Medicare Insurance

Medigap

Medigap policies are private plans available to people with Original Medicare to cover some or nearly all of the out-of-pocket costs under Parts A and B.

Medigap, a way to keep costs in check with traditional Medicare.

Wondering about Medigap and how it fits in with Medicare? The finer points of Medicare can get a little muddy. Here’s a quick overview of Medicare supplement insurance (aka Medigap).

Original Medicare covers hospital care (Part A) and medical outpatient care (Part B). Both come with sets of cost-sharing amounts — how much you pay out of pocket for your care.

One way to trim the out-of-pocket costs with Parts A and B is to buy a Medigap policy.

Medigap plans can offset nearly all of the out-of-pocket costs of Original Medicare.

Medicare Part A (hospital coverage) includes cost-sharing for:

  • An initial deductible
  • The number of days you spend in the hospital (per-day fee)
  • The number of days you spend in a skilled nursing facility (per-day fee)

We won’t get into a detailed cost breakdown here, but suffice it to say that hospital bills alone can be astronomical.

With Medicare Part A, you can have more than one “benefit period” in a single year, meaning more than one set of deductibles and per-day fees for hospital stays in the same year.

But it’s not just Part A that you need to worry about.

In fact, in some ways, Part B can be even more of a burden. That’s because Medicare Part B (medical coverage) has an initial deductible plus a 20% coinsurance rate.

And that coinsurance rate has no cap under Original Medicare. That means you’ll pay 20% of your medical costs no matter how high they get each year.

Enter Medigap, a way to keep costs in check with traditional Medicare.

Medigap policies are private plans available to people with Original Medicare. For an added monthly premium, you can cover some or nearly all of the out-of-pocket costs under Parts A and B. These include:

  • The Part A deductible
  • Part A coinsurance & hospital costs
  • Part A hospice coinsurance
  • Coinsurance for skilled nursing facility care
  • The Part B deductible
  • Part B coinsurance
  • Part B excess charges
  • The first three pints of blood
  • Medical emergencies for travel outside the U.S.

Not every Medigap plan covers all of these benefits. There are 10 plan types: A, B, C, D, F, G, K, L, M, and N.

Actually, if you’re totally new to Medicare, there are only 8 plan types.

Plans C and F aren’t available to new Medicare enrollees starting January 1, 2020. The government eliminated them. (Take that up with the Centers for Medicare & Medicaid Services.)

In every state but three — Massachusetts, Minnesota & Wisconsin — all Medigap plans of the same letter type look the same. Plan G in Florida covers the exact same benefits as Plan G in Nebraska, in other words.

If you live in one of the three states that don’t standardize their plans with the rest of the country, your Medigap options will be a little different.

The great thing about standardized plans is that you can count on every private plan covering the same set of benefits. No need to compare the same plan types side by side because, well, they’ll look identical.

But you will need to pay attention to cost.

Medigap policies are standardized, but cost and availability vary based on where you live and the company you buy a plan from.

Important note: Medigap plans are guaranteed-issue if you buy a plan when you’re first eligible for Medicare.

As long as you sign up within six months of turning 65 and enrolling in Medicare Part B, you can buy a Medigap policy from any insurer that’s licensed in your state to sell one. Medical history won’t be used against you.

If you wait to buy a policy outside of that initial signup window, you may not be able to get one because insurers can use your health history to deny your application (or charge you more).

To recap, then:

  • Medigap plans are private plans sold by individual companies.
  • They’re available to people with Original Medicare (Parts A and B).
  • For an added monthly premium, these plans cover the high out-of-pocket costs under Original Medicare.
  • If you want a policy, get one within six months of enrolling in Part B. Otherwise, you might not be able to.

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