While the federal government’s Medicare program makes health care more affordable, it doesn’t cover all your medical expenses. You must still pay out of pocket for certain Part A and Part B expenses. Some people choose to enroll in a Medicare Supplement Insurance Plan, also known as Medigap, to offset some of the costs you can incur.
What Is Medicare Supplement Insurance?
Your Medicare coverage consists of Part A (hospital) and Part B (medical) insurance, which pays a portion of your medically necessary health care services. This includes inpatient hospital stays, lab tests, surgeries, physician visits, ambulance service, and flu shots.
A Medigap insurance policy helps pay for some of the out-of-pocket costs you’re responsible for, which can include:
- The annual deductible you pay for your health care costs before Medicare begins to pay
- Coinsurance, which is a percentage of the cost of a service you receive
- Co-payments, which are set fees you pay per service
Medicare Supplement Insurance is available through private insurance companies for a monthly premium. You continue to receive your health care coverage through Medicare.
What Kinds of Medigap Policies Are There?
There are 10 different types of Medigap plans, categorized by letter: A, B, C, D, F, G, K, L, M, and N. These categories are standardized in all states except for Massachusetts, Minnesota, and Wisconsin.
Depending on the category, the supplemental insurance may cover all, some, or none of the following out-of-pocket costs:
Part A coinsurance
- Part B coinsurance or co-payments
- First three pints of blood
- Hospice care coinsurance or co-pays
- Skilled nursing facility care coinsurance
- Part B deductible (only for those enrolled in Medicare before 2020)
- Part B excess charge (the amount a health care provider can charge above the Medicare-approved amount)
- Foreign travel exchange
- Out-of-pocket limit
Each Medigap category offers the same mix of benefits. For example, all Medigap Plan A insurance policies pay for Medicare Parts A and B coinsurance. If you also want the Part A deductible covered, then you need to look at a plan in another letter category. The Medicare website has a chart that compares the features of each Medigap category.
Choosing a Medigap Policy
Once you choose the letter category that meets your needs, you can compare costs between insurance companies. Plans may differ in terms of monthly premiums or additional benefits offered.
Keep in mind that insurers don’t have to offer all categories of Medigap plans. If they do provide Medigap, it must at least include Plan A, which is the most basic benefits plan, and either Plan C or Plan F.
Medicare Supplement Insurance Plans Enrollment
Medicare Supplement insurance plans (or Medigap) are voluntary, additional coverage that helps fills the gaps in coverage for Original Medicare. The best time to enroll in a Medicare Supplement insurance plan is during your individual Medigap Open Enrollment Period, which is the six-month period that begins on the first day of the month you turn 65 and have Medicare Part B.
If you decide to delay your enrollment in Medicare Part B for certain reasons such as having health insurance through your current employment, your Medigap Open Enrollment Period will not begin until you sign up for Part B.
During your Medigap Open Enrollment Period, you have a “guaranteed-issue right (src)” to buy any Medigap policy sold in your state. This means that insurance companies cannot reject your application for a Medicare Supplement insurance plan no matter what pre-existing conditions or disabilities you may have. They also cannot charge you a higher monthly premium based on your health status.
Outside of this open enrollment period, you may not be able to join any Medigap plan you want. Insurers can require you to undergo medical underwriting. You may have to pay more if you have health problems or disabilities.
Medigap plans, like Medicare Advantage plans, are offered through private insurance companies and are available for purchase through brokers like Medicare Planning of America.
Choosing the Right Medicare Coverage for Your Needs
Original Medicare doesn’t include prescription drug coverage. In addition to a Medigap plan, you may want to add a Medicare prescription drug plan (Part D) to help pay for the medication your doctor prescribes. You also have the option of receiving Medicare coverage through a Medicare Advantage plan, which can provide additional benefits such as vision, dental, hearing, and fitness.
Medigap, Part D Medicare prescription drug plans, and Medicare Advantage plans — such as an HMO or a PPO — can be purchased through Medicare Planning of America. Our team of licensed insurance agents can answer any questions you have and help you find the health coverage that works best for you.