Is a MediGap Plan Right for You?

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You have a couple of choices when it comes to supplementing original Medicare; a Medigap (also known as a Medicare Supplemental) policy or a Medicare Advantage plan. While Medicare Advantage plans are heavily advertised and often have lower monthly premiums, they can expose the insured to high levels of utilization costs when compared to Medigap plans.

The focus of this article is to better explain the virtues and pitfalls of a Medigap plan.

Medigap Plans, are health insurance policies that can pay some of the health care costs that Original Medicare does not cover, like coinsurance, deductibles, or copayments.  Think of it as a plan that fills in some of the ‘gaps’ that Original Medicare doesn’t pay.

Original Medicare is made up of Part A (Hospital) and Part B (medical/outpatient services). As previously mentioned, with original Medicare, beneficiaries are required to pay deductibles and coinsurance for various services. Medicare’s deductibles and coinsurance can be mitigated to some degree, depending on the Medigap plan selected.

Medigap plans are offered by private insurance companies, and have an additional monthly cost, over and above your Medicare Part B monthly premium. You are responsible for paying the monthly premium to the insurance company.  Some companies will accept monthly premium by check, while others will require either quarterly, semi-annual, or annual unless EFT (electronic funds transfer from your bank) payment mode is selected.

What should I consider when choosing Medicare supplemental coverage?

  • Do you have a chronic medical condition that requires ongoing care?
  • Do you expect to incur frequent copays for doctor/outpatient visits?
  • Do you need to protect your insurability? (i.e. family history of medical issues)

When is the best time to purchase a Medigap policy?

  • You should purchase a Medicap policy during your Initial Enrollment Period (IEP), which is a 7-month window; 3 months before your birth month, the month of your birthday, and 3 months after your birthday.
  • If you are covered by job-based health insurance and now choose to enroll in Medicare after age 65, you can enroll in a Medigap plan using a special election period (SEP).

Several things you need to know about Medigap Plans:

  • You must have Medicare Parts A and B.
  • Medigap plans are not always guaranteed issue, which means the underwriting department of each insurance company will review your application to determine whether or not you can enroll. There are a few exceptions to this rule.
    • Are you enrolling within 6 months of your Part B effective date?
    • Do you live in a guaranteed issue state (CT, MA, ME, NY)?
  • A Medigap policy is guaranteed renewable, even if you have health problems, as long as you continue to pay the monthly premium.
  • In most states, Medigap plans are lettered; N, G, F, etc. Plans with the same letter offer identical benefits, although the monthly premiums may be different based on the carrier. There are three waiver states that do not follow this Medicare standardized Medigap format, and they are Massachusetts, Minnesota, and Wisconsin.
  • Premiums for Medigap plans can vary significantly. Lower priced plans tend to have higher utilization costs, while conversely higher priced plans tend to have lower utilization costs.
  • Most Medigap Plans offer nationwide coverage and are accepted by providers as long as they accept original Medicare. There are no referrals required to see specialists when covered by Medigap plans.
  • Medicare pays primary and Medigap plans pay secondary. As long as the provider accepts original Medicare, they will accept a Medigap plan, regardless of the insurance company.
  • Medicare Plans are individual policies. Unlike employer plans that offer family rates, Medicare policies only cover the individual. If you and your spouse are both eligible for Medigap coverage, you’ll each need to purchase a separate policy.

What a Medigap Plan Does NOT cover

While Medigap plans offer more comprehensive hospital and medical coverage for an additional monthly premium, there are some items that are not included with the purchase of a Medigap plan.

Medigap Plans do not cover prescription drugs. Pharmacy prescription drug plans (Part D) are offered through private insurance carriers contracted with Medicare and will need to be purchased separately.

Many ancillary benefits, such as dental, vision, fitness, hearing, etc. are not provided by Medigap plans.

In Conclusion:

Medigap plans, when compared to Medicare Advantage plans, offer greater network flexibility, cost predictability, and coverage transparency. Premiums tend to be higher than Medicare Advantage plans and often increase each year.

While the premiums for Medigap plans are often higher than Medicare Advantage plans, Medigap plans do not cover Prescription drugs or many ancillary coverages that are included in many Medicare Advantage plans.

If you visit the doctor frequently or are concerned about protecting your insurability, then a Medigap plan may be the best option for you.

If you would like to see if a MediGap policy will be a good fit for you, be sure to speak with your Member Agent.

Don’t have a Member Agent to help you yet?  Click here to use our Agent Finder.

Member Agents are here to help you and their educational services are available to you free of charge.

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