Medicare Supplement insurance, commonly known as Medigap, is a health insurance policy designed to supplement Original Medicare coverage. Medigap is not a replacement for Medicare; paying into it provides payments for most of the out-of-pocket costs associated with Medicare, such as premiums and copays.
While Medigap provides additional coverage for individuals with Original Medicare, many misconceptions about Medigap prevent individuals from taking advantage of its benefits. In this article, we’ll tackle the most common misconceptions about Medigap so you can better understand your healthcare coverage options… and maybe even save some money along the way.
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Myth #1: Medicare Supplement plans are the same as Medicare Advantage plans.
Many confuse Medicare Supplement plans with Medicare Advantage plans; however, they are fundamentally different.
This confusion is because, like Medigap, private insurance companies offer Medicare Advantage plans. However, the two programs differ in that one is used as primary insurance (Medicare Advantage), while the other provides supplementary coverage (Medigap). However, keep in mind that Medigap plans are not available to those who have Medicare Advantage.
While Medigap does not replace the coverage offered by Original Medicare, the two forms of coverage are designed to work together. For example, imagine slipping, twisting your ankle, and going to the ER. You will present your Medigap card along with your Medicare card. Not all secondary claims automatically cross over from Medicare, and occasionally the provider will need to bill the secondary plan.
When it comes time to settle the bill for your treatment, your Medigap plan may cover the cost of the deductible, coinsurance, premiums, or other out-of-pocket costs your insurance does not pay for.
Myth #2: Medicare Supplement plans cover everything that Original Medicare does not cover, including long-term care, dental, vision, and hearing services.
While Medigap plans help pay for some out-of-pocket expenses that Original Medicare does not cover, they do not offer additional benefits such as long-term care, dental, vision, or hearing services. Medigap is designed to work alongside Original Medicare to provide coverage for basic healthcare services but does not add coverage to Original Medicare.
Myth #3: Medicare Supplement plans are only available during the Annual Enrollment Period.
The Initial Enrollment Period (IEP) is a 6-month period that begins during the month when you turn 65 and enroll in Medicare Part B. You can enroll in any Medigap plan offered in your state without undergoing medical underwriting during this period. After the IEP, you may still enroll in a Medigap plan but may be subject to medical underwriting and have different choices.
Myth #4: Medicare Supplement plans are too expensive for most people.
Medigap plans may typically have higher monthly premiums than Medicare Advantage plans, but they can provide cost savings in the long run. Approximately 14 million Medicare beneficiaries were enrolled in a Medigap plan in 2020, accounting for about 23% of all Medicare beneficiaries. Further, 93% of Medigap policyholders were satisfied with their coverage.
It is also worth noting that Medigap premiums may vary by state, insurer, and plan, so it is essential to shop around and compare plans to find one that fits your budget and needs.
Myth #5: Medicare Supplement plans have network restrictions like Medicare Advantage plans.
Medigap plans offer nationwide coverage, providing greater flexibility and choice than many Medicare Advantage plans. With Medigap plans, you can see any doctor or specialist who accepts Medicare, regardless of where you live or travel. This is especially important for individuals who plan to travel out of state or have multiple residences.
Myth #6: You can only enroll in a Medicare Supplement plan if you have a pre-existing condition.
During the IEP, you can enroll in any Medigap plan offered in your state, regardless of your health status. After the IEP, you may still enroll in a Medigap plan, but you may be subject to medical underwriting, which means the insurance company may charge you a higher premium or deny coverage, depending on your health status. Further, your cost for Medicare Supplement may vary depending on your age and health history, while Medicare Advantage is standardized.
Medigap helps cover the out-of-pocket costs that Original Medicare does not cover, such as deductibles, coinsurance, and copayments. Medigap policies are standardized and labeled A through N, each with distinct benefits. For example, Medigap Plan F is the most comprehensive plan, covering all listed out-of-pocket costs, while Plan G covers everything except the Medicare Part B deductible. Medigap plans cost more per month but have a lower cap on medical expenses compared to Medicare Advantage plans.
Myth #7: Medicare Supplement plans are only available through the government.
Medigap plans are offered by private insurance companies, not the government. However, they are regulated by Medicare and must meet specific standards set by the federal government. The benefits offered by each Medigap plan are standardized and the same for all insurance companies offering the plan. This means that the benefits you receive with Plan F from one insurance company are the same as those from another. Premiums may vary, however, so it’s crucial to shop around.
Myth #8: Medicare Supplement plans are challenging to understand and navigate.
While it may seem overwhelming to choose a Medigap plan, resources are available to help you navigate the process. Medicare.gov offers a Medigap policy search tool that allows you to compare plans and premiums in your area. Additionally, insurance companies and independent brokers can help you understand the benefits and costs of each plan. Researching and shopping around is essential for finding an appropriate plan that meets your needs and budget.
Myth #9: Medicare Supplement plans require a lot of paperwork and bureaucracy.
While some paperwork is inevitable when enrolling in a Medigap plan, the process is generally straightforward. During the IEP, you can enroll in a Medigap plan without medical underwriting, so you do not need to provide any medical information. After the IEP, you may need to answer health questions to enroll in a Medigap plan, but the process is typically uncomplicated.
Myth #10: Medicare Supplement plans are never worthwhile.
Medigap plans can help limit out-of-pocket costs associated with healthcare. Medigap plans sometimes have higher monthly premiums than Medicare Advantage plans. However, the advantages outweigh the drawbacks for many Medicare recipients who prioritize nationwide coverage, reduced out-of-pocket healthcare costs, and greater flexibility.