Medigap: A Guide to Medicare Supplement Insurance

What Is Medigap?

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.

What Medigap Covers

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.

What Medigap Does Not Cover

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.

Is It Better to Have Medicare Advantage or Medigap?

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 vs. Medigap

*As of 2021, MA plans are now accepting patients with ESRD due to the 21st Century Cures Act.

Types of Medigap Policies

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:

Medigap Policy Benefits

*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.

Is Medigap Right for You?

If you’re wondering whether you should consider Medigap, then you may want to consider the following questions:

• What is your current coverage? Before you purchase a Medigap policy, take stock of your existing coverage. You must already have Medicare Parts A and B to purchase a Medigap plan.
• Are you enrolled in a Medicare Advantage Plan? You’ll have to return to Original Medicare to apply for a Medigap policy. In most cases, if you’re planning to leave the Advantage Plan, then a private insurer can sell you the Medigap plan before your existing coverage ends.
• Who needs extra coverage? You should also consider the number of people who will need coverage. Medigap policies will cover only one person. If you and your spouse are both looking for coverage, then you will both need to buy separate policies. Many companies offer discounts for multiple policies in the same household.
• When can you purchase a Medigap policy? This should be done during the Medigap open-enrollment period, a six-month period that starts on the first day of the month you enroll in Medicare Part B. Some states offer additional periods of open enrollment, so check your local laws. While you may enroll in Medigap at any time, if you do so outside of your open enrollment period, you’ll have to go through medical underwriting.

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.

How Much Does Medigap Cost?

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:

• Community pricing: Premiums are the same for everyone, regardless of age. Costs may go up because of inflation or other factors.
• Issue age pricing: Premiums will be the lowest for younger buyers and higher for older ones. These rates, however, won’t change as buyers get older.
• Attained age pricing: Younger buyers will pay less, but costs will gradually rise as they age, often becoming the most expensive.

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.

How to Purchase Medigap Insurance

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.

Reviews of Our Favorite Medigap Providers

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.