If you’re over age 65, then you’re likely familiar with Medicare. If you’ve ever used Medicare, then you probably found out that it doesn’t cover everything. Original Medicare can offset the costs of hospital visits and routine health care, but you’ll still have to pay coinsurance, copayments, and deductibles, among other out-of-pocket expenses.
Luckily, many private insurers offer Medicare Supplement Insurance, also known as Medigap. Trusted by over 13 million Americans, Medicare supplement plans can be a prudent investment that will protect you from unexpected medical costs.
Original Medicare Part A covers many hospital and in-patient care costs, while Medicare Part B covers outpatient and preventive care. There are, however, some gaps in health care expenses that are not covered by these parts of Medicare. To assist with these otherwise out-of-pocket costs, private insurance companies offer Medigap plans to help cover the difference.
Medigap plans extend coverage for Medicare Parts A and B, as well as covering some deductibles that would otherwise be out of pocket, including hospital stays that extend past Original Medicare Part A coverage and doctor-related costs not covered by Medicare Part B.
By charging an up-front premium with a Medigap plan, private insurance companies can provide peace of mind on your hospital stays and visits to specialists. Like Original Medicare, Medigap plans are designated by letters of the alphabet. The cost and availability of these plans depend on where you live and the kind of coverage you need.
Just as Original Medicare does not cover every cost associated with health care, some elements of health care are not covered by Medigap plans. Most don’t cover private nursing services or long-term care, such as nursing home services. Medigap does not include dental or vision insurance, although many private insurance companies that offer Medigap also offer these plans separately at an additional cost. Since vision is not covered by Medigap, neither are eyeglasses. Hearing aids also are not covered by these plans.
Medigap plans are not part of Original Medicare, which is split into parts. Medigap is not the same as Medicare Advantage, which can cover vision, hearing, dental, and fitness programs. Medicare Part D covers prescription drugs, which are not covered under Medigap plans.
Both Medicare Advantage and Medigap are designed to supplement your Original Medicare plan, but they do so in different ways. Depending on your plan, Medigap may cover coinsurance, copayments, hospital costs, hospice care, and emergency travel care, among other things. On the other hand, Medicare Advantage plans may include extra benefits such as dental care, vision coverage, wellness programs, and prescription drug coverage.
Since one person can’t have both Medigap and Medicare Advantage plans, you should look at which benefits you’re more likely to need.
| Medicare Advantage | Medigap |
|---|---|
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*As of 2021, MA plans are now accepting patients with ESRD due to the 21st Century Cures Act.
Medigap plans are sold through private insurers, but their benefits are standardized, which means the premium costs will be the only difference between insurance companies. All insurance companies with Medigap plans will offer Plan A. Apart from Plan A, Medigap plans will vary depending on the insurance provider. Regardless of the provider, a specific Medigap policy will offer the following:
| Benefits | Plan A | Plan B | Plan C | Plan D | Plan F | Plan G | Plan K | Plan L | Plan M | Plan N |
|---|---|---|---|---|---|---|---|---|---|---|
| Medicare Part A coinsurance and hospital costs | 100% | 100% | 100% | 100% | 100% | 100% | 100% | 100% | 100% | 100% |
| Medicare Part B coinsurance or copayments | 100% | 100% | 100% | 100% | 100% | 100% | 50% | 75% | 100% | 100% |
| First three pints of blood | 100% | 100% | 100% | 100% | 100% | 100% | 50% | 75% | 100% | 100% |
| Part A hospice care copayment or coinsurance | 100% | 100% | 100% | 100% | 100% | 100% | 50% | 75% | 100% | 100% |
| Coinsurance for skilled nursing facility care | No | No | 100% | 100% | 100% | 100% | 50% | 75% | 100% | 100% |
| Part A deductible | No | 100% | 100% | 100% | 100% | 100% | 50% | 75% | 50% | 100% |
| Part B deductible | No | 100% | No | 100% | No | No | No | No | No | No |
| Part B excess charges | No | No | No | 100% | 100% | No | No | No | No | No |
| Foreign travel emergency coverage | No | 80% | 80% | 80% | 80% | No | No | No | 80% | 80% |
*With plans K and L, Medigap plans will pay for 100 percent of covered services after you meet your yearly out-of-pocket limit. In 2022, this limit is $6,620 for Plan K and $3,310 for Plan L.
Pro Tip: All Medigap plans are created equally, but the providers vary widely in their accessibility, premiums, and extra benefits. To learn more, look at my list of this year’s best Medigap providers.
If you’re wondering whether you should consider Medigap, then you may want to consider the following questions:
During open enrollment, an insurance company can’t refuse to sell you any of its Medigap policies. It also can’t increase its charges based on existing health problems. Outside of open-enrollment periods, insurance companies can legally deny your application, charge you higher premiums, or implement waiting periods on portions of your coverage.
Pro Tip: Insurance companies may charge different premiums for the exact same Medigap policies, so compare quotes before signing up for a plan.
To begin your search for a Medigap policy, visit the Medicare website. You can enter your ZIP code and view the Medigap plans available in your area. When I typed in a Nevada ZIP code, the following plans were available: A, B, C, D, F, high deductible F, G, high deductible G, K, L, M, and N. By putting in an age, sex, and tobacco-use status, I obtained more accurate pricing.
The Medicare website also allows you to compare the benefits of each plan. Once you’ve determined which plan best suits your needs, you can view the policies offered by private insurers in your area.
The only way to find out the exact amount you’ll pay for Medigap is to make direct calls to insurance companies. Alternatively, you could contact a broker who works with insurance companies to save time. You’ll also want to find out how each company sets its prices. There are three pricing methodologies:
In addition to premium price, consider whether a Medigap provider offers additional discounts for women, nonsmokers, married people, multiple policies, or paying yearly as opposed to monthly. We also recommend checking whether a company uses medical underwriting — that is, whether a provider will base your coverage costs on your health history.
Once you’ve decided on an insurance company and a Medigap policy, all you have to do is apply. This likely will consist of an online questionnaire on which you’ll provide personal information, including your medical history. If you’re applying during an open-enrollment period, then the insurer can’t use any of these answers as justification for denying coverage or changing its price. Once approved, your insurer will provide a summary of your policy and its benefits. Read it carefully and write down any questions you have about your coverage.
Once you’re enrolled, your insurer will tell you how to pay. You’ll likely have your choice of check, money order, or bank draft. Some companies offer electronic funds transfers, which will allow you to set up automatic payments from your checking account or credit card. Transfers often come with discounts on your premiums.
There are several reasons you may want to change your Medigap policy. Perhaps you’re paying for unnecessary benefits or you want additional benefits, or you wish to change your provider to save money.
If you’re healthy, you may change your Medigap policy at any time without any issues related to passing medical underwriting. If you have health issues, however, this process gets a bit more tricky.
There is also a special enrollment period called Trial Rights. If you enrolled in a Medigap policy and then switch to Medicare Advantage, you’ll have a 12-month trial right to drop your MA and go back to Medigap without going through medical underwriting as long as you enroll in the same plan they were in prior or one with lesser benefits.
For example, you can go from Plan G to Plan G or Plan G to Plan N, but you could not go from Plan N to Plan G without going through medical underwriting since Plan G has more benefits than Plan N. You only get trial rights once.
Depending on your desired Medigap plan, you’ll likely have a plethora of options for insurance providers. For example, a Nevada woman looking to enroll in Medigap Plan A has over 40 options to choose from. The actual benefits of these plans will be identical, but they will vary in premiums, pricing models, and additional perks like gym coverage, hearing aid discounts, or other rebates.
To help you narrow down your options, here are some of our favorite Medigap providers. Not all of them offer every type of Medigap plan, but they undoubtedly offer trustworthy coverage and some additional benefits.
Our financial experts have conducted thorough research on the ways in which providers’ Medigap plans meet certain needs, conditions, and situations.
There is no one-size-fits-all solution for Medigap plans. To find the best Medigap plan for your needs, start by looking at the options available in your state. Figure out which benefits work for you, and then start contacting insurance agencies.
You can change plans at any time outside your Medigap OEP. There’s a misconception that the Medicare Annual Enrollment Period in October is for beneficiaries to enroll in Medigap. This is not true. AEP is for beneficiaries that want to enroll or switch their MA and/or Part D plan. Those that leave MA can then enroll in a Medigap plan at that time. However, they will have to go through medical underwriting unless they are still within their 6-month Medigap OEP.
In most cases, a Medigap insurance provider can drop you only if you stop paying your premium, you lied on your policy application, or the provider becomes bankrupt or insolvent. If you purchased your Medigap policy before 1992, different laws may apply.
There is no prescription coverage with Medigap plans. If you want drug coverage, you have to enroll in a separate Part D policy.
A copayment is an amount you pay as a share of the cost of medical services or supplies, and it tends to be a set amount. Coinsurance is the share of the cost for services after any deductibles. It’s usually represented as a percentage.
