What Does Medigap Cost?

By Medicare Benefits - October 13, 2020

Medicare is a healthcare program that offers insurance subsidized through the federal government for people 65 years of age or older, and individuals under the age of 65 with specific disabilities. Original Medicare benefits cover roughly 80% of a recipient's medical expenses, as long as the facility uses the Medicare-approved fee structure. 

Medicare Supplement insurance is also known as Medigap. These benefits help to cover the out of pocket costs of some healthcare services that Original Medicare won't cover. Medigap plans have costs that will vary depending on several factors. If you enroll in a Medicare Supplement policy during your 6-month initial enrollment period, you’ll have a guaranteed issue right to buy any Medigap policy sold in your state. If you wait until after this period ends, you can be charged more for a policy based on pre-existing conditions. Costs will also depend on the plan you enroll in, the company you purchase it from, and your location all factor in. 

Understanding Medigap Coverage

Medigap is a form of supplemental insurance that you can purchase to help pay for services or items that Medicare Part A and Part B won't cover. A few things that your Medigap policy can cover include: 

  • Part A and Part B deductibles
  • Any excess costs for Part B
  • Part A and Part B copays or coinsurance
  • First three pints of blood
  • Foreign travel healthcare costs

The specific services or items your policy will pay for depends on which Medigap plan you buy. You can currently choose from 10 different ones, and they use a letter system to designate each one. You can currently enroll in A, B, D, G, K, L, M, and N. Each plan comes with different coverage levels attached to them. Plans C and F have been discontinued for new enrollees, but individuals who had enrolled prior to 2020 can keep their coverage.

Even though private companies sell these Medigap policies, every plan is standardized. This means that each one of the 10 plans has to give recipients the same basic coverage levels. It doesn't matter which company you purchase it from. These policies are also guaranteed to be renewable as long as you continue to pay your monthly premiums. The company isn't allowed to cancel your Medigap policy for any other reasons, even if you start having health problems. 

Medigap Cost Breakdown

As with all Medicare Supplement plans, there are costs associated with it. It is slightly more difficult to break down Medigap's expenses, but we listed a general overview below. 

Copays and Coinsurance
Medigap doesn't have an association with copays or coinsurance. If your Medigap policy doesn't cover your Original Medicare copays or coinsurance, you may still have to pay them out of your own pocket. 

Deductibles
Medigap usually isn't associated with having a deductible. However, there is a catch. If your policy doesn't cover the cost of Part A or Part B deductible, you'll have to pay those each year. Plan G has a high deductible option available. This does help to lower your monthly premiums, but you'll have to pay a deductible of $2,340 for 2020 before your benefits will pay anything.  

Monthly Premiums 
Each policy has a monthly premium that varies by the policy itself. Insurance companies can set their premiums based on a community-rated scale, issue-age-related scale, and attained-age-rated scale. This is why you want to compare several different policies when you're shopping for coverage. It'll give you an idea of what scale the companies use for your area, and this will help you figure out your premium. You have to pay these premiums in addition to any other premiums you pay for your Medicare benefits, including: 

  • Medicare Part A (if you haven’t worked the 40 quarters needed to qualify for premium-free Part A)
  • Medicare Part B
  • Medicare Part D

Out-of-Pocket Limits
The out-of-pocket limits are the maximum amount of money you'll have to pay out of your own pocket before benefits kick in, and Plan K and Plan L have them. Once you meet this limit, these plans will cover any other services you have for the rest of the year at a 100% rate.

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