A Medigap policy is health insurance that private insurance companies sell to help fill gaps in what the Original Medicare Plan covers. Medigap policies also are known as "Medicare Supplement Insurance." Medigap policies pay most - if not all - of the costs for coinsurance and copayments under the Original Medicare Plan. These policies may also cover the Original Medicare Plan deductibles. Some policies include extra benefits to help pay more of those things that Medicare doesn't cover, like prescription drugs.
Medigap policies do not cover:
- Long-term care
- Vision or dental care
- Hearing aids
- Private-duty nursing
- Unlimited prescription drugs
Before buying a Medigap policy, think about:
- How much are you spending on health care?
- What are your healthcare dollars spent on?
- Which Medigap benefits do you need?
- How much can you afford to spend on premiums?
- What will your future health care costs be? Remember, you may need more health care as you get older.
Do you need a Medigap policy?
There are other types of coverage that may be more appropriate for you than a Medigap policy, depending on your income and health status. Among them are:
Buying a Medigap policy
It's an important decision. Only you can decide if a Medigap policy is right for you. Shop carefully. Compare available plans. Look for a policy that suits your budget. Make sure it gives you the coverage you need.
All states except three (Massachusetts, Minnesota, and Wisconsin) offer 10 standardized Medigap plans named plans "A" through "J". Each plan provides a different set of benefits. You do not need a Medigap policy if you are enrolled in a Medicare + Choice plan. In fact, it is illegal for anyone to sell you a Medigap policy if they know you are in one of these plans.
Certain basic benefits are covered in all Medigap plans:
- Inpatient Hospital Care - Coverage for the Medicare Part A coinsurance and the cost of 365 days of hospital care during your lifetime after you use up all Medicare hospital benefits
- Medical Costs - Coverage for the Part B coinsurance (generally 20% of the Medicare-approved payment amount).
- Blood - Coverage for the cost of first three pints of blood you use each year.
How a Medigap policy works
When you buy a Medigap policy, you pay a premium to an insurance company. Any policy purchased after 1990 will be renewed automatically each year as long as you pay the premium.
Medicare SELECT is another type of Medigap policy available in some states. If you buy a Medicare SELECT policy, you'll still have one of the standardized Medigap plans (A-J). With these policies you generally must use specific hospitals and, in some cases, doctors (except in emergencies) to receive full Medigap benefits. For this reason, Medicare SELECT policies generally cost less than the other Medigap policies.
If you don't use a Medicare SELECT provider for non-emergency services, you will have to pay what Medicare doesn't pay. Medicare will pay its share of approved charges no matter what provider you choose. Medicare SELECT might not be offered in your state.
High deductible option
Insurance companies may also offer a "high deductible option" on Medigap plans F and J. If you choose this option, you must pay a high deductible each year before the plan pays anything. This amount can go up each year. Premiums for high deductible options cost less, but if you get sick, your out-of- pocket costs will be higher and you may not be able to change plans.
When should I consider buying a Medigap policy?
The best time to buy a Medigap policy is during your Medigap open enrollment period. It lasts for six months and begins on the first day of the month in which you are
- Age 65 or older and
- Enrolled in Medicare Part B.
During your Medigap open enrollment period, insurance companies cannot:
- Deny you insurance coverage.
- Place conditions on a policy, such as delaying the start of coverage.
- Change the price of the policy because of past or present health problems.
In addition, insurance companies that use waiting periods for pre-existing conditions must generally shorten the period if you had other health insurance before you bought the policy and if you meet certain requirements.
What are Medigap protections?
By law, you have a right to buy a Medigap policy if you lose certain types of health care coverage. Without these protections, insurance companies can refuse to sell you the policy you want or charge you a higher premium if you have health problems. Also, if you drop your Medigap policy, you may not be able to get it back except in very limited circumstances.
For information about health coverage changes and your rights to buy a Medigap policy in certain situations, call 1-800-MEDICARE (1-800-633-4227, TTY users should call 1-877-486-2048).
It is best not to wait until your health coverage ends before you apply for a Medigap policy. If you apply while still enrolled in your current health plan you can usually begin your Medigap coverage as soon as your current health plan coverage ends.
Where can I find more information about Medigap policies?
- Call your State Insurance Department to find out what Medigap policies are available in your state, which companies sell them, and about any other insurance-related issues.
- Contact your State Health Insurance Assistance Program (SHIP) to arrange for free help in deciding which policy is best for you and to see if you qualify for Medigap protections if you lose health coverage. (Select this link to access a list of SHIP contacts, by-state)
- Look at www.medicare.gov on the web. Select "Medicare Personal Plan Finder" to compare Medigap policies.
- Review The Guide to Health Insurance for People with Medicare: Choosing a Medigap Policy, which is available as a download. To get a printed copy of this brochure, call 1-800-MEDICARE (1-800-633-4227, TTY users should call 1-877-486-2048) and ask for your free copy.
Some helpful terms:
Coinsurance: The amount you may be required to pay for services after you pay any plan deductibles. In the Original Medicare Plan, this is a percentage (like 20%) of the Medicare approved amount. You have to pay this amount after you pay the deductible for Part A and/or Part B. In a Medicare Prescription Drug Plan or Medicare Health Plan, the coinsurance will vary depending on how much you have spent.
Copayment: In some Medicare health and prescription drug plans, the amount you pay for each medical service, like a doctor's visit, or prescription. A copayment is usually a set amount you pay. For example, this could be $10 or $20 for a doctor's visit or prescription. Copayments are also used for some hospital outpatient services in the Original Medicare Plan.
Deductible: The amount you must pay for health care or prescriptions before Original Medicare, your Medicare drug plan, your Medicare Health Plan, or your other insurance begins to pay. For example, in Original Medicare, you pay a new deductible for each benefit period for Part A, and each year for Part B. These amounts can change every year.
Medigap Policy: A Medicare supplemental health insurance policy sold by private insurance companies to fill "gaps" in Original Medicare Plan coverage.
Medicare SELECT: A type of Medigap policy that may require you to use hospitals and, in some cases, doctors within its network to be eligible for full benefits.
Open Enrollment Period (Medigap): A one-time only six month period when you can buy any Medigap policy you want that is sold in your state. It starts in the first month that you are covered under Medicare Part B and you are age 65 or older (or under age 65 in some states). During this period, you can't be denied coverage or charged more due to past or present health problems.
Premium: The periodic payment to Medicare, an insurance company, a health care plan, or a drug plan for health care or prescription drug coverage.
Source: Centers for Medicare and Medicaid Services