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Updated onJun. 09, 2022

Medicare Supplement Insurance (Medigap)

Having Medicare entitles you to certain medical expense coverages. These include:

  • Part A: Hospital, nursing facility, and nursing home care, as well as hospice and home health services.
  • Part B: Services related to prevention, diagnosis, and treatment.

However, there are some expenses that neither of these parts cover or don’t cover fully. For these reasons, some people choose to purchase Medicare Supplement Insurance, which is commonly referred to as “Medigap.”

Medicare Supplement Insurance

What is Medigap?

Medigap policies are insurance policies offered by private companies to help recipients pay expenses that Medicare doesn’t cover.

Medigap policies are insurance policies offered by private companies to help recipients pay expenses that Medicare either does not cover at all, or does not cover in their entirety. This includes copayments, coinsurance, and deductibles, but it also offers coverage related to medical costs incurred while traveling outside the United States.

The way Medigap works is simple: Medicare pays its predetermined amount for services rendered and then Medigap steps in and pays its plan amounts directly to the healthcare provider. The participant is then responsible for whatever expenses remain, if any.

Medigap policies are designed to cover just one person, so couples interested in obtaining this type of coverage must purchase individual policies for each person.

The best time for a person to purchase a Medigap policy is during the six months immediately following:

  1. Reaching the age of 65; and
  2. Enrolling in Medicare Part B.

This is the open enrollment period. If you wait past this timeframe, Medigap policies may no longer available. If they are, they may be more expensive.

Medicare Plan

Medigap policy premiums are paid monthly, just like the Part B premiums paid to Medicare, but the amounts vary depending on the provider and policy chosen. They are also priced three different ways, according to Medicare.gov:

Medigap policy premiums are paid monthly but the amounts vary depending on the provider and policy chosen.

Community-rated: With a community-rated Medigap plan, all recipients pay the same premium amount. While premiums may go up with inflation and other similar factors, they are not increased with age. This type of Medigap policy is also often referred to as a “no-age-related policy.”

Issue-age-rated: The premiums on these policies—also known as “entry age-rated policies”—are set based on the age of the participant at the time the Medigap policy is purchased. And just like with community-rated policies, these premiums don’t increase with age, only with inflation and other similar factors.

Attained-age-rated: This type of Medigap policy sets premiums based on the participant’s current age, regardless of the age when the policy was purchased. Thus, premiums go up the older you get, making this one of the more expensive types of Medigap policies available.

Other factors that can potentially affect premium costs include any discounts offered by the insurance company, the purchase of a high-deductible Medigap plan, and whether you choose a policy that requires the use of specific providers, such as Medicare SELECT.

Know your budget

Additionally, as long as the premiums are paid, Medigap insurance cannot be cancelled, even if the participant develops health issues.

Medigap is beneficial at helping offset medical expenses not covered by Medicare, but this form of supplemental insurance does have some limitations.

For instance, it is only available to Original Medicare recipients and not to individuals who are insured under a Medicare Advantage policy. In fact, if you have Medicare Advantage and apply for Medigap, Medicare.gov says that the Medicare Advantage plan must end before the Medigap policy begins.

Medigap policies also cannot be used in conjunction with a Medicare Medical Savings Account Plan. Also, as of January of 2006, they cannot provide prescription drug coverage.

Another limitation of these types of policies is that there are some expenses Medigap insurance does not cover. According to Medicare.gov, these include:

  • Long-term care
  • Vision care
  • Dental care
  • Hearing aids
  • Eyeglasses
  • Private-duty nursing

There are certain circumstances in which insurance companies are required to offer Medicare recipients Medigap policies. These are known as “guaranteed issue rights” or “Medigap protections.” According to Medicare.gov, they include:

There are certain circumstances in which insurance companies are required to offer Medicare recipients Medigap policies.

  • Being enrolled in a Medicare Advantage Plan that decides to no longer provide Medicare services or no longer provides services in your area.
  • Being enrolled in a Medicare Advantage Plan and you move from the service area.
  • When you have an employer or union-sponsored plan in addition to Original Medicare, but that plan is ending.
  • Having Original Medicare and Medicare SELECT, but you move from the SELECT policy’s service area.
  • Signing up for a Medicare Advantage Plan or Programs of All-inclusive Care for the Elderly (PACE) when you are first eligible to do so, yet, within the first year, wanting to switch to Original Medicare.
  • After dropping Medigap to join another Medicare policy and wanting to switch back, though this right only applies to first-time switches and you can’t have been in the plan more than one year.
  • Dropping the Medigap policy because you were misled or the insurance company offering the plan violated the rules.
senior couple planning insurance

Although all Medigap policies must clearly be identified as “Medicare Supplement Insurance” and all must offer the same basic benefits, some do provide additional benefits.

For instance, all Medigap plans cover Part A coinsurance and hospital costs for one full year after Medicare benefits are exhausted. Yet, only certain plans cover Part B coinsurance or copayment expenses fully, with other plans only providing 50 or 75 percent coverage.

All Medigap policies must clearly be identified as “Medicare Supplement Insurance” and must offer the same basic benefits.

Additionally, while most Medigap plans don’t have out-of-pocket limits, some do.

Medicare SELECT is also an option. This Medigap policy can require that you use specific, in-network healthcare providers in order to receive full benefits. This makes comparing plans important prior to signing up for one, especially because not every insurance company has to offer every type of Medigap plan.

Medigap policies can also vary by state, particularly for Medicare participants in Massachusetts, Minnesota, and Wisconsin.

Massachusetts: There are two Medigap plans available to people living in Massachusetts: the Core Plan and the Supplement 1 Plan, and both cover basic benefits. While the Core Plan doesn’t cover Part A inpatient hospital deductibles, Part A skilled nursing facility coinsurance, Part B deductibles, and foreign travel emergencies, the Supplement 1 Plan does cover these. It also provides 120 days of inpatient mental health care per year and yearly Pap tests and mammograms.

Minnesota: Minnesota also offers two different Medigap plans: a Basic Plan and an Extended Basic Plan. Both provide some level of Part A skilled nursing facility coinsurance, foreign travel emergency benefits, outpatient mental health, Medicare-covered preventive care, physical therapy, and other state-mandated benefits. However, the amounts covered by the Extended Basic Plan are often higher in these areas. Plus, the Extended Basic Plan also provides coverages the Basic Plan does not, such as Part A inpatient hospital deductibles, Part B deductibles, and coverage while in a foreign country.

Wisconsin: Wisconsin Medicare participants only have one Medigap plan available for purchase: a Basic Plan. In addition to covering basic benefits, it provides coverage for Part A skilled nursing facility coinsurance, an additional 175 days of inpatient mental health coverage (this is a per lifetime benefit), 40 additional home health care visits, and other state-mandated benefits. Riders can also be purchased for Medigap in Wisconsin and include additional coverages related to Part A and B deductibles, foreign travel emergencies, and more.

If you travel outside of the U.S. regularly, you may wish to purchase a Medigap policy that offers some level of protection in the event that you need medical services or supplies when you are abroad.

Medicare.gov recommends speaking with your plan agent to ensure that you know the benefits available to you while on foreign grounds.

Retirement Plan

According to Medicare.gov, the Medigap plans that provide foreign travel emergency health care coverage are those purchased to supplement costs on Medicare plans C, D, F, G, M, and N. And if you purchased Medigap insurance for Medicare plans E, H, I, or J prior to June 1, 2010, these policies provide this coverage as well, even though they are no longer available for purchase in 2018.

Either way, before you travel, Medicare.gov recommends speaking with your plan agent to ensure that you know the benefits available to you while on foreign grounds. It’s also important to realize that Medigap policies have a $50,000 lifetime limit on expenses paid for emergency foreign medical costs.

Medigap can be confusing, particularly when it comes to its coverage and how it works. Here are some of the most common questions and their answers.

I’m Not 65 Years Old Yet. Can I Still Purchase A Medigap Policy?

Medicare.gov says that insurance companies are not required to sell Medigap policies to individuals under the age of 65. However, many do—in 32 states, in fact—so you must check with your specific state to see if it provides this opportunity.

Can I Still Get Medigap If I Have Health Issues?

If you are in your Medigap open enrollment period or if you have a guaranteed issue right, you are guaranteed the option of purchasing a Medigap policy even if you have health issues. If you try to obtain Medigap at any other time, it is possible to be denied based on your current health status.

Will There Be A Delay In Medigap Coverage If I Have A Pre-Existing Health Condition?

Medigap insurance companies do have the right to refuse coverage of out-of-pocket medical expenses on pre-existing conditions for as long as six months after signing up for the policy. But Original Medicare coverage benefits still apply during this time.

One exception to this is if you had continuous prior creditable coverage for at least six months before signing up. In this case, the insurance company offering Medigap cannot impose a waiting period before coverage begins. It also cannot impose this waiting period if you have Medigap protections or guaranteed issue rights.

If you’d like to learn more about Medicap policies available to you, Medicare.gov offers a free online Medigap policy search. To see the Medigap policy options in your area, simply input your zip code and whether you currently have a Medicare Supplement Insurance Policy.

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