How to Buy Medigap Supplemental Insurance to Fit Your Needs
Buying Medigap (also known as Medicare Supplement Insurance) has a lot to do with knowing when and how to buy. We break down the different situations that affect buying a policy to help you better identify where you fit. And you’ll have the basic information you need to feel more confident when you’re ready to enroll in a plan.
What Is Medicare Supplement Insurance (Medigap)?
Medicare Supplement Insurance is a type of supplemental medical insurance for seniors that is sold by private insurance companies to help cover some costs after Original Medicare (Medicare Parts A and B). These costs are mainly out-of-pocket expenses such as copayments and coinsurance for covered Medicare services. Medigap policies are designed to work only with Original Medicare. So, you must be enrolled in both Medicare Part A and Part B to buy a Medigap plan.¹
There are eight Medicare Supplement Insurance plans for new enrollees, which are represented by letters: A, B, D, G, K, L, M, and N. There are also two plans (C & F) that are available only to people who were eligible for Medicare before January 1, 2020. Each plan letter offers the same basic benefits from company to company. (In Massachusetts, Minnesota, and Wisconsin, plans offer a separate set of benefits.) Insurance companies are not required to sell every Medicare Supplement plan, and some state laws could affect which plans are available in your area.²
Medigap Premium Costs
In addition to your Medicare Part B premium, you pay a monthly premium for Medigap. Because Medigap plans provide different levels of coverage, premiums vary by plan type. The premiums charged for the same plan can also be very different from company to company. Other factors that determine how much you pay for Medicare Supplement Insurance include:3
- Your location.
- Whether your policy went through medical underwriting.
- Your age—companies can use an:
- Issue-age-rated pricing based on your age when you bought the policy,
- Attained-age-rated pricing based on your age each year, or a
- Community-rated pricing where everyone pays the same regardless of age.
- Certain discounts, such as being a non-smoker, paying your premium annually, or paying using electronic funds.
Buying Medigap During Your Open Enrollment Period
Your Medigap Open Enrollment Period (OEP) is the timeframe in which you can first buy any Medigap plan available in your area—regardless of whether you have health problems—and for the same price as a healthy person. Your OEP lasts for 6 months. It starts on the first day of the month you’re 65 or older and enrolled in Medicare Part B. For example, if you turn 65 and enroll in Medicare Part B in May, then May 1 through October 31 would be the best time to enroll.4
If you choose to delay enrollment in Medicare Part B and you don’t buy a Medigap plan when you’re first eligible, you might have to pay a Part B late enrollment penalty. But there’s an exception if you’re eligible for Medicare and have job-based insurance.4
Delaying Part B and Medigap Enrollment When You’re Still Working
If you or your spouse are still working past the Medicare-eligible age, delaying Medicare Part B enrollment—which also delays your Medigap OEP—may be in your best interest if you have group health insurance through an employer or union. Before you decide if you want to keep your employer insurance, it’s a good idea to review Medicare Supplement Insurance plans to ensure you opt for the right choice for you.4
These are some of the reasons you would want to delay Medicare Part B enrollment if you have health insurance through an employer or union:4
- In most cases, group health insurance based on current employment is often similar to Medicare Part B coverage.
- You won’t have to pay for Part B benefits before you really need them.
- If you enroll in Part B when your employer coverage ends, you won’t have to pay the Part B late enrollment penalty.
- You can use your Medigap OEP when it’s more of an advantage to you.
Note: If you’re going to delay enrollment in Medicare Part B because you’re currently employed, contact Social Security to let them know. If you do choose to enroll in Part B while you have employer coverage, your Medigap OEP will start. If you don’t buy a Medigap plan during this time period, you will miss your OEP, and you won’t get another OEP when your employer coverage ends.4
Buying Medigap Outside of Your Open Enrollment Period
If you wait until after your OEP to buy a Medicare Supplement Insurance plan, an insurance company can use medical underwriting to determine whether you qualify for a policy. If you don’t meet underwriting requirements because of your health, the company doesn’t have to sell you a policy outside of your OEP—unless you have guaranteed issue rights.4
If you’re not able to buy a Medigap policy, some states will allow you to buy another type of supplemental insurance for seniors on Medicare called Medicare SELECT. These policies limit your healthcare provider choices to those within the plan’s network.5 When you enroll in Medicare SELECT, you have 12 months to decide whether you want to keep this coverage or switch to a standard Medigap policy.4
Buying a Medicare Supplement Insurance When You Have a Pre-Existing Condition
You can buy Medicare Supplement Insurance if you have a pre-existing condition, but the insurance company could make you wait for up to 6 months before providing coverage related to your condition. In certain instances, this “pre-existing condition waiting period” can or must be waived under the following circumstances: 4
- If you buy a plan during the Medigap OEP and you’re replacing prior creditable coverage, the insurance company may waive or shorten the waiting period.
- If you had at least 6 continuous months (with no break in coverage for more than 63 days) of prior creditable coverage, the insurance company is not allowed to make you wait before covering your pre-existing condition(s).
- If you buy a policy because you have a guaranteed issue right, the insurance company cannot place a pre-existing condition waiting period on your policy.
Unless you have a guaranteed issue right, an insurance company is allowed to exclude coverage for a pre-existing condition if the condition was treated or diagnosed within 6 months before the coverage start date of the Medigap supplemental insurance policy. However, your Original Medicare benefits would still cover treatment for your pre-existing condition. If the Medigap plan doesn’t cover it, you would have to pay your Medicare copayment or coinsurance out of pocket.4
Buying Medigap Supplemental Insurance When You Have a Guaranteed Issue Right
In certain situations—usually when other coverage you have changes in some way or you lose or drop other coverage—Medigap protections under federal law ensure that insurance companies cannot:6
- Deny you a policy because of your health.
- Charge you more for a policy because of past or present medical conditions.
- Issue you a policy with conditions, such as exclusions for pre-existing conditions. (All pre-existing conditions must be covered.)
In other cases, you have a “trial right” to try a Medicare Advantage plan and still enroll in a Medigap policy if you change your mind. You must apply for a Medigap policy within 63 days of the date your other coverage ends to use your guaranteed issue rights. Guaranteed issue rights apply to Medigap plans A, B, K, and L.6
Medigap Out-of-Pocket Costs
After Medicare pays the approved amount for a covered medical service, your Medigap policy usually kicks in to cover Medicare’s out-of-pocket costs. There are, however, certain plans that require you to pay your annual Part B deductible and reach your annual Medicare Supplement out-of-pocket limit before costs are covered. The percentage of the costs your Medigap benefits will cover, if any, depends on the plan type. As shown in the chart below, some Medigap plans provide no coverage for certain benefits, while other benefits are covered at either 50 percent, 75 percent, 80 percent, or 100 percent.2
For example, you get 100 percent coverage for your Part B coinsurance or copayments under Medigap Plans A, B, D, G, M, and N. But you get 50% coverage on Plan K and 75% coverage on Plan L for Part B coinsurance or copayments. Keep in mind, though, that there is no “good” or “bad” plan—the plan you choose depends on your needs and budget. Also, a Medicare Supplement plan that provides less coverage usually has a lower premium than a plan that provides a higher level of coverage.2
|Medigap Benefits²||Plan A||Plan B||Plan C||Plan D||Plan F||Plan G||Plan K||Plan L||Plan M||Plan N|
|Part A coinsurance and hospital costs up to an extra 365 days after Medicare benefits are used up||100%||100%||100%||100%||100%||100%||100%||100%||100%||100%|
|Part B coinsurance or copayment||100%||100%||100%||100%||100%||100%||50%||75%||100%||100%***|
|Blood: first 3 pints||100%||100%||100%||100%||100%||100%||50%||75%||100%||100%|
|Part A hospice care coinsurance or copayment||100%||100%||100%||100%||100%||100%||50%||75%||100%||100%|
|Skilled nursing facility care coinsurance||No||No||100%||100%||100%||100%||50%||75%||100%||100%|
|Part A deductible||No||100%||100%||100%||100%||100%||50%||75%||50%||100%|
|Part B deductible||No||No||100%||No||100%||No||No||No||No||No|
|Part B excess charge||No||No||No||No||100%||100%||No||No||No||No|
|Foreign travel exchange up to plan limits||No||No||80%||80%||80%||80%||No||No||80%||80%|
|**The plan pays 100% of the costs for covered services for the calendar year after the out-of-pocket yearly limit and yearly Part B deductible has been met.
***Plan N’s Part B coinsurance is covered at 100%, except for up to $20 in copayment for some doctor’s office visits and up to $50 in copayment for emergency room visits that don’t require inpatient admission.
Medigap Supplemental Insurance Tips
- Not sure if a Medicare Supplement plan or a Medicare Advantage is the right choice? Take the HealthMarkets Medicare shopping quiz. You can answer a few short questions for a determination.
- Enroll in either Medigap or Medicare Advantage—you can’t have both at the same time.1
- If you buy Medigap, you must enroll in a Medicare Part D plan to get prescription drug coverage.1
- Remember that you pay both your monthly Medicare Part B premium and Medigap premium1.
- If possible, wait until your Medigap Open Enrollment Period to buy a policy when it’s guaranteed to be issued.6
Another tip in getting the most out of supplemental coverage for seniors on Medicare is working with HealthMarkets. We can help you identify the Medicare Supplement plan that best fits your healthcare needs and budget with no obligation to enroll.
Call a HealthMarkets licensed agent anytime at (800) 827-9990, or meet with a licensed agent near you.