A Medigap policy — also called Medicare Supplement Insurance — is a type of private health insurance designed to fill the gaps in original Medicare coverage. Original Medicare — Parts A and B — covers many healthcare costs but leaves beneficiaries responsible for significant out of pocket expenses including deductibles, coinsurance, and copays. A Medigap policy helps pay for some or all of these costs depending on the plan chosen.
Medigap policies are sold by private insurance companies but are standardized and regulated by the federal government. This means that a Medigap Plan G from one insurance company provides the same basic benefits as a Plan G from any other company — though premiums can vary significantly between insurers.
What Medigap covers
Medigap policies are designed to cover out of pocket costs that original Medicare does not pay. Depending on the plan a Medigap policy may cover:
- Medicare Part A coinsurance and hospital costs
- Medicare Part B coinsurance or copayments
- Blood — the first three pints per year
- Part A hospice care coinsurance or copayments
- Skilled nursing facility care coinsurance
- Medicare Part A deductible
- Medicare Part B deductible — only available on older plans
- Medicare Part B excess charges — the difference between what a provider charges and what Medicare approves
- Foreign travel emergency care up to plan limits
What Medigap does not cover
Medigap policies do not cover everything. They generally do not cover:
- Long term care in a nursing home
- Vision care and eyeglasses
- Dental care
- Hearing aids
- Private duty nursing
- Prescription drugs — Medigap policies sold after 2006 do not include drug coverage. A separate Medicare Part D plan is needed for prescription drug coverage.
Standardized Medigap plans
Medigap policies are standardized into lettered plans — Plan A through Plan N — in most states. Each lettered plan offers a different combination of benefits. The most popular plans are:
- Plan G — one of the most comprehensive plans available to new Medicare enrollees. Covers Medicare Part A coinsurance and hospital costs, Part B coinsurance, skilled nursing facility coinsurance, Part A deductible, and foreign travel emergencies. Does not cover the Part B deductible.
- Plan N — similar to Plan G but requires copays of up to $20 for some office visits and up to $50 for emergency room visits that do not result in inpatient admission. Generally has lower premiums than Plan G.
- Plan A — the most basic Medigap plan covering only core benefits including Part A coinsurance and Part B coinsurance.
- Plan K and Plan L — high deductible plans with lower premiums that cover a percentage of costs rather than the full amount.
- Plan F — the most comprehensive Medigap plan but only available to people who became eligible for Medicare before January 1 2020. Covers virtually all Medicare out of pocket costs including the Part B deductible.
In Massachusetts Minnesota and Wisconsin Medigap policies are standardized differently than in other states.
Who can buy a Medigap policy
To buy a Medigap policy you must be enrolled in Medicare Part A and Part B. Medigap policies are designed for people with original Medicare — they do not work with Medicare Advantage plans.
The best time to buy a Medigap policy is during your Medigap open enrollment period which begins when you turn 65 and are enrolled in Medicare Part B. During this six month window you have a guaranteed right to buy any Medigap policy sold in your state regardless of your health status. Insurers cannot charge you more or deny you coverage because of pre-existing conditions during this period.
Outside of the open enrollment period insurers can use medical underwriting to charge higher premiums or deny coverage based on your health status in most states. This makes it important to enroll during the open enrollment period if possible.
How Medigap premiums are set
Medigap insurance companies use one of three methods to set premiums:
- Community rated — the same premium is charged to all policyholders regardless of age. Premiums may increase due to inflation but not because of age.
- Issue age rated — premiums are based on your age when you first buy the policy and do not increase as you get older. Younger buyers pay lower premiums.
- Attained age rated — premiums are based on your current age and increase as you get older. These plans typically have the lowest initial premiums but can become expensive over time.
Understanding how a Medigap policy is rated can help you anticipate how your premiums may change over time.
Medigap vs Medicare Advantage
Medigap and Medicare Advantage are two different ways to supplement original Medicare and they cannot be used together:
- Medigap — works alongside original Medicare to cover out of pocket costs. You can see any doctor or hospital that accepts Medicare nationwide. Premiums are in addition to the Medicare Part B premium.
- Medicare Advantage — replaces original Medicare with a private insurance plan that typically includes additional benefits such as dental, vision, and hearing. Usually requires using a network of providers. Often has lower premiums than Medigap but higher out of pocket costs when care is needed.
The right choice depends on your health needs, preferred providers, budget, and how much you travel or spend time in different locations.
How to buy a Medigap policy
To buy a Medigap policy:
- Make sure you are enrolled in Medicare Part A and Part B
- Compare plans and premiums from multiple insurance companies — the State Health Insurance Assistance Program — SHIP — in your state provides free personalized counseling to help you compare options
- Choose the plan that best meets your needs and budget
- Apply during your open enrollment period if possible to guarantee acceptance regardless of health status
- Pay your monthly premium to the private insurance company in addition to your Medicare Part B premium
Finding help comparing Medigap plans
The State Health Insurance Assistance Program — SHIP — provides free unbiased counseling to Medicare beneficiaries and their families to help them understand and compare Medicare options including Medigap policies. To find your state’s SHIP program visit shiphelp.org or call 1-800-MEDICARE.
Medicare’s Plan Finder tool at medicare.gov also allows you to compare Medigap plans available in your area.
Key terms to know
- Medigap — private health insurance that supplements original Medicare by covering out of pocket costs
- Medicare Supplement Insurance — another term for Medigap
- Open enrollment period — the six month window when you first enroll in Medicare Part B during which you have guaranteed rights to buy any Medigap policy
- Medical underwriting — the process insurers use to evaluate health status and set premiums outside of open enrollment
- Community rated — a premium pricing method that charges the same rate to all policyholders regardless of age
- State Health Insurance Assistance Program — SHIP — a federally funded program providing free Medicare counseling
- Medicare Advantage — an alternative to original Medicare offered by private insurers that cannot be combined with Medigap
Sources
- Medicare.gov — Medigap
- Centers for Medicare and Medicaid Services
- State Health Insurance Assistance Program — shiphelp.org
- USA.gov — Medicare
This article is for general informational purposes only and does not constitute legal or financial advice. Medigap plan availability and premiums vary by state and insurer. Consult a licensed insurance professional or contact your state SHIP program for guidance specific to your situation.