Sorting Through the Medigap Plan Alphabet Soup
Medigap plans, also known as Medicare supplement plans or policies, can provide important medical coverage over and above the basic benefits available under Medicare parts A and B.
Depending on the plan and your individual circumstances, Medigap insurance can be a valuable asset in helping you access needed medical services while protecting your financial well-being.
If you have Original Medicare and a Medigap policy, here's what happens:
- Medicare will pay its share of the Medicare-approved amount for covered health care costs.
- Then, your Medigap insurance company pays its share.
Any standardized Medigap policy is guaranteed renewable even if you have health problems. This means the insurance company can't cancel your Medigap policy as long as you pay the premium.
To purchase Medigap coverage, you must be enrolled in Medicare Part A and Part B.
There are 11 standard Medigap plans available, labeled A through N (although it skips some letters and two plans (F and G) are no longer open to those who are newly eligible for Medicare on or after Jan. 1, 2020).
Medicare plans A through D and M and N provide more comprehensive coverage. They all cover the following:
- Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up.
- Part B coinsurance or copayment.
- Blood (first three pints).
- Part A hospice care coinsurance or copayment.
- Part A deductible (all but plan A, and plan M pays 50%).
- Medical services abroad (all plans except for A and B pay 80% of costs up to policy limits).
Medigap plans K and L provide more limited coverage, though at a lower premium, but they cap out-of-pocket expenses ($6,620 for plan K and $3,310 for plan L in 2022).
For these plans, after you meet your out-of-pocket yearly limit and your yearly Part B deductible, the Medigap plan pays 100% of covered services for the rest of the calendar year.
Here's what they cover:
- Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up.
- Part B coinsurance or copayment (plan K pays 50% and L pays 75%).
- Blood (plan K pays 50% and L pays 75% for first three pints).
- Part A hospice care coinsurance or copayment (plan K pays 50% and L pays 75%).
- Part A deductible (plan K pays 50% and L pays 75%).
- They do not cover medical costs incurred abroad.
Medigap vs. Medicare Advantage (Medicare Part C)
Medicare Part C, also known as Medicare Advantage, is similar to Medigap coverage in that it provides supplemental coverage over and above Medicare Part A (hospital insurance) and Part B (physicians, lab fees and durable medical equipment).
Medicare Advantage provides access to Medicare benefits via a network of managed care providers.
If you have a Medicare Advantage plan and you are happy with it, you do not need a Medigap plan. You should not own both a Medicare Advantage plan and a Medigap policy.
Prescription drug coverage
Medigap plans do not provide coverage for prescription drugs. If you want or need prescription drug coverage through Medicare, ask us about purchasing Part D coverage, or consider a Medicare Advantage plan that includes it.
To avoid future penalties, it's best to enroll in Part D coverage when you first become eligible for Medicare.
Open enrollment
If you purchase Medigap coverage when you are first eligible for Medicare, you are guaranteed eligibility to buy any Medigap plan sold in your state, at the best rates available, regardless of your medical condition or history. If you miss this window and apply later, you could be turned down, or you may have to pay a higher premium for your plan.
For most individuals, the best course of action is to enroll in Part B as soon as you are eligible, to avoid late enrollment penalties. Once you are enrolled in Part B, arrange your Medigap insurance.
Cost
Premiums vary depending on the insurance company. If you are enrolled in a Medigap plan, you also have to pay your Medicare Part B premium, in addition to your Part D premium.
For more information, give us a call.