Medicare Supplement Insurance Plans

Fact Checked
Expert reviewed by: Ron Elledge, Medicare consultant
Published: 3/26/2021


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Ron Elledge
Medicare Consultant and Author
Ron Elledge
Medicare Consultant and Author

Ron Elledge is a seasoned Medicare consultant and author of “Medicare Made Easy.” As a Medicare expert, he regularly consults beneficiaries on Medicare rules, regulations, and strategies.

Medicare Supplement insurance plans are private insurance plans that are offered to help bridge the gap between the coverage you need and what is offered through Medicare. While Medicare pays for a large percentage of the healthcare services and supplies you may need, it does not offer complete coverage, so Medicare Supplement insurance plans can help fill in any missing gaps.

Medicare Supplement insurance plans are often referred to as Medigap policies, because they can help fill the gap between Medicare and healthcare needs. Many people use Medigap policies to help cover the costs of associated healthcare expenses, such as coinsurance payments, copays and deductibles.

Understanding Medicare Supplement Insurance Plans

  • Medicare Supplement insurance plans are private insurance plans that can help fill in any gaps in Medicare coverage for your healthcare service and supplies.
  • In order to purchase a Medicare Supplement insurance plan, you must first be enrolled in Medicare Part A and Part B.
  • Medicare Supplement insurance plans carry a monthly premium that must be paid separately from any Medicare premiums.
  • You can not be enrolled in a Medicare Advantage Plan and a Medigap policy.

What Coverage do Medicare Supplement Plans Offer?

The specific coverage that Medicare Supplement plans offer vary based on the plan you purchase. Medicare.gov offers an in-depth look at the precise coverage of each plan, but in general, Medigap policies will either fully cover, partially cover, or not cover the following services and supplies:

  • Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up
  • Part B coinsurance or copayment
  • The first three pints of blood
  • Part A hospice care coinsurance or copayment
  • Skilled nursing facility care coinsurance
  • Part A deductible
  • Part B deductible
  • Part B excess charges
  • Foreign travel emergency services
  • Out-of-pocket limit

High-deductible plans

Medigap also offers high-deductible plans in some states. If you choose a high-deductible plan, you pay the $2,370 deductible (in 2021) before the policy kicks in. However, the high-deductible plans C and F aren’t available to anyone who is newly eligible for Medicare on or after January 1, 2020.

Medicare deductibles

While Medigap can help cover the costs of deductibles, the one caveat to be aware of with Medigap plans is that they can not be used to cover your Part B deductible if you are newly eligible for Medicare. This means that if you are newly eligible for Medicare as of January 1, 2020, you will not be able to purchase Medigap plans C or F. However, if you were eligible for Medicare before January 1, 2020 but haven’t yet enrolled in Medicare, you can purchase one of the plans that cover the Part B deductible. Additionally, if you were eligible before that January 1 deadline and are already enrolled in Plans C, F, or Plan F with the high deductible, you can keep your plan.

Part D prescription drug coverage

Current Medigap policies do not cover prescription drugs. In the past, before January 1, 2006, some Medigap policies offered prescription drug coverage, but current plans do not offer prescription drug coverage. In order to receive prescription drug cover, you can join a Medicare Part D prescription drug plan. It is possible to purchase a Medigap policy and a Medicare drug plan from the same private company, but you may be responsible for paying both premiums separately.

What’s not covered by Medigap policies

In general, Medigap plans do not cover long-term care, vision or dental care, hearing aids and eyeglasses or private-duty nursing.

State differences

Medigap policies differ if you live in Wisconsin, Massachusetts or Minnesota. These states standardize their Medigap policies in a different way than the other states, including policies on basic and extended care plans.

How do Medicare Supplement Plans and Original Medicare Work Together?

When you purchase a Medicare Supplement insurance plan, your Medigap policy will serve as a secondary source of insurance. That means that Medicare will be used first to pay for any Medicare-approved costs for any healthcare supplies and services. After Medicare has been applied, then your Medigap policy will be charged.

In most cases, there is nothing additional you need to do in order to submit a claim to your Medigap plan, as most doctors and healthcare facilities will automatically bill your Medigap plan.

Are There Additional Benefits to Medicare Supplement Plans?

Other benefits of Medicare Supplement insurance plans include:

Travel coverage outside of the U.S.

Unlike Original Medicare, Medicare Supplement insurance plans offer the advantage of additional coverage for emergency health care when you are outside of the U.S. For instance, Medigap Plans C, D, F, G, M, and N offer foreign travel emergency health care coverage if you are traveling outside of the U.S. There are also additional Medigap policies that are no longer for sale, but if you are already enrolled in them, they cover you for emergency care while traveling as well.

Medigap policies that cover emergency healthcare with foreign travel have a lifetime limit of $50,000 and coverage only applies if it begins during the first 60 days of your trip and if no charges are eligible to be covered by Medicare first. Additionally, the Medigap policy will only pay 80% of the billed charges for eligible medically-necessary emergency care providing you pay your $250 yearly deductible. Additionally, the $250 deductible for foreign travel coverage is a separate deductible from any regular deductible that your plan stipulates.

Guaranteed renewable

Another benefit of a Medicare Supplement plan is that it ensures that you will have your plan guaranteed as renewable, even if you have health problems. Providing that you are paying your monthly premiums, your Medigap policy can’t be cancelled as a result of any existing health conditions.

Who Qualifies for Medicare Supplement Plans?

You are eligible to purchase a Medicare Supplement plan if you’re enrolled in Original Medicare. It’s recommended that you join a Medicare Supplement plan during your six-month open enrollment period, which is the initial six months when you first become eligible for Medicare. It starts the month you turn 65 and as soon as you are signed up for Medicare Part B. The benefit to enrolling in a Medigap policy during the open enrollment period is that you are guaranteed coverage to purchase, no matter what your health conditions are, and you may be able to lock in at a lower price and premium. After your enrollment period is over, you may have more difficulty finding coverage based on your health conditions and your costs and premiums may be higher as well.

There are also certain situations that you may be in called guaranteed issue rights which may stipulate if you have a right to receive a Medigap policy, regardless of your health conditions or any preexisting health conditions.

These include:

  • Moving out of the coverage area while in a Medicare Advantage Plan or Medicare SELECT Plan
  • Your existing Medicare Advantage Plan leaving Medicare coverage
  • Your other insurance plan outside of Medicare is ending
  • You are within your trial right period
  • Your plan coverage ends through no fault of your own

To be eligible to purchase a Medicare Supplement insurance plan, you must first be enrolled in Medicare Parts A and B and not be enrolled in a Medicare Advantage Plan. It’s illegal for an insurance company to sell you a Medigap policy if you’re already on a Medicare Advantage Plan.

The one exception to this would be if you’re in the process of switching back to Original Medicare out of a Medicare Advantage Plan. You have the right to switch out of a Medicare Advantage Plan within 12 months of purchasing a plan for the first time. You may also be eligible to switch out of a Medicare Advantage Plan and switch to a Medigap policy at other times, but you’ll have to speak to your company directly to see if you can disenroll.

Additionally, Medigap plans are individual plans, so if you have a spouse, both you and your spouse will have to purchase your own separate plans. You can find and compare Medigap plans and costs at Medicare.gov.

How Much do Medicare Supplement Plans Cost?

A Medicare Supplement insurance plan will have a monthly premium cost that you pay to the private insurance company that you purchased the plan through. You’ll pay your monthly Medigap policy premium separately of any Medicare premiums.

Costs can vary widely for Medicare Supplement plans because they are offered through private insurance companies, so you can compare costs from each company based on what kind of coverage you will need. You can purchase a Medigap policy from a licensed insurance company in your state.

In general, however, there are three ways that Medigap policies are priced:

Plan

Pricing

Community-rated (no-age rated)

This group of Medigap policies do not charge premiums based on age. Everyone in the policy gets charged the same premium number, regardless of their age.

Issue-age rated (entry-age rated)

These plans are priced based on the age you are when you purchase your Medigap policy. The premium price you pay is lower the younger you are when you purchase and that premium is one you will “lock” into as soon as you enroll. In other words, the premium won’t change as a result of your age once you are locked in (although inflation and other factors may increase the premium costs over time).

Attained-age rated

This plan sees your monthly premiums increase as your age increases. Younger customers will have lower premium costs that will increase yearly as they age.

Some of the other variables that may affect the cost of a Medigap policy include certain discounts that individual plan companies may offer, such as discounts for people who do not smoke, married couples, multi-policy discounts and electronic payment discounts.

There are also high-deductible plan options for Plans F and G, which will carry higher deductibles than the other plans. If you choose plans F and G, you will be responsible for the first $2,340 costs of deductibles, copayments, and coinsurance costs that aren’t paid by Medicare before your Medigap policy kicks in. The other costs to Medigap include the $250 foreign travel deductible, if you utilize it. Additionally, because Medigap policies do not include prescription drug coverage, you may have to pay a late enrollment penalty if you do not enroll in Medicare Part D prescription drug coverage when you first become eligible.

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