Medigap is a health insurance plan that is sold by a private health insurance provider to supplement Medicare coverage. Medigap is also known as Medicare Supplement (or Supplemental) Insurance.
It helps you pay for health insurance expenses that Medicare does not cover. These are essentially “gaps” in Medicare coverage. Medigap’s name originated from the concept that its purpose is to provide health insurance coverage when Medicare does not.
Medigap Plans Explained
If you receive Original Medicare (Parts A and B) and also have a Medigap policy, Medicare will pay its portion of approved medical expenses first. Then the Medigap policy will pay its portion of medical-related expenses. A Medigap policy is very different from a Medicare Advantage Plan. A Medicare Advantage Plan offers Medicare coverage while a Medigap plan supplements the costs of original Medicare benefits.
In all but three states, Medigap plans are standardized by state and federal governments into 10 different plan types, labeled A through N. Each Medigap plan provides a combination of different benefit options, but all Medigap policies cover the same basic benefits. The more benefits a plan covers, typically the higher its premium will be. Massachusetts, Minnesota and Wisconsin are the three states that standardize Medigap policies differently. Keep in mind that Medigap policies are sold and administered through private insurers, not the federal government.
You’re eligible for Medigap if you’re eligible for and have obtained Medicare Part B. If you need supplemental coverage, it’s critical that you sign up for Medigap when you first become eligible. This is the 6-month initial eligibility window starting from when you first sign up for Part B. During the initial eligibility period, you can sign up for any Medigap policy in your state and pay the same premium as everyone else. In other words, you can’t be denied a Medigap policy based on health history or current medical conditions, and your premium rate is set based on plan, not health status.
Outside of your initial enrollment period, you’re not guaranteed a Medigap policy. So if you wait to sign up, you may not get a plan at all. And if you do find a Medigap plan outside of your initial eligibility window, your premiums will likely be much higher because insurance companies can then use medical underwriting to adjust the cost. Also, insurance companies are not federally required to sell Medigap policies to people under age 65, but some states have their own requirements regarding special circumstances. Check with your state to see if you can buy a plan if you meet one of these requirements.
Insurance That Isn’t Medigap
- Medicare Prescription Drug Plans
- Medicare Advantage Plans
- Employer or union Plans
- Long-term care insurance policies
- Veteran’s benefits
- Indian Health Services
What Does a Medigap Policy Cover?
Medigap insurance offers varying levels of coverage for copays and coinsurance related to Medicare-covered expenses, such as home healthcare, hospital stays, medical equipment, ambulances and doctor’s fees. Medigap policies usually do not cover long-term care, dental, vision, eyeglasses, hearing aids or private duty nursing. Important notes: Medigap policies cover coinsurance after the deductible has been met, and a Medigap policy only covers one person. If you’re looking for Medigap coverage for you and your spouse, separate policies will have to be purchased for each of you. All standardized Medigap policies are guaranteed renewable, even if you have health problems. This means that your insurance company cannot terminate your policy for any reason other than nonpayment.
Standardized Medigap policies provide the following coverage:
- Part A coinsurance and hospital costs, up to an additional 365 days after Medicare benefits are used up, are covered at a rate of 100 percent by all Medigap Plans (A-N).
- Part B coinsurance or copayments are covered at a rate of 100 percent by all Medigap Plans, with the exceptions of Plan K (covers only 50 percent) and Plan L (covers up to 75 Percent).
- Blood (first 3 pints) is covered at a rate of 100 percent by all Medigap Plans, with the exceptions of Plan K (covers only 50 percent) and Plan L (covers up to 75 percent).
- Part A hospice care coinsurance or copayments are covered at a rate of 100 percent by all Medigap Plans, with the exceptions of Plan K (covers only 50 percent) and Plan L (covers up to 75 percent).
- Skilled nursing facility coinsurance is not offered in Plan A and B. Plan K provides coverage at 50 percent and Plan L covers up to 75 percent. Remaining Plans C, D, F, G, M and N provide 100 percent coverage.
- Part A deductible is not covered under Plan A. Plan K covers 50 percent and Plan L covers up to 75 percent. All remaining plans offer 100 percent coverage.
- Part B deductible is only covered at 100 percent for Plan C and Plan F. The remaining plans do not offer coverage.
- Part B excess charges are only covered at 100 percent for Plan F and Plan G. The remaining plans do not offer coverage.
- Foreign travel exchange is not offered for Plans A, B, K, and L. All remaining plans are covered at 100 percent of the benefit amount.
- Out-of-pocket limit is only offered with Plan K and Plan L, and the limits change each year. In 2022, the out-of-pocket limit for Plan K is $6,620 and Plan L is $3,310. Once your yearly out-of-pocket limit is reached, and you have met your Part B deductible, Medigap pays 100 percent of the covered services for the remainder of the calendar year.
Reminders: A Medigap policy only covers one person. If you are seeking Medigap coverage for you and your spouse, separate policies will have to be purchased. All standardized Medigap policies are guaranteed renewable, even if you have health problems. This means that your insurance company cannot terminate your policy for any reason other than nonpayment.
If you reside in Massachusetts, Minnesota or Wisconsin, Medigap policies are standardized in a different way.
Medigap in Massachusetts
If you reside in Massachusetts, you have a guaranteed right to purchase a Medigap policy. Medigap policies in the state of Massachusetts provide basic coverage, in addition to 60 calendar days of inpatient care at a mental health hospital. They also provide yearly state-mandated benefits, such as annual Pap tests and mammograms.
Basic benefits in Massachusetts Medigap policies include coverage for the Part A coinsurance, with an additional 365 days after Medicare coverage ends; the Part B coinsurance; the first three pints of blood each year; and the Part A hospice copayment or coinsurance.
Massachusetts offers two Medigap plan types: Core and Supplement 1. Core covers basic benefits, plus 60 days of inpatient mental health care and state-mandated benefits. The Supplement 1 Plan provides coverage for basic benefits plus:
- Part A inpatient hospital deductibles
- Part A skilled nursing facility coinsurance
- Part B deductibles
- Foreign travel emergencies
- 120 days of inpatient days in a mental hospital
- State-mandated benefits
Medigap in Minnesota
If you reside in Minnesota, you have a guaranteed right to purchase a Medigap policy. Medigap Plans in Minnesota provides basic coverage, in addition to the following: Part A skilled nursing facilities, 80 percent of foreign travel emergencies, 50 percent outpatient mental health, Medicare-covered preventive care, 20 percent physical therapy and state-mandated benefits.
A Medigap policy in the state of Minnesota does not cover: Part A inpatient hospital deductibles, Part B deductible, usual and customary fee, and coverage while in a foreign country.
An Extended Basic Plan is offered in the state of Minnesota, which provides the following coverage:
- Part A inpatient hospital deductibles
- Part A skilled nursing facilities
- Part B deductibles
- 80 percent of foreign travel emergencies
- 50 percent of outpatient mental health
- 80 percent of usual and customary fees
- Medicare-covered preventive care
- 20 percent of physical therapy
- 80 percent of coverage while in a foreign country
- State-mandated benefits
Medigap in Wisconsin
You have a guaranteed right to purchase a Medigap policy if you reside in the state of Wisconsin. Wisconsin Medigap plans provide basic coverage, along with the following: Part A skilled nursing facility coinsurance, 175 days per lifetime mental health coverage, 40 home healthcare visits and state-mandated benefits.
Wisconsin offers cost sharing plans that provide the following benefits: 50 percent and 25 percent cost sharing plans that are similar to Plan K (50 percent) and Plan L (25 percent). A high-deductible plan of $2,000 is also offered. Insurance companies are permitted to offer the following additional riders to Medigap plans in Wisconsin:
- Part A deductibles
- Additional home healthcare
- Part B deductibles
- Part B excess charges
- Foreign travel emergencies
- 50 percent Part A deductibles
- Part B copayment coinsurance
Medicare recipients Under 65
Individuals who receive Social Security Disability Insurance (SSDI) and individuals who suffer from end-stage renal disease (ESRD) are offered Medicare coverage, regardless of their age. But it does not provide an automatic entitlement to purchase a Medigap policy. The individual would have to be at least 65 to be entitled to a Medigap policy.
Federal law does not require health insurance carriers to offer Medigap policies for individuals under the age of 65. If an insurance carrier decides to offer Medigap to someone below the age of 65, the health insurance provider may request a medical screening prior to granting coverage.
The following states require insurance companies to offer one type of Medigap policy for enrollees below the age of 65 who suffer from a disability or ESRD:
- New Hampshire
- New Jersey
- New York
- North Carolina
- South Dakota
Note: California and Massachusetts do not offer Medigap policies to ESRD patients under 65.
Medigap and Prescription Drug Coverage
Some Medigap policies that were purchased prior to 2006 may offer prescription drug coverage. However, after 2006, no Medigap policies provide prescription drug coverage. This is largely due to the implementation of Medicare Part D.
Medigap and Travel
Medigap policies may offer additional coverage for health-related services received outside of the United States. The standard Medigap plans C, D, F, G, M and N cover medical emergencies that occur while traveling outside of the U.S. These plans cover
80 percent of approved medical expenses that were obtained while traveling outside of the United States. There’s also a $250 annual deductible that must be met prior to payment for services.
Foreign emergency travel coverage is only provided during the first 60 days of travel and is not offered after 60 days. Foreign emergency travel coverage also has a lifetime limit of $50,000.
When Can I Buy a Medigap Plan?
The best time to purchase Medigap plan coverage is during your six-month Medigap Open Enrollment Period. During this six-month period, you’re allowed to buy any Medigap policy that’s sold in your state without having to worry about medical underwriting or paying a different premium from everyone else.
The six-month period starts start once you’re 65 and have enrolled in Medicare Part B. When the period is over, Medigap may not be offered again. If you are 65 years of age or older, Medigap begins once you have enrolled in Part B and cannot be changed.
If you are enrolled in group health coverage through your employer, you may want to consider enrolling in Part B. Employer-sponsored plans typically provide coverage that is similar to Medigap, so a Medigap policy may not be necessary.
If you apply for Medigap coverage outside open enrollment, there is no guarantee that you will be able to purchase a Medigap policy. Even if you find one, it will most likely be more expensive because insurers can use medical underwriting to charge higher premiums – especially for people with medical problems or preexisting conditions. Some states offer a Medicare Select policy if you are not able to acquire a Medigap policy.
Can I Buy Medigap Coverage through the Health Insurance Marketplace?
Medicare is not sold on the health insurance marketplaces that were created under the Affordable Care Act. It’s important to remember, too, that having Part B coverage alone isn’t enough to meet the minimum essential coverage requirements under the ACA. If you only have Part B, you may have to pay a fine for noncompliance. Medicare Part A counts as minimum essential coverage on its own.
How Much Does a Medigap Policy Cost?
The cost of a Medigap policy varies. There can be a huge difference in monthly premiums even if health insurance providers are offering the same type of coverage. Every insurance company sets its own insurance premiums.
Some insurance companies will set their premiums based on certain factors, such as age, sex, whether an enrollee is a smoker or not, and high-deductible or low-deductible options.
How Do I Purchase a Medigap Policy?
Medigap policies can be purchased from any health insurance provider that is licensed in your state to sell them. It’s illegal for any insurance provider to sell you a Medigap policy if you have a Medicare Medical Savings Account (MSA).