Medigap insurance is Medicare’s terminology for private insurance that covers the gaps between your traditional Medicare benefits and what you must pay out of pocket. These gaps include:
- Medicare Part A Coinsurance & Hospital Costs
- Medicare Part A Skilled Nursing Facility Coinsurance
- Medicare Part A Deductible
- Medicare Part A Hospice Care Coinsurance or Copayment
- Medicare Part B Deductible (annual)
- Medicare Part B Coinsurance or Copayment
- Medicare Part B Excess Charges
- Blood (first 3 pints)
- Foreign Travel Emergency
Don’t worry if you’re not familiar with all of the Medicare “Parts”. For now, the most important thing to understand is that traditional Medicare only covers about 80% of your major medical costs. The rest you must pay out-of-pocket or cover with additional insurance. That’s what Medigap insurance is all about.
Better known as Medicare supplement insurance, a Medigap policy works with Medicare and gives you the freedom to choose your own doctor. Plus, once you’re covered with a Medigap policy, the insurer can never cancel your insurance due to your health or the claims you make.
What Do Medicare Supplement Plans Cover?
The nice thing about Medigap is that all plans are standardized. There are 10 lettered plans (A through N). Each plan offers a different level of coverage on the 9 gaps in traditional Medicare. Medicare supplement insurance companies can offer any of the lettered plans they want and set their rates (monthly premiums), but they can’t change the benefits or offer any extras.
The most popular plans are Medicare Plan F, Plan G, and Plan N. As of 1 January 2020, Medigap Plan F can no longer be issued to new policyholders, leaving Medigap Plan G as the best plan option. Many people consider Plan G the best Medigap plan because it covers all of the gaps in Medicare, with the exception of the Medicare Part B annual deductible.
For a quick look at the standardized plan options, and what each plan covers, check out our Medicare supplement plans comparison chart here (opens in a new browser tab). To have a look at the plans in your area, try our Medigap Plan Finder tool. It offers an easy way to find and compare Medigap plans so you can find the best Medicare supplement for your needs.
When is the Medigap Open Enrollment Period?
Unlike Medicare Advantage, there isn’t an annual open enrollment period for Medigap. However, you do have a one-time individual enrollment period during which you cannot be turned down for any reason. During this short window of time, you have guaranteed issue rights.
Your individual open enrollment period is a six-month window that starts on the effective date of your Medicare Part B coverage, or when you turn age 65, whichever is later. During this six-month period, the insurance company you choose to provide your Medigap policy can’t deny coverage for pre-existing health conditions, and they can’t charge you more than others based on your health. This is a significant benefit for anyone with one or more chronic health conditions.
If you are still working, and want to delay enrolling in Medicare Part B because you have coverage through your employer’s group health plan, don’t worry. In this case, your guaranteed issue rights enrollment period will begin when you enroll in Medicare Part B.
Choosing Coverage: How to Compare Medigap Plans
In every state there are a couple of dozen insurance carriers that offer Medigap policies, so how do you choose the best one? At first, it might seem overwhelming, but the standardization of plans actually makes it quite simple.
The most important first step is to carefully self-evaluate your own personal health and financial situation. Are you a super healthy and active Baby Boomer with no family history of serious health conditions later in life? Or, do you have a chronic condition that could progress to something more serious as you get older? Taking a tough look at your health now, and as you age, will help you decide the amount of coverage you need.
If your monthly budget isn’t a concern, then buy a Medigap Plan G and let your worries be over. With a Plan G, your only out-of-pocket expense will be the Part B deductible.
If your financial situation isn’t that fortunate, and you need to keep an eye on your budget, then it evaluates where you can most afford to take some risk. For example, Medicare Plan N offers most of the same coverage as Plan G, but it does not cover your Part B excess charges, and you’ll make a small copay when you see your doctor (up to $20) or use the emergency room (up to $50). If you’re super healthy, this is a small financial risk that can get you a lower monthly premium.
Need help figuring out your coverage needs? Call 1-855-266-4865 and let a HealthPlanOne agent assist you. There’s no obligation.
Once you figure out the plan you need to get the coverage you need, remember this. All plans are the same no matter which company you choose. That means you can focus on just three things:
- Rate increase history
- Finance Strength
Finding a Medicare supplement insurance company that offers a super-low monthly premium is great, but make sure they also have a history of low rate increases. In most cases, your insurance premium will increase over time due to inflation and the rising cost of healthcare. This is expected. What isn’t expected are huge jumps in cost. So, be sure to ask your agent to provide the rate increase history with your quotes.
The quotes you receive should also show the financial rating of each insurance company. These are important grades. Insurance companies are financial institutions and their financial outlook matters. There are plenty of options, so we suggest a carrier with an A- or better grade from A.M. Best or Standard and Poor’s (S&P).
Choosing a Medigap policy is all about choosing which Medigap plan you want first. That’s because the benefits you get from AARP’s Plan G are identical to Humana’s Plan G, and every other insurance company, too. When it comes to choosing an insurance company, for the most part, it’s all about the price and rate increase histories of the different insurance carriers offering the plan you choose.
Frequently Asked Questions about Medigap
What is Part F of Medicare?
That’s a trick question because Part F does not exist. Medicare “Parts” and “Plans” are often confused. Medicare itself has four parts (A, B, C, and D). However private insurance that works with Medicare has plans. That’s the easiest way to remember the difference between parts and plans.
Medigap Plan F, sometimes called Medicare Plan F, is a Medigap plan that covers all deductibles and co-insurance in Medicare Part A and Medicare Part B (aka, “Original Medicare”). Because it covers all of the gaps in traditional Medicare, it is said to offer first-dollar coverage. In other words, with Plan F you’ll never pull your wallet out to pay a dime on Medicare-covered healthcare services.
Is Plan F Going Away?
Yes. To the dismay of many, Plan F is no longer available to new policyholders. That’s because, as of 1 January 2020, Congress no longer allows Medigap policies to offer first-dollar coverage. As a result, Medigap Plan G is the best policy you can buy now.
Is Medicare Plan G Better Than Plan F?
After Plan F, Medicare Plan G has the most coverage a Medicare supplement policy can offer. The difference between the two plans is minimal. In fact, Plan G works just like Plan F except you pay the annual Part B deductible each.
The reason people want to know if it is better is, in most cases, it has a lower premium than Plan F. So when you factor in the annual deductible, the overall cost of Plan G is less. That’s what makes Medigap Plan G better for many beneficiaries.
What is the difference between Medigap Plan and G?
The only difference is that you pay the annual Part B deductible that we mentioned above. Otherwise, they work exactly the same.
What is High Deductible Medicare Plan G
Medicare Plan G High Deductible is the replacement for the high deductible Plan F policy. With the high deductible version of Plan G, you get all of the same coverage that comes with every Medigap Plan G, but the coverage does not kick in until the annual deductible is met. In 2020 the deductible is $2,340. For some people, this plan is an alternative to Plan K and Plan L, which are cost-sharing plans.
Medicare Plan N vs. Plan G: Which Plan is Better?
Medigap Plan N is one of the new Medicare supplements. Although it has only been around since 2010, it’s really beginning to gain popularity with Baby Boomers aging into Medicare. The reasons for this are simple:
- People previously covered by an employer group health plan are more accustomed to making a copay when they see their doctor; and
- Most Baby Boomers are healthier and more active than previous generations.
Medicare Plan N is a good way to save money on monthly premiums if you are healthy, active, and don’t have a family history of chronic health issues. If you’re considering Plan N as an option, be sure to factor in copays and excess charges, as these costs will be on your side of the ledger.
Is Medicare supplement insurance and Medigap the same thing?
Yes. Medicare supplements, supplemental Medigap insurance, and Medigap are all the same thing. Medigap is the term Medicare coined when the government program was created in 1965. However, Medicare supplement insurance is the preferred terminology by the private insurance industry.
What is the average cost of supplemental insurance for Medicare?
Medicare supplement insurance costs vary from location to location (and age) just like auto insurance. Plans in the Midwest are more affordable than plans in California and Florida. The best way to get the exact rates for plans in your area is to call your insurance agent. If you don’t have an agent yet, call 1-855-266-4865 and let a HealthPlanOne agent assist you. There’s no obligation, and they’re contracted with all of the top insurance carriers.
Are Medicare supplement plans worth it?
This is an important question to ask. Let’s answer it by asking the question differently. Can you afford to pay the deductibles, coinsurance, and copayments in traditional Medicare without additional insurance? For most people, the answer is no.
If you can’t afford the monthly premium of a Medigap plan (premiums start around $100 per month in most areas), then you have two choices:
- Qualify for Medicaid, Veterans benefits with the VA, or TRICARE for Life; or
- Enroll in a Medicare Advantage plan.
These are the only other viable options available to a Medigap plan.
Without a Medigap plan, a single short stay in the hospital will come with a bill for $1,408. That’s the 2020 Medicare Part A hospital deductible, and you pay it with every benefit period. Plus, there are your Medicare Part B costs, including coinsurance every time you see your doctor, including while you’re in the hospital. There’s simply no escaping these costs.
For most beneficiaries, the answer is yes, a Medicare supplement plan is worth every penny.
What is the difference between Medigap and Medicare Advantage?
As discussed immediately above, Medigap and Medicare Advantage are alternative choices for covering the gaps in Medicare. However, exactly how these two private insurance policies cover the costs is very different.
To highlight just how different Medigap and Medicare Advantage are, you first need to understand that there are no standardized plans in the Medicare Advantage system. With Medicare Advantage, Medicare simply says that the insurance carrier must cover the basics offered with Medicare Part A and Part B, but they don’t say how the benefits must be covered. This fundamental fact is what makes Medicare Advantage so confusing. It’s impossible to get an apples-to-apples comparison.
Here’s the other big difference. With Medigap, you pay most of your costs upfront when you pay your monthly premiums. With Medicare Advantage, you pay most of your costs when you use healthcare services. This is where most people with Medicare Advantage are caught off guard.
Here’s a simple example. With traditional Medicare, there’s a hospital inpatient coinsurance for each benefit period (e.g., you start a new benefit period each time you are admitted but if you are readmitted within 30 days for the same issue it’s the same benefit period). For 2020 that coinsurance is $1,408. All Medigap plans cover this cost. However, most Medicare Advantage plans charge you a copayment for the first 3 to 5 days, averaging about $300 per day. So, if you’re hospitalized for a week and have a Medigap plan, your Medicare Part A coinsurance is covered. With a Medicare Advantage plan, you can expect a bill for $900 or more.
Do Medigap Plans have deductibles and copays?
All Medigap plans except Plan F have one or more deductibles. These are actually Medicare deductibles that are not covered by Medigap. For example, Medicare Plan G covers everything except the annual Medicare Part B deductible. This is the amount you pay to see your doctor until the deductible amount is met. The deductibles adjust a bit each year with inflation.
Most Medigap plans cover some or all of your inpatient and outpatient copays under Medicare. Medigap Plan N is an example of a plan that does not pay 100% of your copays. With Plan N you pay a copay of up to $20 for doctor visits and up to $50 for emergency room visits. In trade for these shared costs, your monthly premium is lower.
Can I change Medicare supplement plans anytime?
Yes. However, here’s something important to remember. Unlike Medicare Advantage, which has an annual election period (what Medicare calls the open enrollment period), Medicare supplements do not. You can try to get into a Medicare supplement plan anytime you want, but you only have guaranteed issue right when you are first eligible.
For this reason, most experts recommend getting the best Medigap plan can when you first qualify for benefits. If you later find a plan you want at a good rate, and you’re healthy enough to pass medical underwriting with flying colors, then you can make a switch.
Get an Expert with Options on Your Side
If you still have questions about Medigap plans and the right plan for you, it’s time to call the professionals at HealthPlanOne. With the most insurance carrier options available under a single agency, they are sure to have the right option for you. Call 1-855-266-4865 and let a HealthPlanOne agent assist you.
Frequently Asked Questions About Medigap Insurance