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Medigap Plans: 7 Critical, Misunderstood Facts

By Rikin Shah | Licensed Life & Health Insurance Agent

7 Critical Facts About Medigap Insurance

Health insurers need to do a better job of naming their products.  Nearly every person who hears about “Medicare Supplement Insurance” for the first time assumes that these plans cover additional services.  Who could blame them?

Still, there is plenty to like about “Medigap” insurance plans.  Let’s dig into seven essential and under-appreciated facts about Medicare Supplement Insurance Plans.

 

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Medigap Helps You Pay Your Original Medicare Copayments And Deductibles

Original Medicare (Medicare Part A and Part B) pays a large portion of the costs of its covered services.  But not in full.  For example, it may pay 80% of a service’s cost and pass the rest on to beneficiaries through coinsurance (including co-pays) and deductibles.

Is this enough coverage?

It depends.  If a procedure costs $50,000 and you are responsible for 20%, you still owe $10,000 out-of-pocket!  Most people can’t spare this much cash at the drop of a hat.

Original Medicare may leave you with a “gap” in coverage.  A gap between what you are required to pay and what you can afford to pay.

If you can’t afford the out-of-pocket costs, your coverage isn’t really good for much.

That was the motivation for “Medigap” policies.  To help seniors pay for their Medicare Part A and Part B coinsurance and deductibles.

Medigap Covers The SAME Medicare Benefits As Original Medicare

Medigap plans are secondary insurance policies that cover the same services as Original Medicare.

Medigap plans cover  your Original Medicare deductibles and coinsurance, with only one exception: emergency care in foreign countries.

Deductibles
1. Part A Deductible ($1,484)
2. Part B Deductible ($203)

Part A Coinsurance
3. Hospital Stays **
4. Hospice Care
5. Skilled Nursing Facility
6. Blood (First 3 Pints)

Part B Coinsurance
7. Covered Services
8. Part B Excess Charges

Non-Medicare
9. Foreign Travel Emergency

Is Medigap Different Than Medicare Advantage?

Medigap and Medicare Advantage are far from the same.  (It would be like comparing apples and garlic…)

While Original Medicare may leave you with financial gaps in your coverage (as discussed above), it certainly leaves you with service gaps in your coverage.

For example, Original Medicare does not cover prescription drugs, vision care, dental care, hearing aids, or wellness.  The appeal of a Medicare Advantage plan is bundled coverage — your insurance company bundles your Part A and B coverage with coverage of these additional services that are almost essential to seniors.

There Are 8-12 Medigap Plans Available

There is a variety of Medicare Supplement Insurance Plans available, but access to these varies:

  • Available to All: The eight plans shown in blue below (Plans A, B, D, G, K, L, M, N) are available to everyone, including those newly eligible for Medicare
  • Being Phased Out:  Plans C and F (to the far right) were phased out beginning in 2020.  Those who became eligible for Medicare Part A before January 1, 2020 (anyone 67 or older) can still sign up for (or switch into) these plans

Table Comparing The Benefits Of All 10 Medicare Supplement Insurance Plans

When did you turn 65?  If before January 1, 2020, then you still have access to Medigap Plan C and (the very popular) Plan F.

For those who became eligible in 2020 or 2021,  no need to fear that you missed out.  Medicare Supplement Plan G provides nearly as comprehensive coverage as Plan F, and has been the most popular Medigap Plan by far, over the last two years.  The second-most popular plan is Medigap Plan N, which offers significantly lower premiums without skimping on key benefits, such as full coverage of your $1,484 Medicare Part A deductible.

Medigap Policies Are Provided By Private Insurance Companies

Original Medicare is provided by the Federal government.

Medicare Supplement Insurance, on the other hand, is sold by private health insurance companies.  These companies must be approved by Medicare and must follow strict guidelines.

The largest providers of Medigap policies are:

  1. Aetna
  2. Cigna
  3. Humana
  4. United Healthcare
  5. Blue Cross Blue Shield

Medigap Benefits Are Standardized Across States And Insurance Companies

In 1993, Congress standardized Medigap benefits across states and companies to make it easier for consumers to shop for a plan.

A Medigap Plan H policy from Humana in Hawaii is the same as a Plan H policy from Aetna in Alaska.

Medigap Is Medically-Underwritten (So Those In Poor Health Will Pay More)

Nearly everyone 65 and older in the U.S. can get health insurance coverage through Medicare.

LBJ Quote on Medicare

You Can Join, Switch, Or Cancel Your Medigap Coverage At Any Time

Unlike Medicare Advantage and Original Medicare, you can join, switch, or cancel your Medigap coverage at any time.

There is a big “but” though:

The best time to buy a Medigap policy is during your 6-month Medigap Open Enrollment Period.  This is the only time you cannot be denied coverage for health reasons.

This six-month period automatically starts the first month you have Medicare Part B (Medical Insurance), assuming you’re 65 or older. After this enrollment period, you may not be able to buy a Medigap policy. If you’re able to buy one, it may cost more due to past or present health problems.

Said another way, you will get better prices and more choices among policies, as you will be eligible for any Medigap policy in your state, even if you have health problems.

Getting Medigap After Initial Enrollment

If you apply for Medigap later, you risk being denied the Medigap policy you desire (if you do not pass the insurance company’s medical underwriting requirements).

In some states, you may be able to buy another type of Medigap policy called Medicare Select. If you buy a Medicare SELECT policy, you have the right to change your mind within 12 months and switch to a standard Medigap policy.

Frequently Asked Questions

For the three most popular Medicare Supplement Insurance plans (F, G, and N), the average premium prices for a 65 year old are $215, $150, and $125 per month, respectively.

For Medigap Plan G, you are responsible for your $203 Medicare Part B deductible; however, Plan G covers 100% of your Medicare Part A deductible ($1,484).

None of the ten currently-available Medigap plans (A, B, C, D, F, G, K, L, M, N) cover prescription drugs. To get Medicare Part D prescription drug coverage, you would need to buy a policy from a private insurance company.

Conclusion

Medicare promised to bring modern medicine to all seniors.  Medigap doubled down on that promise (and has been a roaring success) by making those services even more affordable for the average American senior.

Perhaps the worst part about the Medigap program is the mumbo-jumbo it is mired in, making it difficult for Medicare beneficiaries to understand.  We hope this piece has helped clear up some of that mystery!

If you have any questions or suggestions, please don’t hesitate to leave a comment here or send us an email at hello@getsure.org.  For additional information, be sure to take advantage of the below resources:

Warm Regards,
The GetSure Team

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