Medicare provides coverage for hospital stays, doctor visits, and other medical services for people aged 65 and older and those with certain disabilities. While this federally funded health insurance program offers broad coverage, it does not cover all expenses.
Medigap may offer a solution for Medicare beneficiaries with limited financial resources who cannot afford out-of-pocket healthcare costs. Medigap is a type of health insurance policy sold by private health insurance providers to help pay for some of the costs that Original Medicare does not cover, such as copays, coinsurance, and deductibles.
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Does Medigap Actually Help Low-Income Individuals?
Yes, Medigap could help lower the out-of-pocket costs for individuals who need financial assistance with healthcare expenses but do not qualify for Medicaid. If you’re already eligible for Medicare and Medicaid and are receiving free or low-cost health insurance, Medigap is probably unnecessary.
However, if you’re struggling to pay your out-of-pocket hospital bills and want more comprehensive healthcare coverage than Original Medicare offers, Medigap policies may be worth looking into. While these policies come with monthly premiums, they could save you thousands in deductibles, copayments, and coinsurance costs.
What to Consider When Evaluating Medigap for Low-Income Individuals
Here are a few key things to consider if you’re thinking about signing up for Medigap.
Advantages
- Lower out-of-pocket costs: Under Medicare, you’re typically responsible for 20% of a covered healthcare service cost after paying your deductible. With Medigap, you could significantly reduce, if not eliminate, these expenses.
- Guaranteed 6-month enrollment period: The Medigap Open Enrollment Period starts the first month after you enroll in Medicare Part B if you’re 65 or older. Federal law requires Medigap companies to offer policies at the best available rate regardless of your health condition.
- Some plans cover healthcare needs abroad: Healthcare emergencies when abroad can be expensive, but Medicare typically will not cover them. Thankfully, some Medigap policies could help you shoulder up to $50,000 of foreign emergency healthcare expenses.
Disadvantages
- Monthly premium costs: The average monthly premium of a Medigap plan can range from $50 to over $300. On top of paying for Part B premiums, having supplemental insurance can be unaffordable for individuals with limited income.
- You may not be able to sign up if you miss the enrollment period: Once you miss the six-month initial enrollment period for Medigap, insurance companies can deny you coverage if you do not meet their underwriting requirements or charge you higher rates.
- It does not cover prescription drugs: Neither Medigap nor Original Medicare covers prescription drugs. You should consider Medicare Part D if you need financial assistance with prescription drug expenses.
Healthcare Needs
If you have limited financial resources and suffer from chronic health conditions that require lots of medical attention, Medigap’s assistance with out-of-pocket costs for services like hospitalization and doctor’s visits could greatly reduce your financial burden. Medigap coverage can range from basic to extensive, so consider your healthcare needs before choosing the most suitable policy type.
Financial Feasibility
Generally, Medigap plans with more comprehensive coverage cost more. Before choosing a plan, ensure it aligns with your budget and lifestyle and will not cause unnecessary financial strain. Shop around and get quotes from multiple insurance providers before making your final decision.
Alternatives to Medigap
Here are two alternatives to consider if you believe Medigap may not be the best fit:
Medicare Advantage
Medicare Advantage Plans are policies offered by Medicare-approved private health insurance companies. While all Medicare Advantage Plans must at least provide the same level of coverage as Medicare Part A and Part B, they often also cover vision, dental, and prescription drugs. Medicare Advantage Plans must have a maximum out-of-pocket limit, so they could make financial sense if you require frequent medical care.
Medicaid
Medicaid is a state-sponsored healthcare benefit program that helps low-income individuals afford healthcare. However, Medicaid has stricter eligibility requirements than Medigap. To be eligible, you must be a U.S. citizen and permanent resident of the state in which you seek benefits. You must also qualify as low-income. Find out if you’re eligible for Medicaid in your state based on income.
All in All
While Medigap helps fill in the cost gaps in your Original Medicare coverage and makes healthcare more affordable, it may not be helpful nor necessary if you’re already eligible for Medicaid. However, if your income is not low enough for Medicaid but you’re struggling with hospital bills, Medigap or Medicare Advantage are both options to lower your healthcare expenses. If you need help navigating your options, seek free counseling and advice from your local State Health Insurance Assistance Program.