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Medigap Insurance: A Complete Guide to Medigap Coverage


Medigap insurance, also known as Medicare supplement, refers to plans that fill financial gaps in the traditional "Original Medicare". Medigap is sold by private companies and is used to pay for health care costs that may not be covered by Medicare Part A and Part B.


While these Parts, collectively known as Original Medicare cover the cost of several inpatient and outpatient medical services and supplies, the Medigap plans are provided to offset other healthcare expenses not covered by Original Medicare.


These extra costs include deductibles, copayments, coinsurance, and health care expenses when you travel outside the United States.


In the article, learn about Medigap Insurance, how Medigap works, the types of plans available, premium costs, factors to consider before you buy a Medigap plan, and much more.


What Is Medigap & What Are Medigap Insurance Plans?


Medigap or Medicare Supplement Plans are insurance plans sold by private insurance companies. These plans are designed to pay for health care costs that aren't covered under Original Medicare (Medicare Part A and Medicare Part B).


Hence, subscribers pay a monthly premium for full or partial coverage of their out-of-pocket costs including deductibles, coinsurance, and copayments. However, these plans do not stand alone, one must be enrolled in both Medicare Original Parts (Part A and B). Additionally, one does not just pay a monthly premium for their Medigap plans, customers will have to pay their Medicare Part B premium.


Medigap plans are standardized by law in all but three U.S. states. These states are Massachusetts, Minnesota, and Wisconsin.


Key Points to Know About Medigap Insurance


  1. You must be enrolled in Original Medicare to purchase Medicare supplement plans. This means you must have Medicare Part A and Part B. That being said some insurance companies will allow you to purchase your Medigap up to 6 months prior to your original Medicare effective date.

  2. It covers most of your out-of-pocket costs not covered by Medicare Part A and Part B. One Medigap plan also covers your Medicare Part A coinsurance costs for another 356 days after your Medicare benefits run out.

  3. Medigap plans are different from the Medicare Advantage Plans (Part C). The only similarity they share is that they are provided by private companies. Medicare Advantage is an alternative way to get Medicare benefits, comprising Medicare Part A, Medicare Part B, and usually Part D (drug coverage). On the other hand, a Medigap plan only supplements your Original Medicare coverage. You cannot enroll in both a Medicare Supplement plan and Medicare Advantage, you have to choose one or the other.

  4. As a Medigap plan subscriber, you pay a monthly premium to the private insurance company. However, this is in addition to the monthly Part B premium that you pay to Medicare. Most people pay the base Part B premium of ($170.10 in 2022).

  5. A Medicare supplement plan only covers one person. If you and your partner or family want Medigap insurance coverage, each one of you will have to buy separate plans.

  6. You can buy a Medicare supplement plan from any insurance company that's licensed in your state to sell one.

  7. The Medigap insurance costs vary from plan to plan, and insurance companies may have different premium prices.

  8. You have guaranteed life coverage as long as you pay your premiums. In other words, your insurance company cannot cancel your Medigap plan regardless of your health changes after you have the coverage.

  9. Medigap policies do not cover prescription drugs. (They used to before January 1, 2006) So, if you want your insurance plans to have drug coverage, you can enroll in a Medicare Part D (prescription drug plan). Note that you will need to pay different premiums for each Medigap plan and Medicare drug plan, even if you buy from the same company.

  10. It's illegal for any company to sell a Medicare Supplement Plan to you if you have a Medicare Advantage Plan. They can only sell to you if you are switching back to Original Medicare.

  11. Your Medigap plan allows you to see any doctor that accepts Medicare anywhere in the U.S.

  12. With your Medigap Insurance, you do not need a referral to see a specialist.


Types of Medigap Plans


There are 10 standardized Medigap plans available: A, B, C, D, F, G, K, L, M, and N. However, Plans C and F are not made available to people new to Medicare on or after January 1, 2020. This is because Medigap plans from that time can no longer cover the Part B deductible.


By "people new to Medicare", it means those who were not eligible to enroll in Original Medicare before January 1, 2020. If you were eligible before January 1, 2020, but were not enrolled, you may be able to buy a Plan C or Plan F Medigap.


This does not apply to subscribers who already had Plan C or F before January 1, 2020. If you had plan F or plan C before Jan 1st 2020 you can keep your plan, but be aware you may be overpaying by hundreds if not thousands of dollars per year.


Hence, there are 10 standardized Medicare Supplement plans available in 47 states of the U.S. Their prices will vary but the coverage will be the same because the plans are “standardized”.


Here’s a breakdown, showing you how to compare Medigap Plans & Medigap Benefits according to Medicare:



Key

*- Plans F and G offer a high-deductible plan in some states. Going for these plans requires you to pay for Medicare-covered costs (coinsurance, copayments, and deductibles) up to the deductible amount of$2,490 in 2022 before your policy pays anything. Note that Plan F is not available to people who were newly eligible for Medicare on or after January 1, 2020.


**- Medigap Plans K and L pay 100% of covered services for the rest of the calendar year after you meet your out-of-pocket yearly limit and your yearly Part B deductible.


***- Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to a $50 copayment for emergency room visits that don't result in inpatient admission.


What Does Medigap Not Cover?


Medigap policies do not cover any of the following:

  • Long-term care (like non-skilled care you get in a nursing home)

  • Routine Dental services

  • Hearing aids

  • Routine Vision services, eyeglasses, or contact lenses

  • Private-duty nursing


Costs of Medigap Plans


Members pay a monthly premium for their plans. Prices can range from less than $100 to $400 or more.


Medigap plans are priced using a plan rating system, as follows:


Community no-age rated

All Medigap plan subscribers pay the same monthly premium regardless of their age.


Issue-age rated

Monthly premiums depend on your age when you first buy the plan. This means that the younger you are when you enroll, the lower the premiums you will pay. Note that members become eligible at the age of 65 or older (unless you are on Medicare before age 65 due to disability, you may still be able to purchase a Medigap).


Attained-age rated

Monthly premiums are based on how old you are when you first enrolled but increase as you grow older.


While the latter two pricing systems may be based on age, premiums may increase due to inflation or other factors, not related to age.


Medigap Eligibility | Medigap Enrollment Periods


The ideal time to enroll for Medigap is when you are first eligible, that is, 65 years old. Starting from the month you turn 65 (if you are enrolled in Original Medicare or Medicare Part B), you have a six-month Medigap open enrollment period.


Once this period closes, it cannot be repeated or shifted. Depending on your health, if you miss your one time open enrollment period you may or may not be able to enroll in a Medigap plan. After this period you will be subject to medical underwriting and a company can charge you higher premiums or even deny you coverage based on your health status.


Remember that you may only choose between getting a Medigap plan or a Medicare Advantage plan, you cannot have both.


Before you Enroll in Medigap


Before you enroll in a Medigap plan, you might want to consider the following:

  • Your health status (and conditions). Insurance companies may not approve Medicare supplement plans for people with pre-existing medical conditions outside of their one time open enrolment period.

  • Your budget. Remember, premiums can be based on the plan you choose, your age, your place and state of residence, your gender, and your medical history.

  • Benefits. Medigap is a great choice if you are looking for a plan to cover out-of-pocket expenses. With a Medicare supplement you will have a monthly premium you can budget for with very minimal out of pocket expense when you use the coverage. Medigap does not cover prescriptions, you will need to pick up a separate Part D drug plan for that.


Medigap or Medicare supplement insurance plans, as the name implies, is an add-on to the traditional Medicare coverage. It is a great choice to cover whatever health costs may not be covered by Original Medicare.


Compare your options and insure your health. Remember, Original Medicare only covers 80%, Medigap covers the rest. Contact us today to find the best Medigap plan for your particular needs.


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