Medicare is a nationwide health insurance program for individuals aged 65 and over and certain disabled individuals. The basic Medicare benefit package (termed “original Medicare” in this report) provides broad protection against the costs of many health care services. However, Medicare beneficiaries may still have significant additional costs, including copayments, coinsurance, deductibles, and the full cost of services that are not covered by Medicare. In 2009, about 21% of Medicare beneficiaries purchased the private supplemental insurance known as Medigap to fill some of the cost gaps left by original Medicare.
All Medigap plans cover some percentage of Medicare’s cost-sharing. Some plans offer additions to these basics, including various combinations of greater coverage of Medicare cost sharing, and care associated with foreign travel emergencies. The most popular plans are the most comprehensive, and cover all deductibles, copayments, and coinsurance not covered by Medicare. Medigap generally does not cover medical treatments not covered by Medicare, although it does extend coverage for certain covered services, such as coverage for additional hospital days beyond the Medicare benefit limit. Medigap is financed through beneficiary payments to private insurance firms.
- Federal law requires that Medigap insurers observe many consumer protections. Consumer protections are especially strong during open enrollment, which is a six month period that begins for most individuals during the month they turn 65. During this period, individuals are protected against insurers refusing to sell them any Medigap policy that the insurer offers,
- insurers setting premiums based on the individual’s health, and
- insurers imposing waiting times on the start of the policy, other than a maximum of a six-month waiting period for preexisting conditions.
Following the open-enrollment period, beneficiaries have other rights in limited situations, such as when they move to a different state. Guaranteed issue (or the right to buy a plan, to have the plan’s premium not depend on health status, and in some cases to have the plan start coverage of preexisting conditions immediately) is one such right. The right of guaranteed renewability is available in a wide variety of situations, and genetic discrimination is forbidden. Moreover, Medigap insurers must pay out at least 65% (and sometimes 75%) of total premiums as claims to the beneficiaries.
Medigap plans sold to people new to Medicare can no longer cover the Part B deductible. Because of this, Plans C and F are no longer available to people new to Medicare on or after January 1, 2020. However, if you were eligible for Medicare before January 1, 2020, but not yet enrolled, you may be able to buy one of these plans that cover the Part B deductible (Plan C or F). If you already have or were covered by Plan C or F (or the Plan F high deductible version) before January 1, 2020, you can keep your plan.
9 things to know about Medigap policies
- You must have Medicare Part A and Part B.
- A Medigap policy is different from a Medicare Advantage Plan. Those plans are ways to get Medicare benefits, while a Medigap policy only supplements your Original Medicare benefits.
- You pay the private insurance company a monthly premium for your Medigap policy. You pay this monthly premium in addition to the monthly Part B premium that you pay to Medicare.
- A Medigap policy only covers one person. If you and your spouse both want Medigap coverage, you’ll each have to buy separate policies.
- You can buy a Medigap policy from any insurance company that’s licensed in your state to sell one.
- It’s important to compare Medigap policies since the costs can vary between plans offered by different companies for exactly the same coverage, and may go up as you get older. Some states limit Medigap premium costs.
- Any standardized Medigap policy is guaranteed renewable even if you have health problems. This means the insurance company can’t cancel your Medigap policy as long as you pay the premium.
- Medigap policies can no longer be sold with drug coverage, but if you have an older Medigap policy that was sold with drug coverage (before January 1, 2006), you can keep it. You may choose to join a separate Medicare Prescription Drug Plan (Part D). because most Medigap drug coverage isn’t creditable prescription drug coverage, and you may pay more if you join a drug plan later. If you buy Medigap and a Medicare drug plan from the same company, you may need to make 2 separate premium payments. Contact the company to find out how to pay your premiums.
- It’s illegal for anyone to sell you a Medigap policy if you have a Medicare Advantage Plan, unless you’re switching back to Original Medicare.
Compare Medigap Plans
| Medigap Benefits | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Plan A | Plan B | Plan C | Plan D | Plan F* | Plan G* | Plan K |
Plan L |
Plan M | Plan N | |
| Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up | Y | Y | Y | Y | Y | Y | Y | Y | Y | Y |
| Part B coinsurance or copayment | Y | Y | Y | Y | Y | Y | 50% | 75% | Y | *** |
| Blood (first 3 pints) | Y | Y | Y | Y | Y | Y | 50% | 75% | Y | Y |
| Part A hospice care coinsurance or copayment | Y | Y | Y | Y | Y | Y | 50% | 75% | Y | Y |
| Skilled nursing facility care coinsurance | N | N | Y | Y | Y | Y | 50% | 75% | Y | Y |
| Part A deductible | N | Y | Y | Y | Y | Y | 50% | 75% | 50% | Y |
| Part B deductible | N | N | Y | N | Y | N | N | N | N | N |
| Part B excess charge | N | N | N | N | Y | Y | N | N | N | N |
| Foreign travel exchange (up to plan limits) | N | N | 80% | 80% | 80% | 80% | N | N | 80% | 80% |
| Out-of-pocket limit** | N/A | N/A | N/A | N/A | N/A | N/A |
$6,620 in 2022 |
$3,310 in 2022 |
N/A | N/A |
