Medigap plans are sold by private companies. The cost for each plan varies depending on the plan provider and coverage.
In this article, we discuss the different plans Medigap offers and compare coverage. We also look at how to enroll, and the costs.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare supplement insurance plans are also known as Medigap. The policies help fill the ‘gaps’ in original Medicare coverage, including out-of-pocket costs such as copays, deductibles, and coinsurance.
Medigap plans are offered by private insurance companies. There are 10 different plans, identified by letters, ranging from A to N.
Each plan with the same letter must offer the same benefits and can also offer additional benefits such as coverage when a person travels outside the U.S. Every plan provider must offer Medigap Plan A as a minimum.
To qualify for a Medigap policy a person must have original Medicare (Part A and Part B). Most Medigap plans have a premium, and as long as a person pays the premium, the policy is guaranteed to renew.
Although every private insurance company must offer Medigap Plan A, each company can decide which other Medigap policies to offer in each state.
In addition, Medigap plans offered in Massachusetts, Minnesota, or Wisconsin are standardized differently.
The chart below compares the basic coverage provided by the ten plans:
|Benefits||Plan A||Plan B||Plan C||Plan D||Plan F||Plan G||Plan K||Plan L||Plan M||Plan N|
|Part A deductible||not covered||100%||100%||100%||100%||100%||50%||75%||50%||100%|
|Part A coinsurance and hospital costs||100%||100%||100%||100%||100%||100%||100%||100%||100%||100%|
|Part A coinsurance or copayment for hospice||100%||100%||100%||100%||100%||100%||50%||75%||100%||100%|
|Part A coinsurance for skilled nursing facility care||not covered||not covered||100%||100%||100%||100%||50%||75%||100%||100%|
|Part B deductible||not covered||not covered||100%||not covered||100%||not covered||not covered||not covered||not covered||not covered|
|Part B coinsurance or copayment||100%||100%||100%||100%||100%||100%||50%||75%||100%||100%|
|Part B excess charge||not covered||not covered||not covered||not covered||100%||100%||not covered||not covered||not covered||not covered|
|Blood, first 3 pints||100%||100%||100%||100%||100%||100%||50%||75%||100%||100%|
|Foriegn travel exchange||not covered||not covered||80%||80%||80%||80%||not covered||not covered||80%||80%|
|Out-of-pocket limit||not applicable||not applicable||not applicable||not applicable||not applicable||not applicable||$5,880||$2,940||not applicable||not applicable|
In addition to the chart details, a person should note that plans F and G offer a high-deductible plan in some states. While Plan G is available to new members after January 1, 2020, plans C and F are not.
In addition, plans K and L pay 100% of covered services after a person meets the deductible and the plan out-of-pocket yearly limit, and Plan N pays 100% of Part B coinsurance except for $20 copayment for office visits and $50 copayment for some emergency room visits.
People are eligible to enroll in a Medigap policy when they are first eligible for Medicare. The Medigap open enrollment period (OEP) begins in the month a person turns 65 and gets Medicare Part B.
During their OEP, a person can enroll in a Medigap policy even if they have preexisting medical conditions. However, after the OEP has passed, a person may not be able to get a policy or it may cost more because a Medigap plan provider can then use a medical underwriter to evaluate a person’s health.
A medical underwriter gives the company information to decide if they should offer a policy and how much to charge. Before offering a Medigap policy, the plan provider may ask a person to take a physical examination or give more information about their health.
Switching between Medigap plans
After enrolling in a Medigap plan, a person may later want to switch their policy. Reasons may include:
- A person’s situation may change so they no longer require the benefits in the policy.
- A person may need more benefits than offered in their current plan.
- A person may want to change the insurance company.
- A person may want a policy that costs less.
In most cases, the only time a person can change policies is if they have guaranteed issue rights, or they are still in the 6-month Medigap OEP. Guaranteed issue rights mean that, under specific circumstances, a person has the right to get a Medigap policy. Private companies must offer certain policies and cover preexisting health conditions.
A person may also get Medicare SELECT if the plan is offered in their state. After they have enrolled in a SELECT policy, a person can switch to a basic Medigap policy within 12 months.
Medigap premiums and other costs are determined by the private companies offering the plans. Each policy in the identified Medigap letter plan must offer the same benefits.
Each plan will give a cost range for the monthly premium. Depending on the letter Medigap plan, it may also show coverage for the Medicare Part A deductible and Medicare Part B premium, copays, and coinsurance.
Plan details may also include coverage options for:
- skilled nursing facilities
- Part A deductible
- Part B deductible
- Part B excess charges
- foreign travel emergency
A person can use this online tool to find a Medigap policy in their area, and contact information for each plan provider. They can also contact their local state health insurance assistance program center, or their state insurance department.
How do companies set their plan costs?
Companies can use one of three methods to set the cost of the premium for their policies.
- Community pricing: every person in the community is charged the same premium, regardless of the person’s age. Premiums may change due to inflation or other factors, but not because of a person’s age.
- Attained age pricing: based on a person’s current age the premiums for attained age pricing increase as a person gets older.
- Issue age pricing: based on a person’s age when they get the policy, the premium cost does not change as a person gets older.
Medigap policies are offered by private companies and are designed to help cover the gaps in coverage from original Medicare (Part A and Part B).
There are 10 Medigap plans identified by letters. Each letter plan must provide the same coverage, although some plans offer additional benefits.
Costs are set by the private company, which means two policies may cover the same benefits but have different costs.