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Medicare supplement coverage, also known as a Medigap plan, helps beneficiaries enrolled in Original Medicare pay out-of-pocket health care expenses, like copays/coinsurance and deductibles.
Medicare supplement coverage, also known as a Medigap plan, helps beneficiaries enrolled in Original Medicare pay out-of-pocket health care expenses, like copays/coinsurance and deductibles. Original Medicare is comprised of Medicare Part A (hospital insurance) and Medicare Part B (doctors insurance). Medicare supplement insurance does not work with Medicare Part C, a private alternative to Original Medicare. It doesn’t cover costs related to Medicare Part D, which is Medicare prescription drug coverage. Here’s a deep dive into Medicare supplement or Medigap insurance.
Medicare, the federal health insurance program primarily for Americans 65 and over, is considered an entitlement program, but it’s not free. Beneficiaries face common out-of-pocket health care costs, like premiums, copays and deductibles. Medicare supplement or Medigap plans, sold by federally approved private health insurers, help beneficiaries pay their Medicare Part A and Medicare Part B bills. Some Medigap policies also cover expenses Original Medicare does not, notably medical care when you travel outside the U.S.
Learn the Medicare basics.
Medigap plans can cover:
Medigap plans generally do not cover:
Your specific coverage, however, varies, depending on what Medicare supplement plan you buy. There are ten standardized Medigap plans, identified in most states by letters: A, B, C, D, F, G, K, L, M and N. (Massachusetts, Minnesota and Wisconsin standardize their Medigap plans differently.) You can see the basic benefits each plan covers in the chart below.
|Medigap A||Medigap B||Medigap C||Medigap D||Medigap F||Medigap G||Medigap K||Medigap L||Medigap M||Medigap N|
|Part A hospital coinsurance||100%||100%||100%||100%||100%||100%||100%||100%||100%||100%|
|Part B copays||100%||100%||100%||100%||100%||100%||50%||75%||100%||100%|
|Part A hospice copays||100%||100%||100%||100%||100%||100%||50%||75%||100%||100%|
|Part B deductibles||0%||0%||100%||0%||100%||0%||0%||0%||0%||0%|
|Part A deductibles||0%||100%||100%||100%||100%||100%||50%||75%||50%||100%|
|Part B excess charge||0%||0%||0%||100%||100%||0%||0%||0%||0%|
|Foreign travel care costs||0%||0%||80%||80%||80%||80%||0%||0%||80%||80%|
|Skilled nursing home copays||0%||0%||100%||100%||100%||100%||50%||75%||100%||100%|
|Blood: 3 pints||100%||100%||100%||100%||100%||100%||50%||75%||100%||100%|
The cost of a Medicare supplement plan varies by age, state, type of plan and more. (Our partner Via Benefits can help you compare and buy Medicare supplemental plans in your area.) The estimates below illustrate just how different prices can be.
|Premium||$140 to $380|
|Deductible||$183 to $5,240|
|Copay||Contingent on your deductible|
Premium estimates are from a 2017 analysis by the American Association for Supplement Medicare Insurance. The wide range of deductibles stems from the fact that some Medigap plans do not cover all or some of Medicare Part A and Medicare Part B plan deductibles. You can also opt for a high-deductible — or HDHP — Medigap Plan, in which case you’ll pay $2,240 to $5,240 out-of-pocket before coverage starts.
In 2018, HowMuch.net used data from HealthView Services, a producer of health care cost-projection software, to show the cost of Medigap plans by state. Here's how much the average plan costs annually in each one.
As you can see, Massachusetts ($1,947), Nevada ($1,904) and Louisiana ($1,897) had the most expensive Medigap plans, while Hawaii ($1,310), New Mexico ($1,464), Iowa ($1,468) and Oregon ($1,468) had the cheapest Medigap plans.
The best Medigap plan varies by your needs, income and state offerings. Medigap Plan F is generally considered the most robust Medicare supplement insurance, since it covers the most out-of-pocket costs. However, it generally has the highest premiums, so depending on what insurers are charging in the area — and how much you can afford to spend on health insurance — it might not be your best option.
You shop for a Medicare supplement plan on the Medicare website and purchase one from the private insurer. Medigap plans are available all year round.
However, if you’re shopping outside of your Medigap open enrollment period, the insurer can deny you a policy or charge you a higher premium based on health conditions discovered during medical underwriting. They can’t do so during your 6-month Medigap open enrollment period — which is why that’s the best time to buy coverage. Your Medigap open enrollment period starts the month you turn 65 and enroll in Medicare Part B. (Note: This period is not the same as Medicare open enrollment, which is for Medicare beneficiaries looking to change health and prescription drug plans ahead of a new year. Medicare open enrollment is October 15 to December 7.)
You can also purchase Medigap without facing a medical underwriting penalty if you have what’s known as a guaranteed issue right. Usually, this right applies if you had health insurance, like, say, through an employer, and it changes in some way. You can also sometimes buy a Medigap policy at no risk of denial or extra-cost if you tried a Medicare Advantage Plan (Medicare Part C) and decided to drop the coverage.
No matter when you buy, Medigap policies usually begin the first of the month after you apply.
Learn more about applying for Medicare.
First, make sure you’re comparing apples to apples. Insurers can set Medigap premiums — your monthly cost for just having a plan — in three different ways.
Make sure you know what type of premium is being quoted in lieu of taking a price at face value.
Next, ask if you’re eligible for any discounts. Sometimes, women, non-smokers, spouses that both have plans or people with multiple policies can get a lower premium. You might also get a discount for paying premiums yearly or via electronic funds transfer.
Also, know your deductibles. Remember, some plans won’t pay or only pay part of your Original Medicare deductibles. (Learn more about the costs of Medicare.) A HDHP might have a separate deductible for foreign medical health care expenses.
Medicare Part C or Medicare Advantage plans are offered by government-approved private health insurers as an alternative to Original Medicare. They’re not meant to cover out-of-pocket expenses, like copays or deductibles, but they do often provide coverage that Original Medicare — and a Medigap policy — does not, like dental, vision, hearing and prescription drug coverage. As such, some Medicare beneficiaries opt for Medicare Advantage plan as a means to boost coverage and pare back expenses.
At the end of the day, you have to assess all of your costs and the amount of health care you expect to need to decide what Medicare plan(s) are right for you. However, if you opt for Medicare Part C, you can’t purchase a Medigap plan — unless you are canceling coverage.
Learn more about Medicare Part C.
Medigap plans no longer cover prescription drugs. If you are buying supplemental Medicare insurance, you will need creditable prescription drug coverage or you’ll face a penalty. Prescription drug coverage can come from an employer, union or Medicare prescription drug plan. If you’re buying Medigap insurance, you can’t get drug coverage through a Medicare Advantage plan, but you can purchase Medicare Part D, stand-alone prescription drug coverage offered by federally approved private insurers.
Learn more about Medicare Part D.
You can cancel a Medicare supplement plan anytime by calling your insurer. Keep in mind, if you drop your Medigap plan for another, you’re not guaranteed a new policy or a low premium unless you have guaranteed issue right or you’re still in your Medicare Supplement open enrollment window.