What is Medigap Insurance and Should You Buy It?

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What Is Medigap?

Medigap insurance, also known as Medicare Supplement (MS), is private insurance that is intended to help cover some of the health care costs Original Medicare doesn’t cover, including deductibles and copayments.

MS plans are not the same as a Medicare Advantage (MA) plans (Part C). Advantage plans bundle Part A and Part B together, acting as an alternative way to get the benefits of Original Medicare, whereas Medigap plans are supplements to Original Medicare and require you to already have coverage under Part A and Part B.

It may be difficult to understand the differences between MS plans and other types of health coverage. Here are some examples of plans that are not Medigap plans:

● MA plans
● Part D plans (prescription drug coverage)
● Medicaid
● Veterans’ benefits

Who can get coverage?

You must already have Part A and Part B coverage to be eligible for a Medigap plan. Part A and Part B are available to US citizens who meet one or more of the following criteria:

● Are 65 or older
● Have a disability
● Have end-stage renal disease (ESRD)

You can’t have both MS and MA coverage at the same time. If you enroll in Medigap while covered by an MA plan, you must cancel the Advantage plan before your Medigap coverage begins.

It is also illegal for anyone to sell you an MS plan if you have a Medicare Medical Savings Account (MSA) plan,1 a special type of MA plan that combines the Part C coverage with a special savings account that you can use to pay health care costs. If you already have an MS plan, you may still be able to join an MSA plan, but the MS plan may not cover any of the costs left over from the MSA plan.

Also note that federal law does not require that insurance companies sell Medigap policies to people under age 65, even if they qualify for Medicare because of a disability. Some states have laws that require insurance companies to sell MS plans to select people under 65, but rules for eligibility may still differ. Certain states offer plans only to those Medicare enrollees with qualifying disabilities, for example, and not to those with ESRD. Your State Insurance Department should be able to clarify the policies in your state.

These states require insurance companies to offer at least one kind of Medigap policy to people with Medicare under 65:
California* Maryland Oklahoma
Colorado Massachusetts Oregon
Connecticut Michigan Pennsylvania
Delaware Minnesota South Dakota
Florida Mississippi Tennessee
Georgia Missouri Texas
Hawaii New Hampshire Oklahoma
Illinois New Jersey Vermont*
Louisiana New York Wisconsin
Maine North Carolina

* A Medigap policy isn’t available to people with ESRD under 65.

Source: Medicare.gov

What does it cover?

Medigap helps pay for costs left over by Original Medicare. These are some examples of things an MS plan might cover:

● Copayments
● Coinsurance
● Deductibles
● Medical care outside the United States

Basically, with Medigap insurance, Medicare pays its portion of the health care services you receive, and then your Medigap plan covers all or part of your out-of-pocket costs for the service.

What does it not cover?

Medigap plans do not cover the following types of care:

● Long-term care, also called custodial care
● Vision care or eyeglasses
● Hearing aids
● Dental work
● Private nursing

Medigap plans are not allowed to cover prescription drugs as of January 1, 2006. For prescription drug coverage, you must enroll in a Part D Prescription Drug Plan.

How do I enroll?

Enrollment in Medigap plans is done through private insurers, and the plans that are available to you will vary by state. Once you find a plan you like, you’ll then have to enroll through the insurance company of your choice. This can often be done online.

When can I enroll?

The best time to enroll in Medigap coverage is during open enrollment. This is a six-month period that begins the month you turn 65 and enroll in Part B. During this time, you have guaranteed issue rights. This means that insurance companies cannot deny you a Medigap policy even if you have existing health conditions, and companies are not allowed to charge you more based on how much they think it will cost to cover you (a practice known as insurance underwriting).

After the open enrollment period ends, you can still apply for MS coverage, but there is no guarantee you’ll get it if you have pre-existing health conditions. If an insurance company does sell you a plan, it may also charge you more for it outside of open enrollment.

What does it cost?

Medigap premiums vary by state and plan. The nationwide average premium for the most popular type of Medigap coverage is between $159 and $236 per month.2 One thing most MS plans do have in common is that each gets your Part B claim information directly from Medicare and pays your doctor directly. Some also offer this service for Part A.

If you’re enrolled in Part A and Part B and you want help covering some of the leftover expenses like copayments or coinsurance, a Medigap policy could fit your needs. Just make sure you understand what is covered by the plan you’re considering and when you’re eligible for enrollment to avoid any issues.

1 Medicare.gov, “How Medicare MSA Plans Work with Other Coverage
2 Bankrate, “Medigap Plan F the Most Costly, Yet Popular

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