How to pick a Medigap plan

Avoid high medical costs by using Medigap insurance to cover what Medicare doesn't.

  • By Rachel Hartman,
  • U.S. News & World Report
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Medigap policies are extra insurance you can buy if you have Medicare. These plans are designed to help pay for some of the costs that are not covered by Medicare Part A and Medicare Part B. “Original Medicare leaves deductibles, copays and coinsurance behind for the beneficiary to pay for approved medical care and services,” says Danielle K. Roberts, co-founder of the insurance agency Boomer Benefits in Fort Worth, Texas. With a Medigap policy, you could potentially save thousands of dollars in medical bills.

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Here’s a look at how Medigap insurance works, what to consider when choosing a policy and the best time to enroll.

What is Medigap?

A Medigap plan is a private insurance policy that can help you pay for some of the out-of-pocket costs associated with traditional Medicare and sometimes additional services. You must pay a premium for Medigap insurance in addition to your Medicare Part B premium and Medicare Part D prescription drug premium.

Who is eligible for a Medigap policy?

To qualify for Medigap, you’ll need to have Medicare Part A and Medicare Part B. In general, individuals who are 65 and older are eligible for Medicare. If you have a Medicare Advantage plan, which is sometimes referred to as Medicare Part C, Medigap coverage is not available.

What Medigap covers

Medigap plans are designed to supplement Medicare coverage. There are a variety of different Medigap plans, and each one is identified by a letter. You’ll find Medigap plans including A, B, D, G, K, L, M and N. Each plan is set up to provide a different level of supplemental coverage to Medicare. “Different plans cover different things,” says Lev Barinskiy, CEO of SmartFinancial.com, an insurance comparison website. To see the exact benefits for each plan, it can be helpful to look at a plan comparison website, such as the one provided at Medicare.gov.

A key advantage of Medigap policies lies in the network of health providers you’ll be able to visit. “A Medigap policyholder can see any doctor who accepts Medicare,” says Shaun Greene, head of business operations at HealthPocket.

Medigap plans only cover one person, so if you’re married, you and your spouse will need to purchase separate policies. The plans do not cover prescription drugs, hearing aids, vision services, dental care or long-term care.

How to select a Medigap plan

Medigap policies are standardized, and each insurance company must offer established benefits for each plan. This means a Medigap plan with a given letter will be the same anywhere you buy it. “The only difference is the price,” says John Hill, president of Gateway Retirement in Rock Hill, South Carolina. "In every state, there are many companies offering the same coverage at a different price."

When choosing a plan, you’ll want to think about your budget and health factors. “If you are pretty healthy and don't go to the doctor often, Plan N may be a more cost-effective option than Plan G," Roberts says. "If you go to the doctor once a month, Plan G would likely be more cost-effective than Plan N." If you travel abroad frequently, you might opt for a plan that covers emergency services in other countries.

Once you know which plan will be best for your needs, you can compare prices among insurance companies and also read company reviews. “Compare premiums, average rate increases and financial ratings of the carriers,” Roberts says.

When to enroll in Medigap

You can sign up for a Medigap plan during the six months after you enroll in Medicare Part B. During that time, you can purchase any Medigap policy that is sold in your state. Even if you have health problems, it's guaranteed that you'll be accepted, and insurers won't charge you more based on your medical conditions during this initial enrollment period.

After six months have passed, you will no longer have the guarantee that your application will be accepted. Insurance companies might not grant you a Medigap policy if you have certain health conditions. Even if you are able to buy a Medigap plan, it may cost more.

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