What Is Medigap (Medicare Supplement) Insurance?

What Is Medigap (Medicare Supplement) Insurance?

Doctor conducts medical consultation with senior adult patient at clinic.
(Image: iStock/fstop123)

Is a Medigap Insurance Plan Right for You?

Did you know that Original Medicare health insurance plans don’t cover all of your health care costs? That’s where Medigap insurance plans (also known as Medicare Supplement insurance) come in. Medigap plans are designed to help reduce your extra expenses by supplementing Original Medicare and paying for certain out-of-pocket costs.

We will give you the answers you need to common questions about how Medicare Supplement insurance works. 

A Quick Summary of Original Medicare

Before we get into Medigap plans, let’s look at how Original Medicare (Medicare Part A and Part B) usually works:

Part A covers:

  • Inpatient care offered in hospitals or skilled nursing facilities
  • Home health care services
  • Hospice care for the terminally ill

Part B covers:

  • Doctor services
  • Outpatient care
  • Medical supplies
  • Medical equipment
  • Preventive services
Medicare Plans Part A Part B Medicare Advantage (Part C) Part D Medicare Supplement (Medigap) plans
Features Covers inpatient care and home health care services Covers doctor services, outpatient care, and medical supplies Coverage may include wellness programs, hearing aids, and vision services Provides prescription drug coverage Covers out-of-pocket costs (such as deductibles, copays and coinsurance) not covered by Parts A and B

What Is Medicare Supplement (Medigap) Insurance?

Medigap plans are offered through private insurance companies and cover extra health care costs not covered by Original Medicare (Parts A and B).

Medicare Supplement insurance plans cover:

  • Copayments
  • Coinsurance
  • Deductibles

Some Medigap plans also cover medical services when you travel outside of the US.

Covered by Medigap Not Covered by Medigap
Copayment Prescription drugs
Coinsurance Long-term care
Deductibles Private-duty nursing care
Medical services received outside the U.S. (some Medigap plans)  

How Does Medigap Work?

You must already have Medicare Parts A and B before you can buy Medicare Supplement insurance.

Here’s what to expect when you enroll in a Medigap insurance plan:

  1. First, Original Medicare pays its share of the Medicare-approved amount for covered health care costs. Then, your Medicare Supplement insurance policy kicks in and pays its share.
  2. You pay a monthly premium to a private insurance company for your Medigap plan. This monthly premium is in addition to your monthly Medicare Part B premium.
  3. A Medigap plan only covers one person. If you and your spouse are looking for a Medigap insurance plan, each of you will need to buy separate policies.
  4. All standardized Medigap plans come with guaranteed renewal, even if you have health problems. Your insurance company can’t cancel your Medigap policy as long as you pay the premium. 
  5. You can’t have a Medicare Supplement (Medigap) plan and a Medicare Advantage plan at the same time.
  6. There’s no prescription drug coverage. Medigap plans don’t include prescription drug coverage. You can join a Medicare prescription drug plan (Part D), if you need prescription drug coverage.
  7. Not everything is covered by Medigap. Medigap plans usually don’t cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing.
  8. Make sure your insurance company is licensed. You can get a Medigap plan from any insurance company that’s licensed in your state to sell one.

Standard Medigap plans are labeled A through N and offer different health coverage levels.

While premium amounts differ among insurance companies, the benefits of each standard Medigap plan are the same.

For example, Medigap Plan C policies offer the same benefits regardless of which insurance company provides it. The premium amounts might be different depending on which state you live in.

When Can I Enroll in a Medigap Plan?

Most people become eligible for a Medicare Supplement plan shortly before age 65. The Open Enrollment Period for Medigap plans is six months before the first day of the month of your 65th birthday — as long as you also have Medicare Part B — or within six months of enrolling in a Medicare Part B plan.

During this time, you can buy any Medigap policy at the same price a person in good health pays, even if you have health issues.

Here’s an important thing to keep in mind if you have health problems: you might have to wait up to six months for Medigap coverage if you have a pre-existing health condition. Your insurance company can refuse to pay for out-of-pocket costs for pre-existing conditions during this six-month period.

Your Medigap policy must cover your pre-existing conditions after that initial six months.

An exception to this rule is if you get a Medigap policy during your Open Enrollment Period and have had continuous creditable coverage (a health insurance plan) for the six months before getting a policy. The Medigap insurance companies can’t deny you coverage for a pre-existing condition in this situation.

Can I Change My Medigap Plan?

There are certain situations where you might want to change your Medigap plan. For example, you might want to change your Medigap plan if you find a plan with a lower premium. Perhaps you’ve decided that you need more benefits than offered in your current Medigap plan. Or, you might want to change insurance companies.

As long as you are enrolled in Medicare Part A and Part B you can apply for a Medigap plan at any time.  If you are also within your 6-month Medigap Open Enrollment Period, you can switch Medigap policies.

While you can apply for a Medigap policy at any time, it doesn’t mean that an insurance carrier has to accept your application unless you have guaranteed-issue rights.

Guaranteed-issue rights, also known as Medigap protections, are situational rights you have that mean insurance companies must offer you certain Medigap policies. If you are in any of following situations you have guaranteed-issue rights:

  • You previously had a Medigap plan, dropped it to enroll in a Medicare Advantage plan, it’s been less than one year, and now you want to switch back
  • You are currently enrolled in a Medicare Advantage Plan and your plan is no longer covering your area, or you are moving out of the coverage area
  • Your current Medigap insurance provider goes bankrupt and you no longer have coverage
  • You have Original Medicare, along with either union coverage or an employer group health plan that pays after Original Medicare pays, and that plan is coming to an end

The Bottom Line about Medigap Insurance Plans

Medigap plans can give you peace of mind by reducing your out of pocket expenses and keeping your health care coverage affordable. It’s a good idea to shop around and look at different Medigap plans, as different insurance companies can charge different premiums for the same policy.