What Is Medigap?: The Straightforward Facts You Need to Know

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How’s your health? You might be doing great right now, but things can change in a heartbeat. Unless you have adequate insurance, you could end up like the 137 million Americans struggling with medical bills. 

If you’re under 65, private health insurance is the best way to avoid bankruptcy due to medical bills. If you’re older than that, there’s always Medicare.

The government-funded Medicare system pays for up to 80% of medical bills for members over the age of 65. You’ve got to fund the other 20% yourself. Unless you have a Medigap policy, that is. 

Right now you might be thinking, ‘What is Medigap and where do I sign up?’.

Not so fast! First, look at all your options and find out which one works best for you.

What Is Medigap Insurance?

Medigap is also known as Medicare supplemental insurance. It’s designed to fill in the gaps left by Medicare Part A.

For instance, a Medigap policy might cover your deductibles and coinsurance costs. Some Medigap policies pay for a portion of medical care during travel too.

If you you’re a member of Original Medicare and you sign up for a Medigap policy, you don’t need to worry about a thing when it comes to medical bills. Medicare pays its share of your bills and then Medigap steps in to cover the rest. It’s as simple as that.

There are currently eight Medigap policies to choose from for new members, each identified by a letter of the alphabet.

All the plans have the same basic benefits as determined by the government and the state they’re offered in. Each of the plans then offers a few additional benefits apart from these basics.

None of the Medigap policies pay for vision or dental care, long-term care, eyeglasses, hearing aids, and private-duty nursing. 

Private insurers sell Medigap policies subject to these basic rules. They aren’t bound to offer all the varieties of Medigap plans to their clients.  

If your parent or parents are aging and can’t afford the extra costs, you can pay their Medigap premiums for them to ensure they’re getting the best care possible.

In Minnesota, Massachusetts, and Wisconsin the criteria for standardizing plans differ slightly from the norm. 

What Types of Medigap Plans Are Available?

Medigap plans carry the labels  A, B, C, D, F, G, K, L, M, and N. Congress suspended Plans C and F for new members enrolling after January 2020.

Those who signed up before this, still receive their benefits as usual. If you were eligible for Medicare before the suspension, you can also still sign up for these policies. 

All Medigap plans cover coinsurance costs for Medicare Part A. They also pay for hospital costs and coinsurance for up to 365 days after you’ve used up all your Medicare benefits. 

After this is where it gets complicated. Let’s take a look at each of the plans in a little more detail:

What Is Medigap Plan A and B?

Medigap plan A offers the fewest extra benefits to members. As such, it’s usually the cheapest option. 

Medigap Plan A covers the following extras:

  • Medicare Part B Coinsurance or Copayments
  • Blood transfusions up to three pints
  • Part A Hospice Care Coinsurance or Copayments

Medigap Plan B goes a little further by offering all the above plus cover for the Medicare Part A Deductible.

What Is the Purpose of Medigap Plan D and G?

Medigap Plan D is a variety of Plan B that also covers foreign travel. This plan covers up to 80% of approved costs associated with medical emergencies outside the USA subject to your annual limit.

If you want to sign up for this additional cover, you need to find an insurer in your state of residence that offers it. 

Medigap Plan G has the same benefits as Medigap Plan D except it also covers Medicare Part B Excess Charges. 

Medigap Plan K and L Coverage

These plans are a little different from all the others. They only pay a portion of some of the costs included in the previous Medigap plans.

Plan K pays 50% and Plan L pays 75% of the following costs:

  • Medicare Part B Copayment or Coinsurance
  • Blood transfusions up to three pints        
  • Part A Hospice Care Copayment or Coinsurance 
  • Coinsurance for Skilled Nursing Facility Care
  • Medicare Part A Deductible

Plan K and L also have an out-of-pocket limit of $5,240 and $2,620, respectively. This means that their cover only commences once you’ve reached this threshold. 

What’s Included in Medigap Plans N and M?

Both these plans offer the same benefits as Medigap Plan D except Plan M only covers 50% of the Medicare Part A Deductible. 

With Medicare Plan N, you’ll need to pay a copayment of $20 for some office visits and up to $50 for emergency room visits that don’t require inpatient admission. Apart from that, it pays 100% of your Part B coinsurance.  

For a side-by-side comparison, MedicareWire reviews all Medigap plans here.

Important Things to Know About Medigap 

Before you rush out and sign up for Medigap, there are a few things you should know. 

The best time to sign up for Medigap is during the six-month open enrollment period after you turn 65. At this time you have a guaranteed right to any Medigap policy you want. 

After that, insurers can impose restrictions on you based on pre-existing conditions. 

If you end all your medical coverage for any reason beyond your control, you also have 63 days to sign up with Medicare and Medigap without any restrictions. 

If you want to switch plans, you can do so at any time. However, unless you do this within your 30-day review period, you lose your right to guaranteed access.

Here are some more important facts about Medigap:

  • You must have Medicare Part A and B to sign up for Medigap
  • You pay extra for Medigap cover
  • Each Medigap policy covers only one person

Unless you’re busy switching over to Medicare, nobody can sell you a Medigap policy if you have a Medicare Advantage plan

What Is a Medigap Policy That Works Best for You?

There are alternatives to Medigap that may pay for some of your extra healthcare costs. These do not fall under the ambit of the government. These are:

  • Medicare Part C Advantage Plans 
  • Prescription Drug Plans
  • Medicaid
  • FEHBP and other union or employer plans
  • Veterans’ benefits
  • Long-term care policies
  • Urban Indian, Tribal, and Indian Health Service plans

If you’re a member of one of these, you may not need additional cover. Check your policy exclusions to make sure what you’re covered for. 

Things to Consider When Choosing a Medigap Plan

As we age, our medical needs increase considerably. So, it’s important to base your choices on your future needs rather than your present state of good health. 

Don’t wait until ill-health starts knocking on your door. If you delay, you could face extra costs and inconvenience when you sign up for health insurance.

Rather, consider these important factors and settle on a Medigap plan as soon as possible:

Costs and Future Affordability

In most states, insurers set up their Medigap premium in the following three ways:

  • Community-rate premiums – these are the same for everyone regardless of their age
  • Issue-age-rated premiums – vary according to your age when you sign up and increase with inflation every year
  • Attain-age rated premiums – increase every year as you get older. 

Attain-age premiums often start with the cheapest rates but can become unaffordable as you get older. 

It’s a good idea to consider the Medicare Advantage plans offered in your area too before you sign up for Medicare plus Medigap. Depending on your needs, this option could work out cheaper.

Choice of Doctors

Most doctors throughout the country accept Medicare. However, it’s important to make sure that your nearest hospitals and doctors are on board with Medicare.

While Medicare plus a Medigap insurance plan will usually cover all your needs, it does have limitations. Often these are some of the most expensive types of treatment and medical equipment. 

If you can’t get access to the medical care you need quickly in an emergency, you might want to consider a Medicare Advantage plan instead. 

Your Lifestyle

Are you planning to explore the world during your retirement? Cover all your bases with a Medigap policy that includes emergency care outside the country.  Unless you can access Plan F, Plan D, G, M, or N are your best options.

More About Health Issues

In short, your major question when deciding on your supplementary coverage revolves around the question, ‘what is Medigap going to do for me?’.

Making provision for ongoing medical costs is just one of the ways to protect yourself in the future. Ultimately, it’s your responsibility to safeguard your health as much as you can.

Keep reading our blog for advice on how to stay fighting fit for years to come.  

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