As you approach your golden years, you may start thinking about healthcare expenses and how you can afford them. Original Medicare, a federal program, covers a lot of medical expenses, but it doesn’t cover everything. That’s where Medicare supplement insurance, also known as Medigap, comes in. This article will explain what Medigap is and how it works.
What is Medicare Supplement Insurance?
Medicare supplement insurance is a type of private insurance that covers gaps in Medicare coverage. It pays for healthcare costs that Medicare doesn’t, such as deductibles, coinsurance, and copayments. Medigap policies are standardized across the country, so a Plan F in one state offers the same benefits as a Plan F in another state. There are 10 Medigap plans to choose from, labeled Plan A through Plan N. Each plan offers different benefits and premiums, so you can choose the one that fits your needs and budget.
Medigap is different from Medicare Advantage. Medicare Advantage plans are also offered by private insurance companies, but they replace Medicare as your primary insurance. They often have lower premiums than Medigap, but they also limit your choice of doctors and hospitals. Medigap policies work with original Medicare, so you can see any doctor who accepts Medicare.
How to Buy a Medigap Policy
To buy a Medigap policy, you must first be enrolled in original Medicare. You can then buy a policy from any private insurance company that is licensed in your state. It’s important to compare prices and benefits from different companies, as the costs can vary widely. The best time to buy a Medigap policy is during your six-month Medigap Open Enrollment Period. This period begins when you turn 65 and enroll in Medicare Part B. During this time, you have a guaranteed issue right, which means that an insurance company can’t deny you coverage or charge you more based on your health status.
If you miss your Medigap Open Enrollment Period, you may still be able to enroll in a policy, but you could face medical underwriting. This means that the insurance company can charge you a higher premium or deny you coverage based on your health status. There are some exceptions to this rule, such as if you lose your employer-sponsored health coverage or move to a new state.
What Does Medicare Supplement Insurance Cover?
Medigap policies are standardized by the federal government, so each plan has the same basic benefits, regardless of which company you buy it from. These benefits include:
Medigap Plan |
Covered Benefits |
|---|---|
Plan A |
Coinsurance for Medicare Part A and hospice care; Medicare Part B coinsurance or copayment |
Plan B |
All benefits in Plan A; Medicare Part A deductible |
Plan C |
All benefits in Plan B; Medicare Part B deductible; skilled nursing facility coinsurance; foreign travel emergency coverage |
Plan D |
All benefits in Plan B; skilled nursing facility coinsurance; foreign travel emergency coverage |
Plan F |
All benefits in Plan C; excess charges for Medicare Part B; 100% coverage of Part B coinsurance and deductible; foreign travel emergency coverage |
Plan G |
All benefits in Plan F, except for Medicare Part B deductible |
Plan K |
50% of Medicare Part A coinsurance and hospice care; 50% of Medicare Part B coinsurance or copayment; 50% of first three pints of blood; 50% of skilled nursing facility coinsurance |
Plan L |
All benefits in Plan K; 75% of Medicare Part A deductible; 75% of Medicare Part B deductible; 75% of foreign travel emergency coverage |
Plan M |
All benefits in Plan D; 50% of Medicare Part A deductible; foreign travel emergency coverage |
Plan N |
All benefits in Plan D, except for Medicare Part B deductible and excess charges; foreign travel emergency coverage |
Note that Medigap plans do not cover prescription drugs. To get prescription drug coverage, you must enroll in a Medicare Part D plan, which is also offered by private insurance companies.
How Much Does Medicare Supplement Insurance Cost?
The cost of a Medigap policy depends on several factors, including your age, location, and which plan you choose. Premiums can vary widely, so it’s important to shop around and compare prices from different companies. Some insurance companies may offer discounts for being a non-smoker, for paying your premiums annually, or for being in good health. Keep in mind that premiums can increase over time, so it’s important to budget for the cost of Medigap in your retirement planning.
FAQs
Is Medicare Supplement Insurance Worth It?
It depends on your healthcare needs and budget. If you expect to have a lot of medical expenses, a Medigap policy can give you peace of mind and help you avoid financial hardship. However, if you’re in good health and don’t anticipate many healthcare costs, you may not need a Medigap policy. It’s important to evaluate your individual situation and talk to a licensed insurance agent before making a decision.
Can I Change My Medigap Policy?
Yes, you can switch from one Medigap policy to another at any time, as long as you qualify for coverage. However, if you switch after your Medigap Open Enrollment Period, you may have to undergo medical underwriting and could face higher premiums or a denial of coverage. It’s important to research your options and talk to a licensed insurance agent before making a switch.
Do I Need a Referral to See a Specialist with a Medigap Policy?
No, you do not need a referral to see a specialist with a Medigap policy. You can see any doctor who accepts Medicare without a referral.
Can I Have Both Medicare Advantage and Medigap?
No, you cannot have both Medicare Advantage and Medigap. If you enroll in a Medicare Advantage plan, you cannot also have a Medigap policy as they do not work together. It’s important to evaluate the pros and cons of each option and choose the one that fits your needs and budget.
What Happens if I Cannot Afford a Medigap Policy?
If you cannot afford a Medigap policy, there are other resources available to help you with healthcare costs. You may qualify for Medicaid, which is a joint federal and state program that covers healthcare costs for low-income individuals. You may also be able to get assistance through local charities, non-profit organizations, or prescription drug assistance programs. It’s important to research your options and talk to a licensed insurance agent for guidance.
What Is the Best Medigap Plan?
The best Medigap plan for you depends on your individual needs and budget. It’s important to compare the benefits and costs of each plan and talk to a licensed insurance agent for guidance. Plan F and Plan G are popular options because they offer the most comprehensive coverage, but they also tend to be more expensive than other plans.
What Happens to My Medigap Policy If I Move to Another State?
Your Medigap policy will still be valid if you move to another state, as long as the plan is offered in your new state. However, you may need to change your policy if your current plan is not available in your new location or if it is more expensive. It’s important to research your options and talk to a licensed insurance agent before making a decision.
Medicare supplement insurance can help you manage your healthcare costs and protect your retirement savings. By understanding how Medigap works and what it covers, you can make an informed decision about whether it’s right for you.