What is Medigap insurance?

Medicare parts A and B are required for this type of insurance

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Medigap, also called Medicare supplemental insurance, is offered by private insurers to cover costs not covered by Original Medicare. Original Medicare takes care of many health costs and services, but there are a few things it doesn’t cover, like copays, coinsurance and deductibles. If you want coverage for these fees or other services that aren’t covered by Original Medicare, consider getting a Medigap plan.

The basics

  • Medigap can help pay for costs outside of Original Medicare, such as deductibles and copayments.
  • To qualify for Medigap, you must currently have Medicare Part A and Part B.
  • A Medicare Advantage Plan is different from Medigap insurance. Medicare Advantage gets you Medicare benefits, while Medigap supplements Medicare coverage.

What is Medigap?

Medigap is another term for Medicare supplemental insurance. Private insurance companies sell Medigap plans to cover the things that are left out of government-backed Medicare plans. Medicare supplemental insurance helps cover copayments, coinsurance and deductibles. Medigap plans sold after 2006 do not include prescription drugs and can only be paired with Original Medicare, not Medicare Advantage.

Medigap, also called Medicare supplemental insurance, is sold by private companies.”

Though various providers offer them, Medigap policies are generally standardized into a number of different options called plans (not to be confused with Medicare "parts”):

  • Plan A pays for Medicare Part A coinsurance, hospital costs and hospice costs. It also includes coverage for Part B copays and coinsurance. Transfusions are also covered up to the first three pints of blood.
  • Plan B includes all the benefits of Plan A, plus coverage for Medicare Part A deductibles.
  • Plan C builds on the benefits from plans A and B. It includes coverage for a skilled nursing facility and Medicare Part B deductible costs. Plan C covers 80% of costs in case of an emergency during foreign travel, too.
  • Plan D has the same benefits as plans A, B and C, except for Medicare Part B deductible costs.
  • Plan F provides coinsurance and deductibles for parts A and B, Part A hospital stays, Part B copays, transfusions up to the first three pints of blood, stays in skilled nursing facilities and 80% of emergency costs during foreign travel. It also adds coverage for excess charges from Medicare Part B. Your state may offer a high-deductible version of this plan.
  • Plan G offers the same coverage as Plan F, minus Part B deductible costs. Your state may offer a high-deductible version of this plan.
  • Plan K covers Part A coinsurance and hospital costs completely, but it differs from the other plans in that it initially only pays for 50% of Part B copays, the first three pints of blood, Part A hospice, skilled nursing facility stays and Part A deductibles. Plan K has an out-of-pocket limit of $5,880 in 2021. After you meet the yearly limit and Part B deductible, the plan pays 100% of approved costs.
  • Plan L is similar to Plan K, but it ups the initial coverage to 75%. Plan L has an out-of-pocket limit of $2,940 in 2021.
  • Plan M covers 100% of Part A coinsurance and hospital stays, Part B copays and coinsurance, the first three pints of blood, Part A hospice and skilled nursing facility costs. It also covers 80% of emergency care costs during foreign travel. However, it only covers 50% of Part A deductibles.
  • Plan N covers everything mentioned in previous plans except Part B deductibles and excess charges. Coverage for expenses incurred by emergency care during foreign travel is limited to 80%. Plan N pays 100% of the costs for Part B services except for copays for some office visits and some emergency room visits.

Not all plans are available in every state. Massachusetts, Minnesota and Wisconsin have different standardized plans. No Medigap policy includes prescription drug coverage.

Medigap requirements

To qualify for a Medigap plan, you must be enrolled in Original Medicare Parts A and B. Those with Medicare Advantage Plans do not qualify. Eligibility begins the month you turn 65 and enroll in Medicare Part B. You have a right to purchase a Medigap policy during your open enrollment period, which lasts six months and can’t be repeated. If you have preexisting conditions, you have a right to purchase a plan for the same price as a person in good health during your open enrollment period.

To summarize, you are eligible to purchase a Medigap plan if:

  • You turn 65 and enroll in Medicare Part B (if you are outside the first six months of being 65, you might have to pay a late enrollment fee)
  • You are not enrolled in a Medicare Advantage Plan

Certain exceptions apply for those trying to enroll in Medigap plans outside their open enrollment period. If you are outside the open enrollment period and you meet one of the following criteria, you also might be able to purchase a plan called Medicare Select and switch to a Medigap policy within 12 months if you change your mind:

  • You’re under 65 and eligible for Medicare because of a disability or end-stage renal disease
  • You have health problems
  • You have a preexisting condition
  • You have a preexisting condition and are replacing creditable coverage
  • You have other insurance through an employer or union
  • You're eligible for guaranteed issue rights (also called Medigap protections)
  • Your state has additional open enrollment periods

Medigap plans costs

Medigap prices range based on your plan and where you live.

In California, Medigap plan premiums vary considerably, ranging from $29 to $1,038 per month. However, average Medigap policy costs depend on plan type, provider and location. Different providers might charge different prices for the same coverage. Insurance companies also offer plan extras for an additional cost, extending coverage for things that aren’t covered by Medicare, such as hearing aids and dental care.

Personal factors that affect the cost of individual Medicare supplemental insurance policies include:

  • Age
  • Health conditions
  • Tobacco use
  • When you purchase the plan

If you purchase a Medigap policy after your open enrollment period, a penalty might apply.

Do I need supplemental insurance with Medicare?

Medicare supplements aren’t a necessity, but medical costs can add up quickly without them. Original Medicare doesn’t have an out-of-pocket maximum, so treatment for a major emergency or a chronic condition could exhaust savings or be completely out of reach for some older adults. Choosing a Medigap plan can be a more affordable way to pay for costs not covered by Original Medicare. Many Medigap plans cover Medicare Part B copays, which means you pay $0 for approved Part B services (after your deductible, if applicable). If you plan to travel during retirement, many Medigap plans include coverage for emergency care in foreign countries — a benefit that could pay for itself if something unexpected happens abroad.

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