While Original Medicare covers many health insurance costs, it doesn’t cover everything. One way to cover these gaps is by enrolling in Medicare Supplement Insurance, also known as Medigap.
About 50% of Medicare beneficiaries added Medigap coverage for cost assistance. If you think you may need financial assistance with copayments, coinsurance, or deductibles, or if you frequently visit the doctor or utilize medical services, Medigap may be an option you should consider.
Learn more about Medigap and if it would be a valuable add-on coverage for you.
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Is Medigap Worth It?
For many people, this coverage could save them money, even though it is an additional cost. For example, if you have recurring healthcare needs, like seeing a doctor every week or getting regular lab tests, Original Medicare might foot the bill for these services. However, you may still need to pay a 20% coinsurance for every visit. Over time, these costs out-of-pocket costs can add up.
Enrolling in Medigap means that these types of out-of-pocket costs might be covered. Even though a Medigap insurance policy would cost a monthly premium, you may still save money overall because you wouldn’t be paying additional fees for every medical treatment. In particular, this makes Medigap coverage particularly valuable for people who frequently go to the doctor. However, if you see a doctor once a year, then you may find Medigap isn’t worth the additional cost.
When to Consider a Medicare Supplement
- You need regular hospitalization. If you have a chronic medical condition that puts you in and out of the hospital, then Medigap can help you afford this care. While Original Medicare does cover hospitalization expenses for up to 60 days, you have to pay a $1,632 deductible before coverage kicks in. With some Medigap plans, you can skip paying that deductible and instead get coverage right away.
- You’re having trouble affording your medical services. Medicare usually covers 80% of covered services after you hit your deductible, meaning you would pay 20% out of pocket. These costs can add up if you’re frequently seeing doctors and receiving medical care. Medigap monthly premiums vary based on your age, health, and location. As an example, they range from about $80 to $800 in Pennsylvania. If you’re spending more than this a month on medical bills, then enrolling in Medigap could save you money.
- You’ve been diagnosed with a serious disease. If you’ve been diagnosed with a chronic condition like cancer or kidney disease, these can require a lot of ongoing treatment. Medigap insurance can help with costs so you do not deplete your savings, especially if you’re unable to keep working through treatment.
When to Pass On Medicare Supplement
- You are in good health and don’t use a lot of Medicare benefits. If you do not have a lot of health problems and see your doctor a couple of times a year, then you likely don’t need Medigap coverage. The cost of your monthly premium would likely be more than you’d save on medical services.
- You take a lot of prescription drugs. Unfortunately, Medigap plans aren’t allowed to provide prescription drug coverage. Instead, Medicare Part D plans cover that. If the majority of your medical expenses come from expensive medicines, Medigap is not a viable way to cut down on these costs.
- You have a spouse you also want to have coverage. Medigap plans cover 1 person, so you cannot include your spouse in your coverage. Instead, you would both have to have separate plans, and this may not be cost-efficient for some families.
- You are enrolled in Medicare Advantage. If you have a Medicare Advantage Plan that meets your needs, Medigap may not be worth it. This is because Medigap does not pair with Medicare Advantage, so beneficiaries would have to give up their Medicare Advantage Plan and switch back to Original Medicare before enrolling in Medigap.
What Costs Does Medigap Cover?
Medicare Supplement insurance plans are meant to supplement Original Medicare. That means you must have both Medicare Part A and Part B. It should also be noted that Medigap does not provide additional benefits, though some plans may help with overseas medical care costs.
Generally, your existing Original Medicare coverage pays the Medicare-approved amount for your medical bills, and then your Medigap plan covers the additional costs — the exact amount of coverage depends on the specific Medigap plan. Here’s a look at what exactly Medigap covers:
- Coinsurance: Coinsurance is what you pay for a certain procedure or hospital stay. For example, Medicare Part A charges you $408 coinsurance per day if you’re in a hospital for over 60 days. Medicare Part B, on the other hand, has 20% coinsurance, meaning you’d pay $20 if your doctor’s visit costs $100 total. If you have Medigap, your policy may cover these costs for you.
- Deductibles: A deductible is what you pay before coverage kicks in. Part A’s deductible is $1,632, and Part B’s is $240. Medigap coverage may cover your Part A deductible, but those newly eligible for Medigap cannot enroll in plans that cover Part B deductibles.
- Hospitalization: Medicare Part A covers up to 60 days of a hospital stay at 100%. After that, you could owe $408 per day for days 61 to 90 and $816 per day for days 91 to 150. And after 150 days, Medicare pays nothing. Medigap may cover these expenses.
- Durable Medical Equipment: Durable medical equipment includes things like blood sugar test strips, crutches, and walkers. Medicare usually pays 80% of the cost of these items, but Medigap may cover the remaining 20%.
- Lab Work: The good news is that Medicare Part B usually covers medically necessary diagnostic lab work at 100%. Still, if a test isn’t covered at 100%, Medigap may handle the remaining costs.
Medigap Plan Options
Benefits | Plan A | Plan B | Plan C | Plan D | Plan F | Plan G | Plan K | Plan L | Plan M | Plan N |
|---|---|---|---|---|---|---|---|---|---|---|
Part A coinsurance and hospital costs for up to 365 additional days after Medicare benefits are disbursed | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
Part B coinsurance or copayment | Yes | Yes | Yes | Yes | Yes | Yes | 50% | 75% | Yes | 100% coinsurance; but copays may still apply |
Part A hospice care coinsurance or copayment | Yes | Yes | Yes | Yes | Yes | Yes | 50% | 75% | Yes | Yes |
Part A deductible | Not covered | Yes | Yes | Yes | Yes | Yes | 50% | 75% | 50% | Yes |
Part B deductible | Not covered | Not covered | Yes | Not covered | Yes | Not covered | Not covered | Not covered | Not covered | Not covered |
Part B excess charge | Not covered | Not covered | Not covered | Not covered | Yes | 100% | Not covered | Not covered | Not covered | Not covered |
Out-of-pocket limit | N/A | N/A | N/A | N/A | N/A | N/A | $6,940 in 2023 | $3,470 in 2023 | N/A | N/A |
Blood (first three pints) | Yes | Yes | Yes | Yes | Yes | Yes | 50% | 75% | Yes | Yes |
Skilled nursing facility care coinsurance | Not covered | Not covered | Yes | Yes | Yes | Yes | 50% | 75% | Yes | Yes |
Foreign travel exchange up to plan limits | Not covered | Not covered | 80% | 80% | 80% | 80% | Not covered | Not covered | 80% | 80% |
Medigap plans are federally standardized, meaning they all must include the same basic benefits. Some policies can offer additional benefits, so make sure to read all details. Even though plans are sold by private insurance companies, they’re all labeled with a letter A through N that corresponds with the coverage amount.
Because new Medigap plans are no longer allowed to cover the Part B deductible, that means Plans C and F are no longer available. However, if you already have these plans, you can keep them.
Massachusetts, Minnesota, and Wisconsin have their own regulations when it comes to Medigap plans. Their plan names and benefits differ from the national standard.
Comparing Medigap Plans
When thinking about how to choose a Medigap plan, consider your anticipated healthcare needs. Some plans, such as Plans A and Plan B, don’t offer skilled nursing facility care coinsurance, so they might not work if you think you might be in and out of these facilities. Others, such as Plans K and L, have max out-of-pocket limits of $7,060 and $3,530, respectively, which might be too much for you to pay before all expenses are covered.
If you think you might need to use Medicare Part A a lot, you may also want a plan that covers your deductible at 100%. Plans A, K, L, and M do not.
How to Enroll in Medigap
You’re able to buy Medigap the first month you have Medicare Part B and are 65 or older. Even if you may be eligible for Medicare early because of a condition like End-Stage Renal Disease, you may not be eligible for a Medigap policy until you turn 65. Some states have created legislation requiring insurance companies to offer Medigap policies to people under 65, but there is no federal regulation on this.
Enrollment Periods
- Initial Enrollment Period: This initial enrollment period begins when you first have both Medicare Parts A and B. It lasts for 6 months, and is the most opportune time to enroll in Medigap. During your IEP, you would pay the same premium as someone in excellent health and all options in your area are available.
- Outside of Initial Enrollment Period: Outside of your IEP, you may enroll in Medigap at any time of the year. However, when it is no longer your IEP, Medigap insurers can use your age and health status to assess your eligibility as well as premium.
- Special Exceptions: Some people may be eligible for guaranteed issue rights, which is when a company is required to sell you a policy that covers all of your pre-existing health conditions without charging you more. You might be granted this if your Medicare Advantage plan is leaving Medicare or you lose your other Medigap coverage through no fault of your own.
Medigap vs. Medicare Advantage
While both plans are sold by private insurance companies, Medigap and Medicare Advantage are very different. While Medigap is meant to supplement the coverage of Original Medicare, Medicare Advantage replaces Original Medicare and goes a step beyond by providing additional benefits not covered by Original Medicare. For example, some Medicare Advantage Plans offer prescription drug coverage or vision and dental benefits.
You cannot have both Medigap and Medicare Advantage plans. When deciding what type of plan to go with, consider the following items:
- Budget: A Medigap plan may be cheaper than a Medicare Advantage plan, as it’s a supplementary plan.
- Health forecast: If you know you may have a lot of medical bills in your future, you might benefit from the additional coverages that a Medicare Advantage plan provides.
- Availability of network healthcare providers: Medigap is accepted everywhere Medicare is, but Medicare Advantage plans can restrict coverage to their preferred network of providers.
As an example, a person who knows they may need a lot of hospital stays over the coming year might choose Medigap coverage, as it offers more flexibility with what hospitals they can go to and might also cover a majority of their inpatient bills. However, a person with cancer who is taking expensive chemotherapy drugs might prefer a Medicare Advantage Plan, as these typically offer prescription drug coverage (while Original Medicare and Medigap do not).
All in All
Understanding whether Medigap is worth it depends on individual healthcare needs. It can be beneficial for those with frequent medical services, helping cover copayments, coinsurance, and deductibles. Factors to consider include regular hospitalization needs, affordability of medical services, and diagnoses of serious diseases. Conversely, if you are in good health or are enrolled in a Medicare Advantage Plan that you like, Medigap may not be the best option for you.