Getting to know Medicare Supplement (Medigap)

Medicare Benefits Solutions
Nov 25, 2019

If you are signing up for Original Medicare, be prepared to experience sticker shock when you realize the level of cost-sharing required under the Original Medicare program.

To help lower out-of-pocket costs, you can purchase a Medicare Supplement policy. Also known as Medigap or “Med Supp,” Medicare Supplement helps cover the costs that Original Medicare does not, including deductibles, copayments, coinsurance, and medical care while traveling outside of the United States.

Typical Medicare Expenses

For Medicare coverage in 2021, the following costs are your responsibility:

Part A

  • Monthly premium (if you don’t qualify for premium-free Part A): $259-$471, depending on Medicare taxes you paid during your working lifetime
  • Deductible: $1,556 in 2022 for each benefit period with no maximum number of benefit periods you can have
  • Coinsurance during an inpatient stay in 2022: $389 per day from day 61 and $778 per day from day 91

Part B

  • Monthly premium: $170.10 in 2022 (more if your income exceeds a specified threshold)
  • Deductible: $233 in 2022 (per calendar year)
  • Coinsurance: 20% of the Medicare-approved amount for physicians, outpatient services and durable medical equipment

Part D

  • The premium varies with the plan
  • Higher premium if your income exceeds a specified threshold

Get Help Reducing Medical Expenses

Medicare beneficiaries can reduce medical expenses and costs by joining one of two Medicare programs:

  • Medicare Advantage Plan with prescription drug coverage (MA-PD) plan that offers lower out-of-pocket costs, expanded benefits and an out-of-pocket maximum
  • Original Medicare and purchasing Medigap (Medicare Supplement Insurance), which supplements your Original Medicare coverage by paying your deductibles, coinsurance and copayments.

Not all MA-PD plans and Medigap policies are the same. Shop around to identify a plan that includes the benefits you need. Please note – you cannot have both a Medigap plan and a Medicare Advantage plan

How Medigap Insurance Policies Work

When you present your Original Medicare and Medigap member ID cards to your Medicare-participating health care provider, the provider’s billing office submits claims to Original Medicare and the private insurer that sold you the Medigap policy.

Before you buy an insurance plan, keep this in mind to get help choosing a Medigap policy

  • Medigap policies are available through private insurance companies, which must identify these plans as Medicare Supplement Insurance.
  • Enrollment in Part A and Part B is a prerequisite for Medigap.
  • You are responsible for the Medigap monthly premium plus the Part B premium.
  • There is no such thing as a family plan under Medigap. You can’t add family members.
  • Medigap does not offer drug coverage, but you can purchase a stand-alone Medicare prescription drug plan.
  • You cannot have a supplemental plan and Medicare Advantage at the same time.
  • Medicare Supplement plan benefits are standardized, but premiums vary between insurers and can increase based on age and other factors.
  • Medigap has its own Open Enrollment Period, which starts the day of your 65th birthday and you are enrolled in Part B. This period gives you a guaranteed issue right to purchase any Medigap plan in your state. The period ends six months later.
  • Some states require Medigap insurers to sell Medicare Supplement plans to applicants under 65 who have certain conditions.

Finding and Comparing Medigap Plans

Medigap policies are sold by private insurance companies, and are standardized and regulated by the federal government. They are identified by letters A-N, and you will pay a monthly premium for the coverage. Costs can vary between the same Medigap plan from different companies, even in the same state. Some plans offering more benefits in exchange for a higher premium.

Medicare Supplement Enrollment

Most people choose to enroll in a Medicare Supplement plan when they are first eligible. You will have an initial Medigap Open Enrollment Period. During this 6-month period that starts when you are 65 years old and enrolled in Medicare Part B, you can buy any Medigap plan sold in your state without medical underwriting.

In other words, you cannot be turned down or charged more due to pre-existing conditions during this period. If you choose not to enroll in a Medigap plan when you are first eligible, you will not have a guaranteed issue right to join one.

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