[Last updated October 21, 2024]
If you’re covered by Medicare or soon will be, you may have noticed that you can still be responsible for some significant charges even with the coverage Medicare offers. Some health care services could be cost-prohibitive with these out-of-pocket expenses. This is where a Medicare Supplement Insurance (i.e., Medigap) policy can help. It is important to understand what Medigap is, what these plans cover, and how much they cost to help you determine whether you need the additional supplemental coverage.
What is Medigap?
Medicare Supplement Insurance helps fill in many of the out-of-pocket costs, or “gaps,” in original Medicare (Parts A and B) coverage, such as copayments, coinsurance, and deductibles. This is why Medicare Supplement Insurance is often called “Medigap.” Medigap plans can help with hospitalization deductibles and skilled nursing facility (SNF) expenses, among other costs, depending on the plan. Private health insurance companies sell Medigap policies.
It is important to keep in mind that while their names sound similar, Medicare Supplement Insurance and Medicare Advantage are not the same. Medicare Advantage — also known as Medicare Part C — is an alternative to receiving original Medicare Part A and Part B benefits. Medicare Advantage plans may also cover additional benefits not covered by original Medicare, such as vision and dental care. Many Medicare Advantage plans also include prescription drug coverage. (Those enrolled in original Medicare must purchase prescription drug coverage separately through a Medicare Part D plan.) Private insurance companies sell Medicare Advantage plans.
Those enrolled in Medicare Advantage may not also have Medicare Supplement Insurance. Medigap is available only to those with original Medicare.
What do Medigap plans cover?
There are ten different Medicare Supplement Insurance plans to choose from in most states. These plans are each referred to by a letter of the alphabet, with Medigap Plan A offering the most basic set of benefits.
All Medigap plans cover some or all of Medicare Part A coinsurance and hospital costs for an additional 365 days after original Medicare hospital benefits are used up. They all also offer coverage for Medicare Part B coinsurance or copays, blood (first 3 pints), and Part A hospice care coinsurance or copays.
Some Medigap plans also cover skilled nursing facility coinsurance, Medicare Part A deductibles, Medicare Part B deductibles, Part B excess charges, and emergencies during foreign travel.
As an example, Medicare Part A offers limited coverage for skilled nursing facility care. Medicare pays for the first 20 days and offers less coverage for days 21 to 100. Even if you qualify for coverage, you could incur costly out-of-pocket charges in just the first 100 days. Some Medigap plans cover some or all skilled nursing facility coinsurance charges, which can add up quickly. This coverage could save you a lot of money
In some states, you may be able to purchase another type of Medicare Supplement policy called Medicare SELECT. These plans require insured individuals to use specific hospitals and, in some cases, specific doctors (other than in emergencies) to be eligible for full benefits. In return for these restrictions, the plan may charge lower premiums.
How much do Medigap plans cost?
The cost of Medicare Supplement plans can vary widely depending on which option you choose and where you purchase it. For example, Medicare Supplement Plan A typically costs less than Medicare Supplement Plan F because the latter covers more benefits.
It is important to note that all Medigap plans of the same letter must provide the same benefit structure, no matter which insurance carrier offers them. For instance, all Medigap Plan C policies cover the same list of benefits, regardless of where the plan is purchased. However, the premium could differ from one insurance company to another, so it is critical to compare the cost of Medigap plans from several different carriers before you commit to one.
When can I sign up?
Generally, you can sign up for a Medicare Supplement plan during your Medigap open enrollment period, a six-month window after you turn 65 and initially get Medicare Parts A and B.
The Medigap open enrollment period begins the first month you have Medicare Part B coverage. During this time, you may enroll in Medicare Supplement Insurance without going through the medical underwriting process. You could keep your Medigap premium cost down by purchasing a plan during this initial eligibility window because insurance carriers are not allowed to conduct medical underwriting and in turn charge higher premiums for those with adverse health issues. You also will not be denied for a plan.
However, if you wait to sign up for Medigap until after your open enrollment period for Medicare Supplement Insurance has ended, you could pay a higher premium or even be denied for a plan altogether due to preexisting conditions.
How can I find a plan in my area?
If you are turning 65 soon or are already enrolled in original Medicare but do not have Medicare Supplement Insurance, you can find a Medigap plan in your area by searching for your zip code on Medicare.gov.
You can also research private insurance companies that offer this type of coverage. Plans may also be offered through various organizations, like AARP. For example, for the AARP Medigap plan — underwritten by UnitedHealthcare — you can enter your zip code on AARP’s website and find more details about the available plans and their premium costs.
Because there are many different Medigap plan options, it can help to discuss your specific health care coverage needs with a professional who can assist you in finding the best option for you.
Even with the coverage that original Medicare offers, individuals may find themselves owing high out-of-pocket costs for their health care. Medigap plans can alleviate some of these costs. By researching the different Medigap plans available, you can potentially lower some costs and avoid surprisingly large medical bills.
