What Is Medigap Insurance?

Also called Medicare Supplement Insurance, Medigap is health insurance coverage provided by private companies designed to pay for costs not covered by original Medicare. Depending on which plan you get, these costs can include some of what you would pay for copayments, coinsurance, and deductibles, as well as services original Medicare doesn't cover, such as travel outside the U.S.

Key Takeaways

  • Medigap insurance is purchased from private insurance companies to pay for costs not covered by original Medicare.
  • The are 11 standardized Medigap plans approved by the federal government.
  • Medigap plans do not cover the costs of prescription drugs; for that you need to get a Medicare Prescription Drug Plan (Part D).

Understanding Medigap Insurance

Original Medicare, defined as parts A, B, and D, will not cover all expenses associated with an illness. Under original Medicare you would pay 20% of the cost of doctor visits and medical procedures regardless of the amount, a significant portion of your prescription medications, and at least $1,200 if admitted to a hospital.

Medigap covers all or a portion of those extra charges depending on the coverage type. Although private insurance companies offer the coverage, the federal government requires companies to offer standardized policies. Your 11 choices are plans A, B, C, D, F, F-High Deductible, G, K, L, M and N.

However, for those who become newly eligible for Medicare in 2020 and after, plans C, F, and F-High Deductible will no longer be offered. That’s because these plans cover the Medicare Part B deductible, the amount you have to pay before coverage kicks in, which is $185 in 2019. In 2015 Congress passed the Medicare Access and CHIP Reauthorization Act (MACRA), which disallowed such coverage. The intention was to make people pay at least a little bit for health care to prevent them from running straight to the doctor for every scrape, scratch, or sniffle. Fortunately, those who are already enrolled in plans C, F, and F-High Deductible will be able to keep them going forward.

Medigap insurance does not work with a Medicare Advantage Plan (Part C).

What Medigap Covers

According to Medicare.gov, “You pay the private insurance company a monthly premium for your Medigap policy. You pay this monthly premium in addition to the monthly Part B premium that you pay to Medicare. A Medigap policy only covers one person. If you and your spouse both want Medigap coverage, you’ll each have to buy separate policies. You can buy a Medigap policy from any insurance company that’s licensed in your state to sell one.

“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. Some Medigap policies sold in the past cover prescription drugs. However, Medigap policies sold after January 1, 2006 aren’t allowed to include prescription drug coverage. If you want prescription drug coverage, you can join a Medicare Prescription Drug Plan (Part D).”

Medigap policies generally don’t cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing.

“The best time to buy a Medigap policy is during your six-month Medigap open enrollment period. During that time you can buy any Medigap policy sold in your state, even if you have health problems. This period automatically starts the month you’re 65 and are enrolled in Medicare Part B (Medical Insurance). After this enrollment period, you may not be able to buy a Medigap policy. If you’re able to buy one, it may cost more,” says Medicare.gov.

Shopping for Medigap coverage is easier because you only have to compare price and the suitability of the company. A warning: Medigap coverage does not work with a Medicare Advantage Plan (Part C). Indeed, if you have a Medicare Advantage Plan (Part C), it is illegal for someone to sell you Medigap coverage. However, if you have Medicare Advantage and are unhappy with the plan, you can switch back to original Medicare within the first 12 months, at which point you can buy Medigap coverage or possibly even return to the Medigap coverage you used to have before switching to Medicare Advantage.