Medigap: Supplemental Health Insurance for Medicare

August 25, 2024 4 min read Insurance Health Medigap Medicare Health Insurance Supplemental Coverage Medical Expenses

Medigap is a health insurance policy designed to cover the areas of noncoverage under Medicare, such as deductibles, coinsurance amounts, and various medical services. Learn about its types, benefits, and why it is essential for Medicare beneficiaries.

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Medigap, also known as Medicare Supplement Insurance, is a type of health insurance policy designed to cover the gaps not addressed by Original Medicare (Part A and Part B). These policies help pay for out-of-pocket costs such as deductibles, coinsurance, and certain medical services not fully covered by Medicare.

What is Medigap?

Medigap plans are offered by private insurance companies to fill the coverage gaps left by Medicare. They are standardized and regulated, ensuring that each plan offers the same basic benefits regardless of the insurer. However, the cost can vary between companies and locations.

Coverage Areas

Medigap policies typically cover:

Medicare Part A Deductibles: Expenses that patients must pay before Medicare starts paying its share.
Coinsurance Amounts: Patient’s share of the costs after meeting the deductible.
Medical Charges Exceeding Medicare’s Approved Amounts: Costs that exceed what Medicare considers to be the approved amount for services.
Additional Medical Services and Supplies: Items or services not paid for by Medicare.

Types of Medigap Plans

There are ten standardized Medigap plans, labeled A through N:

Plan A: Basic benefits, including coinsurance payments for hospital care (Part A) and Medicare Part B preventive services.
Plan B: Covers everything in Plan A, plus the Medicare Part A deductible.
Plan C: Includes everything in Plan B, along with skilled nursing facility care coinsurance and foreign travel emergency coverage.
Plan D: Similar to Plan C but does not cover the Medicare Part B deductible or excess charges.
Plan F: Provides the most comprehensive coverage, including all deductibles, coinsurance, and excess charges (no longer available to new enrollees as of 2020).
Plan G: Similar to Plan F but does not cover the Medicare Part B deductible.
Plan K: Offers partial coverage of most benefits but includes an out-of-pocket limit.
Plan L: Similar to Plan K but with a lower out-of-pocket limit.
Plan M: Covers half of the Medicare Part A deductible and none of the Part B deductible.
Plan N: Covers the Part A deductible, but copayments are required for certain services.

Historical Context

Medigap was created following the implementation of Medicare in 1965 to address the program’s substantial out-of-pocket costs. As healthcare expenses grew, the need for supplemental insurance became more apparent, leading to the standardization of Medigap policies through legislative measures in the 1990s.

Applicability

Medigap is essential for Medicare beneficiaries who want to minimize healthcare expenses not covered by Original Medicare. It provides peace of mind and financial security by covering unexpected costs.

Comparison with Medicare Advantage

While both Medigap and Medicare Advantage (Part C) plans offer additional coverage beyond Original Medicare, key differences exist:

Medigap: Supplemental insurance that works with Original Medicare; it does not include prescription drug coverage (Part D must be purchased separately).
Medicare Advantage: An alternative to Original Medicare that bundles Parts A, B, and usually D, often including extra benefits like vision and dental.

Medicare: A federal health insurance program providing coverage primarily for individuals aged 65 and older, as well as for certain younger people with disabilities or specific diseases.
Coinsurance: The percentage of costs that a patient must pay after meeting the deductible; often part of both Medicare and Medigap plans.
Premium: The monthly payment required to maintain an insurance policy, including Medigap.

FAQs

Who is eligible for Medigap?

Individuals eligible for and enrolled in Medicare Part A and Part B can purchase a Medigap policy.

Can I have Medigap and Medicare Advantage?

No, you cannot have both. You must choose between Medigap with Original Medicare or a Medicare Advantage plan.

Are prescription drugs covered by Medigap?

No, prescription drugs are not covered. You need a separate Medicare Part D plan for prescription drug coverage.

References

Centers for Medicare & Medicaid Services. (2021). Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare.
American Association for Medicare Supplement Insurance. (2023). Medigap Overview.
National Association of Insurance Commissioners. (2022). 2022 Medigap Policies and Costs Report.

Summary

Medigap is a crucial supplement for Medicare beneficiaries, offering coverage for out-of-pocket expenses not addressed by Medicare. Understanding the various types of Medigap plans, their benefits, and the differences from Medicare Advantage can help individuals make informed healthcare decisions. Always consider individual health needs and financial situations when selecting a Medigap policy.