Medigap, also known as Medicare Supplement Insurance, is designed to cover the costs that Original Medicare (Parts A and B) does not fully pay for, such as deductibles, coinsurance, and copayments. Sold by private insurers, Medigap policies help manage your healthcare expenses by bridging the “gaps” in Medicare coverage, offering more predictable and manageable medical bills.
How Medigap Works with Original Medicare
When you receive medical care, Medicare pays its share of the costs, typically covering 80% of approved charges after deductibles. Your Medigap policy can then pay some or all of the remaining out-of-pocket costs, depending on the plan you choose. For example, if Medicare covers 80% of a hospital stay, a Medigap Plan G may cover the remaining 20%, including copayments and coinsurance.
Medigap only works alongside Original Medicare and is not compatible with Medicare Advantage (Part C) plans. If you switch to a Medicare Advantage plan, you cannot maintain a Medigap policy simultaneously. Those enrolled in Medicare Advantage would need to return to Original Medicare to purchase Medigap coverage.
Standardized Medigap Plans
Medigap plans are standardized across most states, ensuring each plan labeled with the same letter offers the same benefits regardless of the insurer, making it easier to compare coverage. However, premiums vary by insurer and location. Ten standardized plans (labeled A through N) are available, with some unique variations in Massachusetts, Minnesota, and Wisconsin. You can consult your state’s State Health Insurance Assistance Program (SHIP) for local details.
Eligibility and Enrollment
Medigap is typically available to those 65 or older who have Original Medicare Parts A and B. Some states require insurers to offer Medigap to individuals under 65 with disabilities or certain health conditions like End-Stage Renal Disease (ESRD).
The best time to buy a Medigap policy is during the Medigap Open Enrollment Period, which lasts six months starting the month you turn 65 and enroll in Medicare Part B. During this period, insurers cannot deny your application or charge higher premiums due to pre-existing conditions. Buying outside this window may result in medical underwriting and potentially higher costs or denial of coverage.
Choosing the Right Medigap Plan
Selecting a Medigap policy depends on your health, budget, and coverage needs. Plans C and F are no longer available to new Medicare enrollees as of 2020, but existing policyholders may keep them. Popular choices like Plan G offer comprehensive coverage with lower premiums than Plan F, while Plans N and the high-deductible options provide more affordable premiums but higher out-of-pocket costs.
Keep in mind that Medigap does not cover prescription drugs; you’ll need a separate Medicare Part D plan for that coverage.
Common Mistakes to Avoid
- Confusing Medigap with Medicare Advantage: Medigap supplements Original Medicare, while Medicare Advantage replaces it.
- Missing the Open Enrollment Period: Leads to medical underwriting and potential denial.
- Not Comparing Premiums: Standard benefits vary little, but premiums differ widely.
- Ignoring Prescription Drug Coverage: Medigap does not cover drugs.
Frequently Asked Questions
Can I be denied a Medigap policy? Not during your open enrollment. Outside of that, yes, based on health unless you have guaranteed issue rights.
Do Medigap plans cover drugs? No, you must enroll in a separate Part D plan.
Can I switch Medigap plans? Yes, but medical underwriting might apply if not in open enrollment.
Do premiums increase? Yes, based on factors like age and healthcare inflation.
Do Medigap plans cover emergencies abroad? Some plans (D, G, M, N) offer limited foreign travel emergency coverage.
Additional Resources
For more details and plan comparisons, visit Medicare.gov’s Medigap page: Medigap Supplemental Insurance Plans.
Understanding Medigap can significantly ease managing healthcare expenses in retirement by protecting against unexpected medical costs not covered by Medicare.