5 Questions to Ask about Medigap

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Written by Alice Stevens | October 14th, 2019
Alice Stevens is a language enthusiast, loves history, and enjoys traveling. She manages content for BestCompany.com specializing in finance, insurance, and car warranty.
Topics: Medicare

Medicare is how many U.S. citizens over 65 receive health insurance. Because Medicare works differently from employer-sponsored insurance and private insurance, it can take some time to orient yourself. Medicare offers hospital insurance, medical care insurance, and prescription drug insurance in three plans.

For additional coverage or assistance paying for Medicare copayments and deductibles, people can purchase Medicare supplement insurance. This supplemental insurance is often referred to as Medigap.

“Medigap is a smart financial planning step for anyone who knows that they have major expenses coming their way. Those expenses do not have to be health-related. For example, if you know that you plan on moving into a retirement home and are worried about your new costs, Medigap might be a good idea,” says Anastasia Iliou, Medicare Plan Finder Senior Content Manager.

Before enrolling in a Medigap plan, you should understand the cost and benefits of these plans. Here are five essential questions to ask about Medigap:

  • What is Medigap?
  • What does Medigap cover?
  • What is the best Medigap plan?
  • How much do Medigap plans cost?
  • When should I enroll in Medigap?

What is Medigap?

Medigap offers additional cost-sharing for out-of-pocket expenses incurred by Original Medicare (Parts A, B, and D). This additional cost-sharing is helpful because Original Medicare cost-sharing places a larger burden on policyholders than other private health plans.

“What many people don’t realize before enrolling in Medicare is that Medicare is not free and Original Medicare only covers 80 percent of medical expenses – leaving you responsible for the remaining 20 percent of expenses. This form of supplemental coverage is additional insurance to help alleviate the financial burden of covering remaining costs that Medicare won’t cover. For example, Medigap plans are extremely beneficial when it comes to covering costs of chemotherapy and dialysis,” says Danielle K. Roberts, Medicare Supplement Accredited Adviser and Boomer Benefits Cofounder.

The additional cost-sharing assistance is also beneficial when people need extensive medical care.

“Medigap insurance covers medical expenses Medicare doesn’t cover such as co-pays and deductibles, as well as foreign travel emergencies. The main thing is a major healthcare hospitalization, illness, or injury where the costs are so high that even if Medicare is covering a majority of the costs, the fees are overwhelming. These are “gaps” in Medicare coverage. Admittance into long-term facilities such as nursing homes or hospice can be very large costs,” says Ted Chan of CareDash.com.

The health coverage offered by some Medigap plans also include coverage for health services in foreign countries and is great for people who plan on traveling or living abroad during retirement.

Do you need Medigap if you have Medicare Advantage?

For people with Medicare Advantage plans, Medigap is not available. Medicare Advantage plans work like employer group plans, so they vary company to company and can offer more comprehensive coverage.

Expert insight

Troy Baccus, Medicare Life Group Owner
“The first decision with regard to Medigap is deciding between a Medigap plan and a Medicare Advantage plan. A Medicare Advantage plan will be similar to most employer plans, meaning it'll be an HMO or PPO with co-pays and deductibles. A Medigap plan, on the other hand, has no networks and will work at any hospital that accepts Medicare. For those who decide to go the Medigap route, we recommend choosing a Medigap plan after becoming familiar with the deductibles within each of the plans.”

Kumar B. Goel, Lighted Road Insurance President and CEO
“Traditional Medicare does not cover everything. For example, it does not cover outpatient prescription drugs or provide dental, vision or hearing benefits (exceptions apply). Medigap Plans do not cover these benefits either. If you are looking for a plan with additional benefits like these, Medicare Advantage may be a better choice for you instead of Medigap.”

What does Medigap cover?

Medigap currently has 10 plan options: Plan A, Plan B, Plan C, Plan D, Plan F, Plan G, Plan K, Plan L, Plan M, and Plan N. The plans are mostly consistent nationwide.

“Except for Massachusetts, Minnesota, or Wisconsin which have their own versions or variations of the plans, the plans offered are the same across states. Whatever the state, you should review carefully to see what suits your needs,” says Chan.

All Medigap plans cover the following:

  • Coinsurance and hospital costs (Medicare Part A) up to 365 days once Medicare benefits are used up
  • Coinsurance or copayment (Medicare Part B)
  • First 3 pints of blood
  • Hospice care coinsurance or copayment (Medicare Part A)

These benefits are covered fully by Plans A, B, C, D, F, G, and M.

Plan K offers 50 percent coverage for Part B coinsurance or copayment, first three pints of blood, and Part A hospice care coinsurance or copayment. Plan L offers 75 percent coverage for those same three benefits.

Plan N offers full coverage for all benefits with the exception of copays up to $20 for some office visits and $50 copay for emergency room visits when you’re not admitted to the hospital.

All Medigap plans except Plan A offer coverage for the Part A deductible. Plans K and M cover Part A’s deductible at 50 percent. Plan L offers 75 percent coverage for this benefit. The other plans (B, C, D, F, N) cover Part A’s deductible fully.

Only Medigap Plans C, D, F, G, M, and N offer coverage for health care during foreign travel.

Only Plans C and F offer coverage for Medicare Part B deductible. Since new Medicare enrollees are not able to receive this coverage, Plans C and F are not available to new enrollees. Plans C and F offer full coverage for the Part B deductible.

Only Plans F and G offer full coverage for Part B excess charges. An excess charge occurs in cases when a medical provider is allowed to charge more than the Medicare-approved amount.

“Some states have rules that override Medicare to the benefit of the consumer. For example, Pennsylvania, Connecticut, Massachusetts, Minnesota, New York, Ohio, Rhode Island and Vermont forbid or restrict Medicare Part B Excess Charges,” says Matthew Claassen, CMT, CEO and Independent Broker of MedigapSeminars.org.

Keep your state’s Medicare rules in mind as you choose a Medigap plan.

Plans K and L have annual deductibles. None of the other plans have deductibles.

People interested in Plan F can choose a Plan F High Deductible Plan option (HDHP) option. Medicare enrollees who choose this option will have an annual deductible.

Plan F and C are not available to people enrolling in Medicare for the first time.

See Medicare.gov for further information.

What is the best Medigap Plan?

The best Medigap plan depends on your circumstances and the kind of coverage you need. Working with a licensed life insurance agent can help you consider all the factors necessary to make an informed decision.

Expert tips

Danielle K. Roberts, Medicare Supplement Accredited Advisor and Boomer Benefits Cofounder
“When deciding which Medigap plan is best for you (A, B, C, D, F, G, K, L, M, or N) you should keep in mind the premium, how often you’ll use your plan, and what kind of coverage you want in case you get diagnosed with a severe illness. Plan F, G, and N are the most popular. When you decide on which plan you want, the only thing you need to look for now is the best premium and average rate increases from each carrier in your area. Since a Medigap plan’s coverage doesn’t change from carrier to carrier, you should just worry about finding the lowest premium with the best average rate increases.”

Andrew Vasta, NJ Medicare Brokers LLC Owner
“When choosing which Medigap plan, people should consider on average how many times they go to the doctors and the difference in the premium between the plans. Many people choose between Plan G and Plan N. Plan G has no out of pocket costs after the deductible while Plan N has a lower monthly fee but $20 copayment every visit to the doctor.”

Matthew Claassen, CMT, CEO and Independent Broker of MedigapSeminars.org
“Because a person can apply for a Medicare supplement plan up to six months before it starts coverage, most seniors will start to receive an abundance of cold calls and mailers starting about 7-months before the month they turn 65. This can be overwhelming. Some people turn off their phones or get spam blockers. This is a major issue to people turning 65. Most of these cold callers are from call centers that don’t even employ full time permanent agents. They just cold call and sell. This is not where you are going to get your best advice or even accurate advice. Buyer beware.”

Troy Baccus, Medicare Life Group Owner
“Make sure to work with an experienced agent who is seasoned in the Medicare insurance industry. A good agent will have complete knowledge about enrollment windows, be able to provide accurate quotes, and ultimately provide a smooth on-boarding process while enrolling in Medigap.”

How much do Medigap Plans cost?

Several expenses factor into a health plan’s cost: monthly premiums and copays or coinsurance, depending on the policy’s terms.

It’s important to consider all of these factors when considering the cost of a Medigap plan.

Premium cost

Medigap premiums are priced one of three ways:

  • Same rate for everyone, regardless of age
  • Rate based on age when enrolled in plan and remains consistent
  • Rate based on age, but increases with age

It’s a good idea to ask how the insurance companies you’re considering determine their rates. It can help you compare premiums for plans across companies.

Expert insight

Ted Chan, CareDash.com
“Typical costs are $200 to $600 depending on the tier of plan. Since the plans are standard (the only difference is cost), it is recommended you shop around, with a focus on reliable providers who you are confident will cleanly service your plan. Reputable insurers offer the plans, and you should recognize the plan being sold (e.g. Aetna, Blue Cross). Don't let a broker push a plan on you.”

Andrew Vasta, NJ Medicare Brokers LLC
“Medigap policies are standardized so a Plan N with one company is the same exact coverage as a Plan N with another company; however, the monthly premium can be drastically different. Any time someone gets a rate increased they should shop the market to see if they can lower their costs.”

Travis Price, Licensed Medicare Supplement Agent ifixmedicare.com
“Another great Medigap tip would be to talk to an Independent Medigap Agent. The truth is, insurance companies move in and out of the Medigap market constantly. Furthermore, some companies do not sell direct to consumer and are much less expensive than companies like AARP (United Healthcare) and Blue Cross Blue Shield.”

Total cost

The total cost of a health plan includes the amount you spend on copayments and coinsurance. These cost-sharing expenses can be harder to estimate and can come up suddenly. Know the total cost of your Medicare Part A and Part B plans, and compare those costs with the Medigap plan’s premium rates.

Expert insight

Kumar B. Goel, Lighted Road Insurance President and CEO
“Medigap Plans typically have higher premiums with minimal cost-sharing compared to Medicare Advantage Plans. This is to be expected since they help pay for Medicare cost-sharing. If you are bothered by deductibles, copays, and coinsurance and would rather pay a consolidated monthly premium, Medigap may be for you. But do the math before deciding.”

When should I enroll in Medigap?

For guaranteed acceptance, it’s best to enroll at the same time you enroll in Medicare Part B. While there are other circumstances that permit guaranteed issue outside of the window when you enroll in Medicare Part B, it can be a good idea to enroll during your Medigap first open enrollment period.

If you delay enrolling, you’ll have to go through an approval process for underwriting. Underwriting is the process insurance companies use to determine the risk of insuring the applicant. It often involves a health questionnaire and can involve a medical exam. In some cases, coverage may be denied because of health circumstances.

If you opt for a Medicare Advantage plan instead of Original Medicare, you’ll still be eligible for a guaranteed-issue Medigap open enrollment period.

“There are a few other situations where guaranteed issue is applicable. One is if you are on Medicaid Advantage and move, or the Advantage plan stops offering services,” says Chan.

There are some exceptions that allow guaranteed acceptance outside of the open enrollment period.

“Some states like Connecticut and New York have perpetual Open Enrollment periods. A person can enroll in a Medicare supplement or switch supplements at any time without ever being asked a medical question. Other states have rules that provide an Annual Special Enrollment to switch Medicare supplement plans without underwriting,” says Claassen.

Learn more about Medigap guaranteed issue rights.

Expert tips

Adam Hyers, Hyers and Associates, Inc
“For most consumers, the time to get a Medigap (Medicare Supplement) policy is when they first enroll in Medicare Part B. That can happen at age 65, but many people defer their Medicare Part B enrollment because they have qualifying group insurance at work (more than 20 people.) Still, others enroll in Part B before age 65 due to disability. These folks especially want to explore their Medigap options at that time as it may be difficult to get a plan later.”

Danielle K. Roberts, Medicare Supplement Accredited Advisor and Boomer Benefits Cofounder
“The best time to enroll in a Medigap plan is during your one-time Medigap open enrollment period. This period begins the day your Part B is effective and ends 6 months later. This is considered the best time to enroll in Medigap plans because during this time you don’t have to answer any health questions and therefore, don’t have to worry about getting turned down for coverage. If you miss this time, you will likely have to answer health questions, and can be denied coverage due to preexisting conditions.”

Ted Chan, CareDash.com
“As a patient advocate, I recommend it enrolling during the Medigap open enrollment period for anyone who has the means and could be overwhelmed by a large, unexpected medical bill. Otherwise, you should reconsider your circumstances and whether Medigap makes sense every open enrollment period. However, getting it right away protects you against developing a pre-existing condition and being denied coverage.”

In sum

Understanding your Medigap coverage options and your current health situation will help you find a plan that meets your coverage needs. It's also important to keep possible future health concerns in mind as you pick your plan.

Keep your financial situation in mind as you evaluate premium costs and the overall costs of a Medigap plan each year. This will help you make smart budget decisions about choosing Medigap coverage.

Working with an independent Medicare agent can help you evaluate your options and understand the enrollment rules for Medigap and Medicare. Understanding these rules will help you make informed decisions about Medigap enrollment.

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