What Is Medigap Insurance?

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Medigap Insurance – You may have heard people talk about Medigap insurance or Medicare Supplement plans as a way to fill in the “gaps” or “supplement” your Medicare coverage. Both names refer to the same kind of insurance policy. Medigap plans are a great way to reduce your out-of-pocket spending on your healthcare needs.

Today, we’ll discuss why you should enroll in a Medigap plan, which options are the most popular, and when to enroll.

Why Should I Enroll in a Medigap Plan?

You are not required to enroll in a Medigap plan. However, most Medicare beneficiaries choose to supplement their coverage under Original Medicare (Parts A and B) with either a Medigap plan or a Medicare Advantage plan. Both can be great options depending on your situation.

The reason most people choose to enroll in something other than Parts A and B is that there are so many out-of-pocket costs if you don’t have an extra policy. Part A, your hospital insurance, requires a hefty deductible each time you’re admitted to the hospital. (The current deductible in 2022 is $1,556, but it increases every year.) If you spend more than 60 days as an inpatient, you’ll also have a coinsurance cost per day of your stay. Part B, your medical insurance, also has an annual deductible, though it’s much smaller than Part A’s deductible. Your coinsurance responsibility under Part B is roughly 20%.

Those numbers might not sound too bad to some people, but the biggest problem is there is no limit on your cost-sharing. If you have only Original Medicare, you could be responsible for tens of thousands of dollars per year.

As we mentioned, both Medigap plans and Medicare Advantage plans will help with these costs. The nice thing about a Medigap plan is that it is very predictable. We’ll discuss a few of the most popular plans and their coverage details in the next section, but for now, just know that they are more predictable than Medicare Advantage plans.

In addition, Medigap policies do not utilize provider networks. As long as your provider accepts Medicare (and most do), they’ll also accept your Medigap policy, no matter which company you purchase it from. This gives beneficiaries a ton of freedom to choose providers and is especially helpful to those who travel frequently.

Traveling couple has freedom to choose medical providers thanks to their Medigap plan.
Beneficiaries have a ton of freedom to choose providers; this is especially helpful to those who travel frequently.

Popular Medigap Plans

There are actually about ten different Medigap plans to choose from, each named by a letter of the alphabet. We’re going to focus on the three most popular choices today.

Plan F

Plan F has been called the “Cadillac” of Medigap plans. Remember all those out-of-pocket costs we talked about with Parts A and B? It picks up every single one of them! Plan F policyholders have virtually no cost-sharing when it comes to their inpatient and outpatient medical services.

Of course, that also means that Plan F has some of the highest premiums. Premiums are calculated based on your location, gender, age, and tobacco use. Private insurance carriers can choose to set their own pricing, so it’s always a good idea to shop around for coverage. Benefits will always be the same, so there’s no sense in paying more for the same coverage! The average cost for Plan F ranges from $150 – $300.

Only those who turned 65 prior to January 2020 are eligible to enroll in Plan F.

Plan G

Plan G is very similar to Plan F. The only difference is that Plan G does not pay the Part B deductible. This year (2022), that deductible is $233. Plan G offers lower premiums than Plan F, often low enough to be more cost-effective, even with its slightly decreased benefits. The average premium for Plan G ranges from $120 – $220 per month.

Plan N

Beneficiaries who are looking for lower monthly premiums may consider Plan N. Like Plan G, it does not cover the Part B deductible. It also does not cover any Part B excess charges. An excess charge is an amount that non-Medicare providers can tack onto fees. They’re allowed to charge an additional 15% of the Medicare-approved amount. If that’s the case, Plan N will not pick up those costs. Before you consider that a great disadvantage, you should check to see if your state allows excess charges. Eight states have prohibited this practice.

The biggest difference you’ll notice between Plan N and Plan G is that Plan N requires you to pay some copayments. You’ll owe up to $20 for a visit to your provider and up to $50 for an emergency room visit that doesn’t result in admission. The average cost for Plan N is between $80 and $140 per month.

Who Can Enroll in Medigap Insurance?

Anyone who is enrolled in Parts A and B can choose to enroll in a Medigap plan. Plans C and F do have age limitations, but the others are open to all beneficiaries. You can enroll in Medigap at any time during the year. However, if you enroll more than six months past your Part B effective date, you may not be eligible for guaranteed issue rights.

Guaranteed issue rights mean that no carrier can deny your application based on current or past health history concerns. If you do not enroll during a time you have these rights, carriers can choose to deny your application. This is one of the reasons it’s so important not to miss enrollment periods!

If you’d like to learn more about Medigap plans, are ready to enroll, or want to find a plan with lower rates, speak to one of our independent agents. We’ll be sure to answer all your questions and find a plan that meets your needs. Call today for a free consultation.

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