Savings Tips

What Is Medigap?

Donna Freedman
Donna Freedman
October 20, 2022
What Is Medigap?

When you start researching how to apply for Medicare (or how to help your parents apply), a related word will keep popping up: Medigap. This is the collective term for 10 different insurance plans designed to fill in potential “gaps” in your Medicare plan.

Sold by private insurance companies, Medigap is secondary coverage: It kicks in once Medicare has paid as much as it’s going to for your inpatient or outpatient medical treatment. Medigap may take care of most (or all) copayments, co-insurance, deductibles and other expenses. 

Medicare is complicated enough all by itself. When you add options like Medigap and Medicare Advantage to the mix, it’s easy to feel overwhelmed. Here’s what you need to know about how Medigap works and how to make the right choices.

Fast facts about Medigap 

To get Medigap, you need to have Medicare Part A and Medicare Part B. You can buy a Medigap policy from any insurer that’s licensed to sell Medigap in your state, and you will pay a monthly premium for that policy (in addition to what you pay for Medicare Part B). 

Medigap is accepted anywhere Medicare is accepted, and 93% of all doctors accept Medicare. Your Medigap coverage will follow you all around the country, and you don’t have to choose a primary care doctor or get a referral. 

Medigap is guaranteed renewable as long as you pay your premium—that is, your policy can’t be canceled if you develop serious health issues. (However, in some states, an insurer may decline to renew a Medigap policy purchased before 1992.) 

You can’t buy Medigap if you already have a Medicare Advantage plan—unless you drop your Medicare Advantage plan and go back to original Medicare. Also, be aware that Medigap plans sold after January 1, 2006, no longer cover prescription drugs.

Why get Medigap? Won’t Medicare be enough?

Medigap could save you a bunch of money on out-of-pocket charges. For example, suppose you have a chronic condition that requires frequent doctor visits or specialized treatment. Medicare Part B will cover those visits, but you’ll be responsible for co-pays, co-insurance and a deductible. You’ll owe such things if you’re hospitalized, too.

Once Medicare has paid, your Medigap coverage will be applied to those costs. Depending on the plan you choose, you might owe little or nothing once Medigap has paid.  

In addition to hospital and outpatient copays, deductibles and co-insurance, Medigap plans can help pay for things such as: 

  • The first 3 pints of blood in a transfusion
  • Skilled nursing coinsurance
  • Foreign travel emergency care
  • Hospice care coinsurance or copayment 

Will those potential savings make up for the extra premiums you’ll pay to get Medigap coverage? They might not if you have a year with few or no medical appointments. Keep in mind, however, that a single night at a hospital would mean a $1,484 deductible for your Medicare Part A plan. If, during the year, you need things such as physical therapy, imaging or chemotherapy, you’d likely be on the hook for a 20% deductible. 

“Some people like the peace of mind of going to any doctor, and walking out without having to pay anything or receive a bill,” says Alexandria Roland, a licensed insurance agent and spokesperson for Boomer Benefits, a Medicare insurance brokerage.  

[ Read: How Medicare Works ]

When should I apply for Medigap?

If you decide to get Medigap, it’s generally best to do this within six months of the date your Medicare Part B plan goes into effect. During that time frame, insurance companies are generally not allowed to ask you any health questions (also known as medical underwriting). 

After that, you might have to answer those questions, and the answers might lead to a higher premium or to being declined for Medigap coverage.

A few exceptions exist. For example, those who have Medicare Advantage can dis-enroll from that coverage and buy Medigap insurance without any underwriting. However, this is true only if they drop their Medicare Advantage coverage within 12 months of signing up. 

Note: If you and your spouse both buy Medigap policies, some insurance providers will offer a household discount. 

What does a Medigap plan look like?

That depends on the plan you choose. Medigap has 10 standardized insurance plans that are identified with letters of the alphabet: Plans A, B, C, D, F, G, K, L, M and N. Each plan covers a different set of benefits. However, within each plan, the benefits are the same because they are standardized. For example, a Plan A policy will have the same benefits no matter what insurance company you buy it from.  

So, the key is to determine which plan offers benefits that are most important to you. Then you can compare offers from insurer to insurer to find the most affordable price for the plan you want. Some consumers opt to work with a Medicare specialist, such as Boomer Benefits or Chapter, to help determine the right choice for their situation.

The most popular plans for 2022 are Medigap Plan F, Plan G and Plan N, Roland says. However, Plan F is no longer available to people who became eligible for Medicare as of January 1, 2020. Plan G has the most comprehensive coverage of currently available plans. Plan N has the lowest premiums, but members need to cover some co-pays for doctor and emergency room visits plus up to 15% in excess charges from care providers who don’t accept Medicare assignment rates. (However, some states do not allow these charges; ask the insurer for the rule where you live.) . 

Are these “standardized” plans  the same everywhere?

Medigap plan policies are standardized in all but three states:

  • Massachusetts has a core plan plus two supplemental plan options
  • Minnesota has a basic and extended basic option
  • Wisconsin has a basic plan and 25% or 50% cost-sharing plans

How much does Medigap cost?  

The cost of a Medigap plan depends on five variables. The first, and most important, is the plan letter you choose. The other four are age, gender, zip code and any history of tobacco use.

While it’s impossible to say just how much you’ll pay, Roland says that Plan G (the most popular plan) could run between $90 to $180 a month, depending on where you live.

Is there anything Medigap doesn’t cover?

A common misconception is that “Medigap covers what Medicare doesn’t,” Roland says. That’s not the case: If Medicare doesn’t cover it, then Medigap won’t cover it, either. Instead, Medigap covers the portion of a bill that Medicare doesn’t, such as a co-pay for your doctor’s visit.

Thus, Medigap policies generally don't cover long-term care services, vision or dental care, hearing aids, eyeglasses or private-duty nursing. 

Can I wait to get Medigap?

Suppose everyone in your family has always lived long, healthy lives. You decide that Medicare Parts A and B will be enough. Why pay an additional Medigap premium that you might not use that often? The best bet might seem to be to take a wait-and-see approach.

The problem, though, is that if you wait to buy a Medigap plan until you are sick or develop a chronic condition, you might not be able to get coverage. As noted earlier, you have only a six-month timeframe to apply for Medigap insurance with no health questions asked.  After that period, you’ll have to go through medical underwriting, and there’s no guarantee insurers will offer you coverage if you don’t meet their underwriting requirements.

Do I need Medigap if I have affordable retiree health coverage?

If you were a state or federal government employee and have low-cost retiree health benefits, you might be wondering whether it’s necessary to get a Medigap plan. It depends. “We always recommend at least getting quotes and comparing the coverage,” Roland says. Sometimes state or federal health insurance premiums are higher than Medigap plans.

However, those who have the military benefit known as Tricare For Life probably don’t need to consider Medigap, she says.

What if I can’t afford Medigap?

Because there are 10 Medigap plans, it might be possible to find a plan that fits your finances. This would likely mean paying more out of pocket, though. For example, a plan might cover only 75% rather than 100% of the Medicare Part A deductible.

Depending on your income level, the state Medicaid program might pay part or all of your Medicare Part B premium, and possibly other costs as well. If you have Medicare Part D, Roland suggests applying for Extra Help, a federal subsidy with payment assistance for Part D premiums, deductibles and co-insurance. This could free up a little more room in your budget for a Medigap plan. 

Finally, it’s possible to purchase a Medigap plan during that six-month, no-questions-asked timeframe and keep it for as long as it’s feasible. “If the premium gets too high, they change back to a Medicare Advantage plan in the future,” Roland says.

[ Read: How Retirees Can Cut Healthcare Costs ]

The bottom line

Which Medigap plan—if any—should you choose? That’s a personal decision. Consider all the facts about health-care coverage and your individual circumstances before you make that choice. The federal government’s “How to Compare Medigap Policies” page is a good source of information. Also, working with a Medicare specialist company such as Boomer Benefits or Chapter can help clarify your options.

In some cases, your decision might be “I don’t want Medigap.” But don’t dismiss it out of hand. The right plan could save you thousands of dollars every year, easing the strain on your retirement budget and reducing stress over medical bills.

[ Keep Reading: What to Do When Health Insurance Won’t Pay a Claim ]

Donna Freedman

Donna Freedman

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