Key Takeaways:

• Medigap plans, also known as Medicare Supplement Insurance, can help cover costs that Original Medicare doesn’t, such as copayments and deductibles.
• Choosing the right Medigap plan can provide peace of mind and financial predictability, especially for those with frequent medical expenses.

What Is a Medigap Plan and Why Might You Need One?

When you first enroll in Medicare, you quickly realize that it doesn’t cover everything. While Medicare Parts A and B provide substantial medical coverage, you’re often left with gaps like copayments, coinsurance, and deductibles. This is where Medigap plans come into play. These plans are designed to “fill in the gaps” that Original Medicare leaves behind.

Medigap is sold by private insurance companies and works alongside your Original Medicare coverage. Unlike Medicare Advantage plans, which replace your Medicare benefits, Medigap supplements them. If you’re someone who prefers predictable healthcare costs and minimal surprise bills, Medigap can be a game-changer.

Eligibility and Enrollment

When Are You Eligible for Medigap?

Your eligibility for Medigap starts as soon as you’re enrolled in Medicare Part A and Part B. However, there’s an ideal time to enroll called the Medigap Open Enrollment Period. This six-month window starts the month you turn 65 and are enrolled in Part B. During this period, you can buy any Medigap plan available in your state without being denied coverage or charged a higher rate due to pre-existing conditions.

Miss this window, and the process can become more complicated. Outside the Open Enrollment Period, insurance companies may use medical underwriting to decide whether to accept your application and what premium to charge. This can be an issue if you have pre-existing health conditions.

What Do Medigap Plans Cover?

Medigap plans are standardized in most states, meaning Plan G in one state must offer the same benefits as Plan G in another. There are 10 standardized Medigap plans labeled A through N, each offering a different combination of coverage.

Key Benefits That Medigap Plans Cover:

• Part A Coinsurance and Hospital Costs: Most Medigap plans cover the full coinsurance amount for hospital stays beyond what Medicare pays.
• Part B Coinsurance or Copayments: Some plans cover these costs in full, while others may only cover a portion.
• Blood: Medigap plans often cover the cost of the first three pints of blood if you need a transfusion.
• Part A Hospice Care Coinsurance: Most plans help cover coinsurance for hospice care.
• Skilled Nursing Facility Care Coinsurance: Some plans will cover this expense, which can be costly without additional help.
• Part A and B Deductibles: Certain plans cover these deductible amounts, which can save you a significant amount of money each year.

How Medigap Works with Original Medicare

Medigap plans complement Original Medicare by stepping in to cover what Medicare does not. Here’s how it works:

1. Medicare Pays First: When you receive medical care, Medicare will pay its share of the approved amount.
2. Medigap Pays Second: Your Medigap plan will then pay its share, which can include covering deductibles, coinsurance, and other out-of-pocket costs.
3. You Pay the Rest: If there are any remaining costs that your Medigap plan doesn’t cover, those are your responsibility.

Medigap Plan Options and What Sets Them Apart

With 10 different Medigap plans to choose from, you have options that cater to various needs and budgets. While each plan offers unique benefits, the most popular ones are usually those that cover a broad range of costs.

Notable Medigap Plans:

• Plan F: Known for comprehensive coverage, Plan F covers almost all the gaps in Medicare. However, it is only available to those who were eligible for Medicare before January 1, 2020.
• Plan G: This plan has become a favorite since Plan F’s phase-out for new enrollees. It covers everything Plan F does except for the Part B deductible.
• Plan N: Plan N offers lower premiums but requires copayments for certain office visits and emergency room trips.

What Medigap Doesn’t Cover

While Medigap can be a significant relief, it’s important to know its limitations. Medigap plans do not cover the following:

• Prescription Drugs: For drug coverage, you’ll need to enroll in a standalone Medicare Part D plan.
• Vision or Dental Care: Routine vision and dental services are not included and require separate insurance.
• Hearing Aids: Medigap won’t cover hearing exams or aids.
• Long-Term Care: Services like nursing homes or in-home care aren’t included.

The Costs of Medigap Plans

Medigap plan costs vary based on a few key factors:

1. Location

Where you live can greatly impact your premium. Medigap plans in different states (or even cities) can have varying costs.

2. Age Rating

Plans can use different rating methods to set prices:

• Community-rated: Everyone pays the same premium regardless of age.
• Issue-age-rated: Your premium is based on the age when you buy the policy.
• Attained-age-rated: Premiums start lower but increase as you age.

3. Plan Type

Each Medigap plan offers a different combination of benefits, which affects its cost. A plan with broader coverage like Plan G typically has higher premiums than one with more limited coverage like Plan A.

How to Choose the Right Medigap Plan for You

Finding the right Medigap plan involves balancing your budget with your medical needs. Here’s what to consider:

1. Assess Your Medical Needs: If you anticipate high medical expenses, a comprehensive plan like Plan G may be worth the higher premium.
2. Compare Premiums: While it’s tempting to go for the lowest premium, make sure it aligns with the coverage you need.
3. Consider Future Costs: If you choose an attained-age-rated policy, keep in mind that premiums will increase over time.

When Can You Switch Medigap Plans?

You might find that your current Medigap plan no longer fits your needs or budget. While there’s no annual Open Enrollment Period like there is for Medicare Advantage or Part D plans, you can still switch, but doing so might be subject to medical underwriting. Exceptions exist, such as when you’re within your six-month Medigap Open Enrollment Period or have a guaranteed issue right due to specific circumstances.

Understanding Guaranteed Issue Rights

Guaranteed issue rights protect you from being denied coverage or charged a higher premium due to your health status. These rights apply when:

• Your Medicare Advantage plan is ending.
• You move out of your Medigap plan’s service area.
• You leave your current plan within the first year of joining.

Knowing your guaranteed issue rights can be a huge advantage if you need to switch plans due to unforeseen circumstances.

Additional Considerations for Medigap Plans

Medicare SELECT

Some Medigap plans come in a variation called Medicare SELECT, which requires you to use hospitals and doctors within a network. This can lead to lower premiums, but it’s important to make sure the network fits your healthcare needs.

Foreign Travel Emergency Coverage

Some Medigap plans offer coverage for medical emergencies while traveling outside the U.S., a benefit that Original Medicare typically doesn’t provide. If you’re a frequent traveler, this feature could be particularly useful.

Is Medigap Worth It for You?

Medigap can offer peace of mind by covering unexpected medical expenses. However, it’s not for everyone. If you rarely see the doctor or have minimal healthcare costs, a Medigap plan might not justify the premiums. On the other hand, if you want more predictable out-of-pocket expenses, especially for frequent medical visits or treatments, Medigap can be a solid investment.

Deciding on the Right Medigap Plan

Choosing a Medigap plan is a significant step that can impact your financial and health security. Weigh the pros and cons, consider your current and future medical needs, and always compare your options. Medigap plans can make a big difference, offering you financial predictability and reducing stress when medical bills come in.