What is Medigap?

Because original Medicare coverage has limitations, many people purchase supplemental insurance policies that are specifically designed to cover some of the gaps. These supplemental insurance policies, called “Medigap” policies, are sold by private health insurance companies, not the federal government. In general, you will not need a Medigap policy if your Medicare coverage is through a managed care plan (Medicare Advantage) or if you are qualified for Medicaid because you have low income; your managed care plan or Medicaid will generally fill the gaps in Medicare coverage.

Note that:

• You must have Medicare Part A and B in order to buy a Medigap policy.
• A Medigap policy only covers one person. Spouses will need to buy separate Medigap policies.
• The monthly premium you pay to the insurance company for your Medigap policy is in addition to the monthly Part B premium you pay to Medicare.

What services are covered?

The federal government generally requires that only 10 kinds of plans (Plans A through D, Plans F and G, and Plans K through N) can be offered as Medigap plans; these plans must be clearly identified as “Medicare Supplemental Insurance.” All plans must cover these services:

• Part A coinsurance costs up to 365 extra days of hospital care after Medicare benefits are used up
• Part B coinsurance or co-payment (Plan K covers 50 percent and Plan L covers 75 percent)
• The first three pints of blood (Plan K covers 50 percent and Plan L covers 75 percent)
• Part A hospice care coinsurance or co-payment (Plan K covers 50 percent and Plan L covers 75 percent)

The Plan A Medigap policy will cover only the above expenses. Other plans offer Plan A benefits plus some combination of these additional benefits:

• Full or partial coverage of your Part A deductible ($1,288 for each inpatient hospital stay in 2016)
• Full coverage of your Part B deductible ($166 in 2016)
• Full or partial coverage of the daily co-payment requirement for the 21st to 100th day of skilled nursing facility care ($161 per day in 2016)
• Medically necessary emergency care during the first two months of each trip outside the US, after you pay a $250 deductible (up to plan limits)
• Medicare Part B excess charges
• Medicare preventive care Part B coinsurance costs
• Full coverage of Medicare Part A and Medicare Part B coinsurance, co-payments, and deductibles after out-of-pocket maximum has been reached

Medigap Plans: Benefits Offered

*Plan F also offers a high-deductible plan with a deductible of $2,180.

**Plan N pays 100 percent of Part B coinsurance except up to a $20 co-payment for office visits and up to $50 for emergency room visits.

All plans may not be offered in your state, yet all are standardized and certified by the U.S. Department of Health and Human Services so that each plan provides exactly the same kind of coverage no matter what state you live in (except for Massachusetts, Minnesota, and Wisconsin, which have their own standardized plans).

Caution: This chart shows plans and benefits available for new Medigap policies. If you currently have Medigap insurance that was purchased before June 1, 2010, policy benefits may be different, or you may have a plan that is no longer sold (Plans E, H, I, or J). If so, you can keep that plan as long as you continue to pay the premiums, and plan benefits won’t change.

What consumer safeguards are available?

The federal government has mandated that several consumer safeguards be required in all Medigap plans:

• There must be what is called a “free-look” provision, permitting you to get a full refund of any money you paid if you decide to cancel the policy within a certain time period, usually 30 days. The specific time period may actually be longer in your state.
• The policy must be guaranteed renewable, unless you don’t pay your premiums or if you make false statements on your application.
• If you purchase Medigap insurance within six months of enrolling in Part B (your open enrollment period), you cannot be denied coverage, regardless of any illnesses or medical conditions you may have, although you may have to wait up to a maximum of six months to get coverage of a pre-existing condition. Pre-existing conditions are any illnesses you had before signing on to an insurance plan. However, if you had at least six months of continuous prior creditable coverage (you didn’t have a break in coverage for more than 63 days), your new policy cannot restrict or deny payment for pre-existing conditions.
• An insurance company cannot sell you a policy that substantially duplicates any existing coverage you have, including Medicare, or sell you more than one Medigap policy.
• An insurance company cannot claim a policy is a Medigap policy if it duplicates Medicare coverage.
• If an insurance company offers a plan that looks like a Medigap policy but does not conform to one of the standardized plans, there must be a clear disclaimer that it is not a Medigap policy.

In addition, most regulation of insurance is actually done on the state level, and there may be additional consumer safeguards in your state.

What is Medicare SELECT?

Medicare SELECT is offered in some states as a managed care Medigap plan that provides full coverage only if you use the plan’s network of health care providers. These policies have lower premiums than the Medigap plans that do not restrict your choice of provider.

Can you use your employer plan as your Medigap?

If you plan to keep working past age 65, you may choose to keep your employer-provided health insurance as well as sign up for Medicare. Since Part A coverage is free, you may want to sign up for it when you reach age 65. However, you may want to wait to enroll in Medicare Part B until your employer coverage ends, because once you enroll in Part B, your open enrollment period for Medigap starts. If you don’t buy a Medigap policy within six months, you may be denied coverage later or charged a higher premium.

If you’re covered by an employer-sponsored plan after you retire, your employer’s plan may cover costs that Medicare doesn’t, so you may not need to purchase a Medigap policy. If you have any questions about your coverage, talk to your employer’s benefits coordinator.