A guide to Medicare Supplement Insurance (Medigap): everything you need to know

If you have trouble paying for out-of-pocket Medicare expenses, you can get supplemental coverage.

Elissa

Elissa Suh

Published October 2, 2019

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KEY TAKEAWAYS

  • Medigap plans help pay for out-of-pocket costs like deductibles, copays, and coinsurance

  • You have to pay Medigap premiums, in addition to any premiums for Original Medicare

  • You need to enroll in Original Medicare (parts A and B) to buy a Medigap plan. Medicare Advantage Plan (Part C) enrollees cannot get Medigap

  • Since 2006, Medigap has had no prescription drug coverage, and it generally doesn’t include vision or dental care

Medicare is a federal health insurance program aimed at retirement age Americans. It helps make health coverage more affordable and less costly than private health insurance. Many people even get part of it premium-free. However, Medicare beneficiaries still have to pay for some costs of health care — like deductibles and coinsurance — on their own. Medicare Supplement Insurance, also known as a Medigap plan, can help cover these expenses.

Medigap insurance plans help people enrolled in Original Medicare pay out-of-pocket health insurance expenses, like copays, coinsurance, and deductibles. Original Medicare is comprised of Medicare Part A and Medicare Part B. Part A is insurance for hospital care and Part B covers doctor and outpatient insurance. If you are enrolled in Medicare Part C, a private alternative to Original Medicare, then you cannot get a Medigap policy.

Medicare Supplement Insurance is offered by private insurance companies and comes with its own costs, like a premium and deductible. Roughly 24% of Medicare beneficiaries also had a Medigap policy in 2018, according to the American Association for Medicare Supplement Insurance.

Medigap plans typically don’t include extra coverage, like vision and dental care, or prescription drug coverage (unless you got your Medigap plan before 2006). For prescription drug coverage, you’ll need Medicare Part D.

In this article:

Medigap vs. Medicare Advantage plans (Medicare Part C)

Medicare Advantage plans (Medicare Part C) are offered by government-approved private insurance companies. They may provide coverage that Original Medicare does not — like dental, vision, hearing and prescription drug coverage. As such, some Medicare beneficiaries opt for Medicare Part C as a means to boost health coverage and potentially pare back expenses.

Medigap plans are also only offered through private health insurers, but they generally don’t offer the extra health coverage like Part C plans do. Instead, they are only meant to help pay the costs incurred by medical services covered under Medicare Part A and Part B .

See the chart for differences

FeatureMedigapMedicare Part C
ProviderPrivate health insurancePrivate health insurance
Enrollment requirementEnroll in Original MedicareEnroll in Original Medicare
Extra coverageTypically noneDental, vision
SavingsHelps cover out-of-pocket expensesDepends on plan
Network choiceAny provider who accepts MedicareVaries, may be restricted depending on your plan
CostPremium, deductible, possible copayPremiums, deductibles, copays
Additional costsPremium for Part A (if you have them), B, DPart B premium

If you choose a Medicare Advantage plan, you cannot purchase a Medigap plan. In fact, it is illegal for the insurance company to try to sell you one. (If you decide within a year of signing up for Part C that you’d prefer to like to revert back to parts A and B and drop C, you will be able to get Medigap. Contact your insurer to disenroll.)

To decide what Medicare plans are right for you, you have to assess all of your costs and the amount of health care you expect you’ll need. Because both Advantage plans and Supplement Insurance come from private insurers, there are many plans with a wide range of costs and coverage options. Compare them closely or talk to a licensed agent to help you.

Learn more about Medicare Part C.

When to buy a Medigap policy

Medigap has its own enrollment period, which is dependent on your circumstances. It is six months long and begins when you enroll in Medicare Part B.

If you turn 65 and decide to enroll in Medicare Part A and B (Original Medicare), you will have six months from your enrollment date to buy a Medigap plan.

If you choose not to get Part B — because you are delaying coverage until you retire and lose employer-sponsored coverage — then your Medigap open enrollment period will begin once you enroll in Part B after you leave your job.

The Medigap enrollment period is not the same as Medicare open enrollment period. You can read more about Medicare open enrollment here.

While you can cancel a Medicare supplement plan anytime by calling your insurer, keep in mind you might not be able to get a new Medigap policy if it is outside of Medigap open enrollment. In fact, many states do not allow you to buy supplemental Medicare coverage outside of the enrollment period.

Medigap and pre-existing conditions

Having a pre-existing condition does not affect your Original Medicare coverage, but it can affect Medigap plans, specifically if you are trying to buy a plan outside of the enrollment period.

If you are able to shop for a Medigap outside the enrollment window, you will have to go through medical underwriting and the insurer will look at your medical history. This means the Medigap insurer can turn you down for the pre-existing condition or make you wait six months before your coverage starts if they do approve you.

What Medigap does and does not cover

Medicare covers out-of-pocket costs. These include deductibles (how much you must spend on your own before insurance starts to cover the costs), coinsurance, and copays.

Covered by Medigap

  • Medicare Part A deductible
  • Medicare Part A coinsurance and hospital costs
  • Medicare Part B deductibles _(Starting in 2020, new Medigap plans won’t cover the Part B deductible)
  • Medicare Part B copays or coinsurance
  • Medicare Part B excess charges (assessed when health care providers are legally permitted to charge above the Medicare-approved amount)
  • First three pints of blood transfusion
  • Medical care while traveling abroad (Not covered by Medicare alone)

Not covered by Medigap

Medigap insurance policies typically do not cover the following:

  • Anything related to Medicare Advantage plans (Medicare Part C)
  • Prescription drugs
  • Vision care or glasses
  • Dental care
  • Hearing aids
  • Private-duty nursing
  • Long-term care

Types of Medigap plans

Your specific coverage 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.

BenefitABCDFGKLMN
Part A deductible 100%100%100%100%100%50%75%50%100%
Part A coinsurance100%100%100%100%100%100%100%100%100%100%
Part A hospice care100%100%100%100%100%100%50%75%100%100%
Part B deductible 100% 100%
Part B copay/coinsurance100%100%100%100%100%50%50%100%100%*
Part B excess charges 100%100%
Blood (3 pints)100%100%100%100%100%100%50%75%100%100%
Skilled nursing facility coinsurance 100%100%100%100%50%75%50%
Foreign travel emergency 80%80%80%80% 80%80%
Out-of-pocket limit $5,560$2,780
This Medigap information pertains to 2019 Medigap plans.

Starting in January 2020, if you’re newly eligible for Medicare you will not be able to sign up for Medigap plan C or F.

Medigap Costs

Medigap plans come with their own costs, including a premium and a deductible. These monthly payments are in addition to any premiums you pay for Original Medicare (parts A and B) and Medicare prescription drug coverage (Part D).

The cost of a Medicare supplement plan varies widely by age, state, type of plan and the insurer. One insurance company might charge much more for essentially the same coverage as another company.

The Medigap monthly premium might range from $21 to $500 a month. (We’ll look at premium costs by state later.) The deductible ranges from $185 to $2,300 for a high-deductible health plan (HDHP).

When you compare Medicare Supplement insurance policies, make sure you’re also comparing the same Medigap plan types, as seen in the chart above, across providers. For example, compare Plan L from one Medigap insurance company with Plan L from another.

Medigap Plan F is generally considered the most robust Medicare supplement insurance, since it covers the most out-of-pocket costs. However, it also tends to have the highest premiums, too, so depending on what health insurers are charging in your area — and how much you can afford to spend on health insurance — it might not be your best option. This plan will not be available starting in 2020.

How Medigap policies are priced

When choosing a Medigap policy, it is important to know how the price has been set. Knowing how the rate is set will tell you if the price will increase in the future.

Medigap insurers set premiums in three different ways.

  1. Community-rated (no-age-rated) premiums: The same for every policyholder. They might rise due to external factors, like inflation, but not because of your age.
  2. Issue-age-rated (entry age-rated) premiums: Based on the age you are when you buy — lower premiums for people who buy a policy at a younger age. Rates might rise due to external factors, too, but they won’t rise alongside your age either.
  3. Attained-age-rated premiums are based on your current age. They’re lower for younger buyers, and will increase as you age.

If the insurance company uses medical underwriting, it will examine your medical history and adjust the premiums accordingly.

Some states might have a specific kind of Medigap plan called Medicare SELECT, which has lower premiums but some restrictions on its coverage. High-deductible health plan options, if offered, might be able to get you lower premiums as well.

Also ask the insurer 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.

Medigap plan costs by state

According to data from the Centers for Medicare and Medicaid (CMS), here is the average monthly cost of all Medigap plans in each state in 2019:

StateLow-End AverageHigh-End Average
Alabama$84$143
Alaska$93$175
Arizona$93$247
Arkansas$95$247
California$88$205
Colorado$96$202
Connecticut$164$442
Delaware$94$212
Florida$173$365
Georgia$138$365
HawaiiInformation UnavailableInformation Unavailable
Idaho$103$221
Illinois$88$217
Indiana$58$960
Iowa$85$189
Kansas$92$194
Kentucky$85$152
Louisiana$91$207
Maine$128$234
Maryland$111$249
Massachusetts$132$214
Michigan$111$257
Minnesota$117$244
Mississippi$113$184
Missouri$113$226
Montana$81$191
Nebraska$86$198
Nevada$96$204
New Hampshire$129$233
New Jersey$129$218
New Mexico$90$229
New York$167$347
North Carolina$91$195
North Dakota$84$199
Ohio$86$168
Oklahoma$74$174
Oregon$81$161
Pennsylvania$94$200
Rhode Island$93$221
South Carolina$105$262
South Dakota$88$180
Tennessee$92$211
Texas$99$269
Utah$82$176
Vermont$126$198
Virginia$88$182
Washington$135$222
Washington DC$99$165
West Virginia$100$207
Wisconsin$77$182
Wyoming$84$171