Medicare Supplement (Medigap) Insurance Plans Explained

A Medigap Supplement Insurance plan (also known as Medigap) is private health insurance designed to cover the out-of-pocket costs—like copayments and deductibles—left by Original Medicare (Parts A and B). 

Your Guide to Medigap Plans

While Original Medicare covers most basic healthcare needs, out-of-pocket expenses like deductibles, coinsurance, and copayments can add up. Let’s walk through what you need to know about Medigap plans and why they’re an important consideration for Medicare beneficiaries. 

The Gaps Left By Original Medicare Part A and B

Medigap plans can help cover out-of-pocket costs left by Original Medicare, such as:

• Deductibles: This is the amount you pay out-of-pocket for a covered service before Original Medicare will pay.

• Coinsurance: This is your share of costs for a covered service, given as a percentage (i.e., 20%), that you pay after you’ve met your deductible.

• Copayments: These are fixed out-of-pocket costs you pay for covered services after meeting your deductible. 

Understanding Standardized Medigap Plans (A through N)

Medicare Supplement Insurance plans are denoted by the letters A through N (plans C, E, F, H, I, and J are no longer sold). In most states, these policies have been standardized, meaning there is no difference in the benefits offered between insurers—the only difference between plans is the cost of the monthly premium. 

Each Medicare Supplement plan must at least cover a portion of the following basic benefits:

• Medicare Part A coinsurance costs up to an additional 365 days after Medicare benefits are exhausted

• Medicare Part B hospice care coinsurance and copayments

• Medicare Part B coinsurance or copayments

• The first three pints of blood used in a medical procedure

Massachusetts, Minnesota, and Wisconsin each have non-standardized Medigap plans that differ from the typical lettered plans available in other states. Massachusetts offers three plans, Minnesota has two, and Wisconsin has a unique structure with a Basic Plan and options for additional riders. Residents in these states should contact their State Health Insurance Assistance Program (SHIP) or Department of Insurance for specific information.

Medigap Plan Eligibility and Open Enrollment Period

In order to purchase a Medicare Supplement or Medigap policy, you have to be enrolled in Original Medicare (Medicare Part A and Medicare Part B). It’s important to be aware that you cannot be enrolled in both a Medicare Advantage plan and a Medicare Supplement plan. This is because Medicare Advantage Plans are intended to replace Original Medicare, while Medigap plans are meant to provide supplemental coverage for Original Medicare beneficiaries. Let’s go over the enrollment process for Medicare Supplement plans. 

When can I enroll in a Medigap plan?

You can enroll in a Medigap during the Medicare Supplement Open Enrollment Period, which begins on the first day of the month you turn 65 and lasts six months. During this time, you may buy any Medigap plan sold in your state, and your insurance company must accept your application regardless of any pre-existing health conditions. This is known as guaranteed issue, meaning you cannot be denied coverage or charged a higher premium due to your health status. 

Medigap Enrollment Outside of the Open Enrollment Period

If you attempt to enroll in a Medigap plan outside of your one-time, six-month Medicare Supplement Open Enrollment Period, you will be subject to medical underwriting. This may result in higher premiums or a denial of your application. 

Eligibility for Medicare Beneficiaries Under Age 65

Currently, there is no federal legislation guaranteeing Medigap enrollment for beneficiaries under 65. However, some states mandate access to certain plans for individuals under 65 who qualify for Medicare due to disability. Medicare.gov is a helpful resource for understanding Medigap eligibility requirements by state for qualifying beneficiaries under 65.

Looking at Popular Medigap Plans

The right Medigap supplement plan for you will depend on your unique needs. Let’s review some different plan options that may be available to you. 

Medigap Plan G and Comprehensive Coverage

Medigap Plan G is the most comprehensive Medicare Supplement plan, covering all out-of-pocket expenses not covered by Original Medicare, except for your Part B deductible.¹ Learn more about Medicare Supplement Plan G. 

Medigap Plan N and Cost Sharing

Medigap Plan N is a common choice among beneficiaries, covering about 10% of all Medigap members (making it the third most popular Medigap plan). It pays for 100% of Part B costs, except for a copayment of up to $20 for some office visits and a copayment of up to $50 for emergency room visits.¹ Plan N also does not cover Part B excess charges (charges that go beyond the Medicare-approved amount for a service).

Learn more about Medicare Supplement Plan N. 

High-Deductible Options for Lower Monthly Premium

Choosing a Medigap plan means weighing the trade-off between the monthly premium you’ll pay and the out-of-pocket costs your plan may cover. For example, some plans may have a higher monthly premium but offer broader coverage, while other plans may have less expensive premiums but come with additional costs, such as copayments or deductibles. 

Understanding Medigap Costs and Premium Pricing Methods

The cost of Medigap policies depends on a number of factors, such as the type of plan, the insurance company, your location, and your age. If you enroll in a Medicare Supplement plan, you will pay a monthly premium in addition to your Medicare Part B premium. The monthly premium varies among insurance companies, but the benefits of each standard plan are always the same. 

Factors That Influence the Cost of Your Monthly Medigap Premium

A range of factors affect the cost of your monthly Medigap premium, including:

• Which plan letter you choose

• The carrier that offers the plan

• Your location

• Whether any discounts apply

• The pricing method

The Three Standardized Ways Companies Price Medigap Premiums

Medigap plans may be priced in three different ways: community-rated, issue-age-rated, and attained-age-rated.

Can I save money by switching Medigap plans?

Yes, you can potentially save money by switching Medigap plans, most commonly by finding a different company that offers the exact same standardized plan (like Plan G) at a lower monthly premium. However, outside of your initial six-month Open Enrollment Period or a guaranteed issue event, an insurance company can deny your application or charge you more due to health issues, as most switches require medical underwriting. Therefore, you should always secure approval for the new plan before canceling your current Medigap policy to avoid a coverage gap.

Ready to enroll in a Medicare Supplement (Medigap) plan?

New to Medicare, on Medicare but recently moved, or lost your health insurance? A licensed insurance agent can walk you step-by-step through the process and help you find a Medigap plan that’s right for you.

Sources

1. https://www.medicare.gov/health-drug-plans/medigap/basics/compare-plan-benefits