What is Medigap Insurance?<span class="wtr-time-wrap after-title"><span class="wtr-time-number">16</span> minute read</span>
16 minute read|
Updated for October, 2019
Medicare insurance only covers so much of an insured person’s medical expenses, and out-of-pocket expenses can be substantial. A medigap policy is a kind of Medicare supplement insurance that is sold by private companies. Its purpose is to pay for medical expenses not covered by Medicare.
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Table of Contents
- What is the Difference Between Medigap and a Medicare Advantage Plan?
- How Does Medigap Work?
- Who Is Eligible?
- What Type of Doctors Can You See With Medigap?
- Does a Medigap Policy Pay For Care Outside the United States?
- Can You Switch Medigap Plans?
- Which Medigap Policy Should I Buy?
- When Can I Buy Medigap?
- How Do You Compare Medigap Policies?
- What are Some Future Policy Changes That Could Affect Medigap?
- When Should I Consider Medigap Insurance?
- How Do I Shop For Medigap Insurance?
- Making the Decision
Medigap insurance does not discriminate between different medical services, and does not provide a list of “covered vs. not covered” procedures. Medigap also does not require patients to see specific doctors. As a result, these flexible Medicare supplement plans can be invaluable for patients who struggle to make payments for medical expenses not covered by Medicare. Understanding the benefits of a Medigap policy can help you decide if this important insurance plan offers benefits that can help you.
Who Is Eligible?
When a person turns 65, they enter an eligibility period that lasts for six months.
In order to be eligible for a Medigap policy, a person must be enrolled in Medicare part A and B. Most people do not become eligible for Medigap insurance until they are 65 years old. When a person turns 65, they enter an eligibility period that lasts for six months. During this time, they may enroll in Medigap regardless of pre-existing conditions and health history, and Medigap cannot make seniors pay higher premiums based on their health history if they enroll during this initial enrollment period.
Older people enter an enrollment period if they are new to Medicare part B or if they have recently lost their insurance coverage. During this time, they are given “guaranteed issue” rights, meaning they can sign up for Medigap and may not be denied coverage due to pre-existing health conditions. People who have Medicare Advantage Part C are not eligible for a Medigap policy; only people who have original Medicare are eligible for Medigap.
People who do not sign up for Medigap during their initial open enrollment period and who do not enter a period of guaranteed issue may be denied coverage due to pre-existing conditions or other health reasons if they apply. Seniors who are serious about getting a Medicare supplement plan should sign up for Medigap when they first become eligible to prevent problems.
People who are younger than 65 but who are eligible for Medicare coverage due to disability may not be eligible for Medigap, or if they are eligible, they may be required to pay a higher premium due to their pre-existing condition. Protections from the federal government that prevent insurance companies from charging a higher rate do not begin until the insured reaches 65.
What Type of Doctors Can You See With Medigap?
A Medigap policy allows seniors to see any doctors, regardless of whether the doctor accepts Medicare assignment. A doctor who accepts Medicare assignment will accept the Medicare-approved amount for their services. For doctors who accept this amount, Medigap will pay the doctor directly after services have been rendered. For doctors who do not accept Medicare assignment, the patient may have to pay the doctor directly and file a claim with Medigap in order to claim the money for reimbursement.
Medigap only offers coverage if there is a medical emergency and if the emergency happens within the first 60 days of the trip.
Does a Medigap Policy Pay For Care Outside the United States?
For seniors who travel, some Medigap plans will pay for care outside the United States. Medigap only offers coverage if there is a medical emergency and if the emergency happens within the first 60 days of the trip. If the insured does not have the proper Medigap plan or if the emergency happens after the first sixty days, the senior may have to pay for medical care out of pocket without reimbursement. For seniors who travel frequently and want to ensure that their medical care will be covered during the trip, plans C, D, F, G, M and N will pay for a portion of emergency care administered outside the US, provided the need for care occurs within the first 60 days of the trip.
Can You Switch Medigap Plans?
Yes, you can switch Medigap plans. The best time to do this is if you’re in your six-month eligibility window or if you have recently become eligible to switch plans for another reason. Seniors who decide they would like to sign up for a new policy and who are eligible to do so may take advantage of the 30 day trial period. The trial period allows a person to sign up for a second plan while retaining their original plan. At the end of the 30 day trial period, the person may either go back to their original policy or may choose the second policy.
Which Medigap Policy Should I Buy?
Medigap part A is the same no matter what insurance company is offering the coverage.
There are 10 types of Medigap plans, so deciding which type of plan to purchase can be a challenge. Fortunately, however, plan details will not vary from one insurance company to the next. In other words, Medigap part A is the same no matter what insurance company is offering the coverage. The only details of coverage that will change from one type of insurance company to the next is the price.
When looking at different types of Medicare supplements, it’s easy to be overwhelmed by information. For many seniors, the most important benefits include:
- 20 percent share of doctor visit costs
- Hospital deductibles
- 20 percent share of lab test costs and outpatient services
- Hospital and skilled nursing facility coinsurance costs
Seniors struggling to decide which Medigap policy to purchase should ensure they have these coverages. Each package varies in deductible amounts, type of coverage offered, costs to be shared and other details. Seniors must make their decision by evaluating their personal medical expenses and their own financial situation.
The most popular of the plans is Medigap F, which offers the most coverage. People who are considering Medigap F, however, should be aware that there are two types of Medigap F, and one of them has a high deductible.
There is no Medigap policy that covers dental, vision or prescription drug coverage. Original Medicare does not cover prescription drugs either, so seniors hoping to get this coverage must select a standalone part D plan.
When Can I Buy Medigap?
People who sign up for Medigap early may be required to pay a higher monthly premium and higher deductibles based on health history.
Seniors can buy a Medigap plan when they turn 65 and sign up for Medicare part B. In some states, seniors are able to buy Medigap before they turn 65 if they have been allowed to sign up for Medicare due to a disability. However, people who sign up for Medigap early may be required to pay a higher monthly premium and higher deductibles based on health history. In some states, people are not allowed to sign up for Medigap early at all.
When a senior turns 65 years old and signs up for Medicare part B, he or she enters an initial open enrollment period when it is possible to sign up for any plan. During this initial open enrollment period, the senior cannot be denied coverage, and the insurance company cannot charge a higher rate based on the health history of the insured. During this time, Medigap is a “guaranteed issue.”
After this enrollment period, there are specific times when a person may be allowed to sign up for Medigap. This happens if the senior’s Medicare Advantage plan shuts down, if the senior’s retiree plan shuts down, if the senior moves out of the Medicare Advantage plan’s service area, if the senior’s Medigap plan shuts down, or if the senior had initially signed up for Medicare Advantage but instead decided to switch back to traditional Medicare within a year of signing up.
How Do You Compare Medigap Policies?
It’s important to understand that Medigap policies of a certain type are all the same no matter what insurance company is offering the plan. In other words, Medigap part F offers the same benefits no matter what insurance company is providing the coverage. Shopping around can result in a better premium rate but cannot change the details of the policy.
Looking at a plan comparison chart can make it easier for seniors to decide which type of insurance is right for their needs. To make the selection process easier, narrow the possible choices to three or four acceptable types of Medigap plans, then contact various insurance companies and get quotes for each type of plan.
When comparing Medigap policies, ask yourself:
- What is my health history?
- How often in the last several years have I been in the hospital?
- What are my chronic conditions?
- What are my expectations for the state of my health in the future?
- What does my doctor expect for my future health?
- What makes up the majority of my medical bills?
- How much money am I able to spend on medical care each year?
- How much can I afford to spend on my health on a monthly basis?
Having the answers to these questions will help you determine your priorities for a health insurance plan. Once you’ve selected a couple of different insurance plans, it’s time to compare costs can be compared. It’s also helpful to check out the Weiss ratings of each policy. Weiss provides an objective view of Medigap premiums.
What are Some Future Policy Changes That Could Affect Medigap?
The only people who will not be able to shop for new coverage are people who are newly eligible for Medicare.
One of the biggest changes to affect Medigap in recent years is the elimination of plans F and C. Since Plan F is the most popular plan on the market, this is a change that could affect millions. The details of this change are complicated. Plan F and C will be eliminated in 2020.
Seniors who have already signed up for Medigap Plan F in 2020 will be able to retain their coverage, and seniors who were already eligible for Medicare before the 2020 mark will be able to retain their coverage or continue to shop for new coverage if they choose to do so. The only people who will not be able to shop for new coverage are people who are newly eligible for Medicare.
People who are eligible for Medicare before 2020 but who do not plan to sign up for Medicare until after they have left their employer can still sign up for Medigap part F or C, even if this happens after 2020.
Other Medigap plans will remain on the market for Medicare-eligible seniors, including the popular G and N plans, which offer nearly all the same coverages as Medigap part F. Medigap part G will begin to offer a high-deductible plan, as plan F does now.
When Should I Consider Medigap Insurance?
Medigap protects seniors from high deductibles, co-pays and out of pocket expenses. Medigap also covers some medical expenses that Medicare doesn’t cover at all, like the cost of medical treatment overseas. Because these expenses can become unwieldy or unrealistic for seniors to manage, Medigap insurance is a smart investment for people who can afford it. Medigap is a smart investment even if the senior is currently in good health.
While monthly payments can seem like a waste if the insured is not currently seeing the doctor or going to the hospital, many seniors rely on health insurance coverage more as they age. Once the six month enrollment period is up, signing up for Medigap may become too expensive or impossible later on, which can put the insured in a bad position. Remember, too, that if you need prescription drug coverage, you can’t rely on Medigap insurance to help you, as Medigap policies don’t usually cover prescription drugs.
How Do I Shop For Medigap Insurance?
Shopping for Medicare supplement insurance can be a challenge. To start, find out what kind of Medigap insurance is available in your service area. Not all states require insurance companies to offer any Medigap plans at all. If Medigap is offered, then Plan A must be available. If a plan besides Plan A is offered, then Plans C and F must also be offered. However, other plans may not be available in your service area. The Medicare website provides a search feature that can help people find policies in their area.
Once you know which plans are available, decide which plans are right for you. When you’ve narrowed the choices down to the right plans, contact insurance companies that offer plans to find out how much each plan will cost. Shopping around is critical—and the best time to do this is during the six months after turning 65 and after signing up for Medicare Plan B.
Making the Decision
People who believe that they are in good health and who do not need Medigap may consider signing up for Medigap regardless.
Medigap is a smart way to cover out of pocket expenses after signing up for Medicare parts A and B. However, Medigap isn’t for everyone. Not everyone can afford Medigap, and not everyone needs Medigap. A careful analysis should be made before deciding whether or not to sign up for Medigap. People who believe that they are in good health and who do not need Medigap may consider signing up for Medigap regardless. Medigap can be cancelled at any time by simply calling the insurance company, but you can’t enroll in Medigap at just any time.
So keep in mind that once Medigap has been cancelled, the insured may need a medical assessment in order to reinstate the policy. This could mean paying much higher prices, or being denied coverage entirely. Seniors who want to ensure that they have the maximum protection from medical expenses in their later years should strongly consider signing up for Medigap coverage.