How does Medicare Supplement Insurance work?

Adding Medicare Supplement Insurance, or Medigap, to Original Medicare could save you money on health care.

If you’re approaching 65, you might be trying to understand the ins and outs of Medicare. Maybe you’ve figured out parts A, B, C and D. (For instance, you might know that Parts A and B are Original Medicare, Part C is Medicare Advantage and Part D is prescription drug coverage.)

But there’s another set of letters you might want to know about too: Medicare Supplement Insurance, or Medigap, plans A through N. In fact, about 14.5 million people have signed up for Medigap, which helps lower your out-of-pocket costs with Medicare.

“It lives up to its name, which is to fill in the gaps of Medicare,” says Scott Maibor. He’s a licensed insurance agent and managing director at Senior Benefits Boston. Medicare enrollees who have Medigap are 3 times less likely to have problems paying medical bills, compared with those who don’t have it.

But figuring out the right Medigap plan for you can be tricky. Here’s what you need to know to get started.

Have questions about Medicare? A licensed insurance agent can help you navigate your options. Call a licensed insurance agent today at 1-844-211-7730.

What is Medicare Supplement Insurance or Medigap?

As the name suggests, it is a type of supplemental insurance sold by private health insurance companies. Most states have about 10 different Medigap plans you can choose from. They are designated by the letters A through N.

You can buy a Medigap plan if you have Original Medicare (Parts A and B). But you cannot buy a Medigap plan if you are enrolled in a Medicare Advantage (Part C) plan.

Medigap plans can help you cover costs related to deductibles, copayments and coinsurance, says Adria Gross. She’s CEO and founder of MedWise Insurance Advocacy in Monroe, New York. (Copays and coinsurance are the portions of your bill that you must pay out of pocket. The deductible is the amount you must pay before Medicare starts paying.)

Some Medigap plans can also cover medical services that Original Medicare doesn’t cover. For example, Medigap can cover doctor or hospital visits when you’re out of the country.

How does Medicare Supplement Insurance or Medigap help you save money?

Medicare helps you pay for your health care, but it doesn’t cover 100% of your medical bills. You still have to pay your deductible, copays and coinsurance on care you receive. And those out-of-pocket expenses can add up.

Original Medicare does not have an out-of-pocket limit. That means your potential out-of-pocket costs could be a lot more than you might expect. That’s where Medigap plans can help.

Depending on the plan you choose, Medigap will cover some or all of your copays and coinsurance. Some plans also add an out-of-pocket maximum. In 2023, depending on which plan you pick, that can be anywhere from $3,470 to $6,940. That’s still expensive, but not as expensive as having to pay every part of those medical bills on your own.

Keep in mind, though, that Medigap only covers out-of-pocket costs for services covered by Original Medicare. That means it doesn’t cover:

Eyeglasses
Hearing aids
Long-term care (like a nursing home)
Private-duty nursing services
Vision or dental services

What types of Medigap plans are there?

There are at least 10 different types of Medigap plans, all named by letters. What’s available to you might depend on what state you live in and when you first enrolled in Medicare.

“Truthfully, only a few of the Medigap plans are used most often,” notes Maibor. The most comprehensive plan is called plan G, which usually costs around $200 a month, he says.

Each Medigap plan is slightly different, but generally they cover:

Doctor visit copays
First 3 pints of blood if you need a blood transfusion
Health costs while traveling out of the country
Hospice care coinsurance or copays
Hospital coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up
Skilled nursing care

Prices for plans can vary. Since Medigap plans are sold by private companies, they set their own prices. Some companies offer discounts too. For example, they may offer a lower monthly premium if you pay it electronically or pay your insurance bill (premium) yearly in a lump sum. There are also Medigap policies that offer lower premiums for married people who get the same plan from the same company.

Is Medicare Supplement Insurance or Medigap right for me?

It comes down to your own personal preference and healthcare needs. You’ll pay more each month by having a Medigap plan compared to only having Original Medicare. But it can save you serious money on your medical bills.

“Some people hate having high monthly payments, if they feel that they don’t use the plan much,” says Maibor. “Others feel much more secure if they know that they can walk into any hospital in the country and know that whatever the cost of various scans and tests, for them it’s free.”

Ready to explore insurance plans where you live?

When can I buy Medicare Supplement Insurance or Medigap?

It’s best to buy a Medigap plan when you first enroll in Medicare. You’ll have a 6-month Medigap Open Enrollment Period that starts the first month that you have Medicare Part B.

If you have health problems, buying a Medigap plan during your Open Enrollment Period is critical. Since Medigap is supplemental insurance, companies can refuse to sell you a policy if you have a preexisting condition.

But if you apply during your Medigap Open Enrollment Period, companies must sell you a policy, even if you have health problems. You’ll also get the best price and have more options available to you during your Open Enrollment Period.

Want to learn more about Medicare and Medigap? A licensed insurance agent can help explain your options. Call one today at 1-844-211-7730 to explore your options.

Sources

AHIP. “Medigap.” Retrieved from https://www.ahip.org/issues/medigap Accessed March 3, 2023

Medicare.gov. “How to compare Medigap policies.” Retrieved from https://www.medicare.gov/supplements-other-insurance/how-to-compare-medigap-policies Accessed March 3, 2023

Medicare.gov. “What's Medicare Supplement Insurance (Medigap)?” Retrieved from https://www.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap Accessed March 3, 2023

Medicare.gov. “When can I buy Medigap?” Retrieved from https://www.medicare.gov/supplements-other-insurance/when-can-i-buy-medigap Accessed March 3, 2023

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