Medigap, like Medicare, has several plan options. All plans have the same basic offerings, but some offer more comprehensive coverage than others. Read on to learn more about Medigap basics, what they cover, and how to choose the best policy for you.
The Medigap Basics
Medigap is supplemental insurance available to people who have Medicare. Medigap is only sold by private companies and helps fill the ‘gaps’ in what Medicare does not cover. Original Medicare pays for many, but not all, of the costs for healthcare services and supplies. Medigap, or Medicare Supplement Insurance, can help pay for some of the remaining healthcare costs.
Private insurance companies sell Medigap policies to cover what Medicare does not. Each plan is denoted by a different letter. Each plan covers different services. To understand what Medigap covers, it is essential first to understand what Medicare covers.
What Does Medicare Cover?
Medicare is split into two parts: Part A and Part B. Part A covers hospital stays and includes a deductible. This deductible is up to $1,408 in 2020. Part B covers outpatient services, including doctor’s office visits, diagnostic testing, blood work, and other outpatient procedures. The deductible is $198 in 2020 and Medicare typically only covers 80% of all the services’ cost.
The cost of healthcare continues to rise. Therefore, the 20% of costs that people are left to cover can be debilitating. Additionally, Medicare does not cover all services and equipment that people need. This is where Medigap comes in.
What Does Medigap Cover?
Medigap insurance coverage differs per plan but can include copayments, coinsurance, and deductibles. Each plan is denoted by a letter, and each plan covers different services. The plans are labeled Plans A, B, C, D, F, G, K, L, M, and N, and each of these plans has a different standardized coverage set.
The most popular is Plan F which has the most comprehensive coverage, including that it pays the Medicare Plan B deductible. However, it is essential to note that Plans C and F are no longer available for people who become Medicare-eligible in 2020 or the future. To better understand what each plan covers, visit Medicare.gov. Each policy’s price differs based on the patient’s age, the coverage of the policy, and the company offering the policy.
What Does Medigap Not Cover?
Every Medigap policy is different and covers different services. However, in general, Medigap does not cover long-term care, vision and dental care, hearing aids, the cost of eyeglasses, or private nursing services. Most people purchase long-term care policies to cover their long-term care or skilled nursing needs. Additionally, people can purchase private vision or dental care or pay for those services out of pocket.
When to Buy Medigap
The price of Medigap can increase as a person ages. Therefore, it is wise to purchase Medigap during your six-month Medigap Open Enrollment Period. You can purchase a Medigap policy even if you have health problems or preexisting conditions. Your six-month open enrollment period begins the month you turn 65 and are enrolled in Medicare Part B.
Some Medigap insurance companies will not accept a Medigap application after a person’s open enrollment ends. Be sure to speak with your financial planner about including planning for medical expenses in your retirement plan.
What You Should Know About Medigap
To be eligible for Medigap insurance, a person must meet several requirements. These requirements include that they have Medicare Part A and Part B and be at least age 65. In some scenarios, a person can purchase Medigap before age 65 or later if they have group health insurance through an employer or union. Most people are only eligible for Medigap in their six-months of open enrollment.
Additionally, it is essential to note that Medigap is different from Medicare Advantage Plans. Medicare Advantage plans provide some Medicare benefits, whereas Medigap supplements existing Original Medicare benefits.
Private insurance companies only sell Medigap. You must apply for Medigap with an insurance company that can sell policies in your state. Policyholders pay monthly premiums in addition to the monthly Part B Medicare premium. If a couple has Medicare, they must apply for separate Medigap policies as Medigap only covers one person. Once a person qualifies for their Medigap plan, they can renew their policy without proving their health situation. Therefore, companies can’t cancel your Medigap policy, permitting that you continue to pay the premium.
Medigap policies and what they cover can change often and can vary in each state. For example, in the past, some Medigap policies covered the cost of prescription drugs. However, any policies sold in 2006 or later do not include prescription drug coverage. If you need prescription drug coverage, Medicare Part D covers the cost of prescriptions.
How to Choose a Medigap Plan
Before you choose a Medigap plan, it is important to understand what your needs are. For example, you should ask yourself if you are comfortable paying for your deductibles out of pocket. You may want to speak with a financial planner to evaluate what to anticipate for your healthcare expenses and the cost of the Medigap plans. This can help you decide what your budget is for additional healthcare insurance coverage.
When you understand your needs, you can then compare Medigap plans. Each plan offers different coverage options, so you may want to visit Medicare.gov to compare each plan. It is important to note that price is the only difference between policies with the same letter, even if different companies sell them. Once you have a good idea of which plan is best for you, you can compare insurance providers’ pricing options in your state.
To find a Medigap insurance provider in your state, you can enter your zip code on the Medicare.gov Medigap website. Then, you can compare prices between different insurance providers. If you choose to purchase a plan from the same provider that your Medicare is through, you may have to pay two premiums each month.
The Bottom Line
Medigap fills in the gaps of Medicare Part A and Part B coverage. Depending on the plan you choose, it might cover deductibles, coinsurance, and copayments. People who reach age 65 and have Medicare Part A and Part B are generally eligible for Medigap plans, but they must purchase it from a private insurance company. Now that you know the Medigap basics you are more prepared to plan for your retirement.
Planning for retirement is difficult, especially as your needs tend to change over time. Planning for healthcare and health-related expenses can seem cumbersome, especially with the myriad of options for Medigap insurance coverage. Make sure to speak with a financial planner about what options are available in your state, and to ensure that you have a plan in place to manage your healthcare expenses financially.