If you’re concerned about Medicare costs, a Medigap health insurance policy (also called Medigap Supplemental insurance or a Medicare Supplement insurance plan) helps pay the “gap” between what Original Medicare (Medicare Parts A and B) pays and what you pay out of your own pocket. You can get a Medicare Supplement policy through private insurance companies.
See Medicare Supplement plans
What you should know about Medigap
The Medigap policy you purchase must be clearly identified as “Medicare Supplement Insurance.” There are 10 different Medigap basic benefits options to choose from. Plans are labeled A, B, C, D, F, G, K, L, M, and N (Plans E, H, I, and J are no longer available). Plans with innovative benefits may be available and offer by a company.
You can get a Medicare Supplement insurance plan only if you already have Original Medicare. Medigap may help pay for out-of-pocket costs under Medicare Part A (hospital insurance) and Medicare Part B (medical insurance), but it does not cover Medicare Part C (Medicare Advantage plans), Medicare Part D (Prescription Drug Plans), or any other private health insurance, Medicaid, Veterans’ Administration benefits, or TRICARE.
Because Medigap policies are regulated by state and federal laws, the benefits for all the basic benefits options are generally the same regardless of insurer. The differences will be in the price, who administers the plan, and which of the 10 options the insurer chooses to offer. Choose a health insurer you trust, and shop around for the best prices.
Residents of certain states, including Massachusetts, Minnesota, Texas, and Wisconsin, also have the option to buy a Medicare SELECT policy. If you choose this type of Medicare Supplement insurance plan, then you will have to use a specific network of doctors and hospitals. See Plans
Open Enrollment Period for Medicare Supplement insurance plans
Your Medigap Open Enrollment Period begins the first day of the month in which you turn 65 and are covered under Medicare Part B. You have six months to enroll. If you are under 65, check with your state’s Social Security Administration to see if it offers additional open enrollment periods.
Be aware that Medigap plans supplement Original Medicare to fill in cost gaps. If you are considering a Medicare Advantage plan, you can’t use a Medigap plan in conjunction with a Medicare Advantage plan.
As long as you enroll during this six-month Medigap Open Enrollment Period, the insurance company cannot refuse to sell you a Medigap policy, charge you more because you have health problems, or make you wait for basic benefits to begin. However, you may have to wait up to six months for basic benefits of a pre-existing condition*. Original Medicare will still cover that health problem even if your Medicare Supplement insurance plan doesn’t cover your out-of-pocket costs.
If you enroll in a Medicare Supplement insurance plan outside of your Medigap Open Enrollment Period, the private insurance company may “underwrite” the plan. That means you may be subject to a physical, and the insurance company can refuse to sell you the plan or they can adjust your premium based on your health status.
If you enroll into a Medicare Advantage plan, you are not allowed to use and can’t be sold a Medigap policy. However, if you later return to Original Medicare, Parts A and B, within your first year of joining a Medicare Advantage plan, you may have a special right to sign up for a Medigap Supplement insurance plan. See Medicare Supplement plans
How insurance companies set Medigap premiums
There are three ways an insurance company can set Medigap premium rates:
- “Community-rated” (or “no-age-rated”) premiums are the same for everyone, regardless of age.
- “Issue-age-rated” (or “entry-age-rated”) premiums are based on your age when you first buy the policy. The sooner you enroll, the less you will pay.
- “Attained-age-rated” premiums are based on your current age, meaning it goes up as you grow older.
Other factors impacting the premium rates can include inflation, geography, medical underwriting (if you did not enroll when first eligible), and other discounts. You should check with each specific health insurer to see how it sets Medigap prices before you buy.
*Pre-existing conditions are generally health conditions that existed before the start of a policy. They may limit coverage, be excluded from coverage, or even prevent you from being approved for a policy; however, the exact definition and relevant limitations or exclusions of coverage will vary with each plan, so check a specific plan’s official plan documents to understand how that plan handles pre-existing conditions.