Medigap (Medicare Supplement) Plans: How They Work

Original Medicare covers many health care services, but not all costs. You typically pay deductibles and 20 percent coinsurance for most Part B services, and there is no annual out-of-pocket maximum. Medigap, also called Medicare Supplement Insurance, is private insurance designed to help fill some of those gaps.

Key facts about Medigap

• You must have Original Medicare (Parts A and B) to buy a Medigap policy.
• Medigap does not work with Medicare Advantage plans.
• Medigap generally does not include drug coverage, so you would also need a Part D plan.
• Each policy covers one person. Spouses need separate policies.
• You pay a monthly premium to the insurance company, in addition to your Part B premium.

Standardized plans

In most states, Medigap plans are standardized and identified by letters: A, B, C, D, F, G, K, L, M and N. A Plan G from one company offers the same basic benefits as a Plan G from another company. What differs is the premium, the company's customer service and how the company prices the plan over time.

Massachusetts, Minnesota and Wisconsin standardize their plans differently.

Plans C and F are not available to people who became eligible for Medicare on or after January 1, 2020. Some people who were eligible before that date may still be able to buy them.

What Medigap can help cover

Depending on the plan letter, Medigap can help pay for:

• Part A coinsurance and hospital costs
• Part B coinsurance or copayments
• The Part A deductible
• Blood (first three pints)
• Skilled nursing facility coinsurance
• Part B excess charges (in some plans)
• Some emergency care during foreign travel (in some plans)

Some plans, like K and L, have lower premiums but cover a smaller share of costs and have an annual out-of-pocket limit. High-deductible versions of some plans are also available.

What Medigap does not cover

Medigap generally does not cover long-term care, routine vision or dental care, hearing aids, eyeglasses or private-duty nursing.

When to buy: the Medigap Open Enrollment Period

Your Medigap Open Enrollment Period is the six months that start the first month you have Part B and are 65 or older. During this time, you can buy any Medigap policy sold in your state, and companies generally cannot deny you coverage or charge you more because of health conditions.

After this period ends, you may not be able to buy the policy you want, or it may cost more, unless you qualify for certain protections. Some states provide additional rights to change policies. Check with your State Health Insurance Assistance Program.

How premiums are priced

Companies price Medigap policies in one of three ways:

• Community-rated: everyone pays the same premium regardless of age.
• Issue-age-rated: premium based on your age when you buy the policy.
• Attained-age-rated: premium based on your current age, so it rises as you get older.

Premiums can also increase due to inflation and other factors. Ask how a company has priced its policies over time.

How to shop

1. Decide which plan letter fits your needs and budget.
2. Get quotes for that plan letter from several companies.
3. Compare premiums, pricing methods and any household discounts.
4. Check the company's complaint record with your state insurance department.
5. Ask your SHIP counselor for help comparing.

Be wary of pressure

Take your time, and never feel pressured to buy over the phone. It is illegal for anyone to sell you a Medigap policy if you have a Medicare Advantage plan, unless you are switching back to Original Medicare.

Terrameritavi is an independent publication and is not affiliated with Medicare or any insurance company.