Medigap Insurance is a supplement to Medicare coverage. Sold by private insurance companies, it can offset some healthcare expenses that aren’t covered by Original Medicare. Those costs include copayments, coinsurance, and deductibles.

Key Takeaways

  • Medigap policies supplement healthcare costs and services that Original Medicare doesn’t offer.
  • You must be enrolled in Medicare Parts A and B before enrolling in a Medigap policy.
  • Policyholders pay a monthly premium to their Medigap insurance provider in addition to their Medicare Part B premium.
  • Many Medigap plans may not offer prescription drug or long-term medical service coverage. If that is essential to your health coverage, consider another form of Medicare supplement insurance.

What is Medicare supplement (Medigap) insurance?

Along with costs, Medigap policies can cover services that Original Medicare doesn’t, such as medical care when traveling outside the United States. If you have the Original Medicare and purchase a Medigap policy, Medicare will pay its portion of the amount approved for covered health care expenses and your Medigap policy will pick up its share.

Medigap policies differ from Medicare Advantage Plans. Medicare Advantage essentially replaces Original Medicare Parts A & B, while sometimes offering additional coverage. A Medigap policy simply supplements the Original Medicare benefits you currently receive

What you should know about Medigap policies

  • Applicants must be enrolled in Medicare Parts A and B before applying for a Medigap policy.
  • You can apply for a Medigap policy if you have a Medicare Advantage Plan, but you must leave the Medicare Advantage Plan before your Medigap policy becomes effective.
  • You pay a monthly premium to the private insurance company for your Medigap policy along with the monthly Part B premium Medicare charges.
  • Medigap policies only offer individual coverage. Married couples who want coverage must purchase separate policies.
  • Medigap policies can be purchased from any insurance company in your state that is licensed to sell them.
  • Standardized Medigap policies are guaranteed renewable even if you have health issues. That means your insurance company cannot cancel your Medigap policy as long as your premiums are paid.
  • Some previously sold Medigap policies covered prescription drugs. However, policies sold after January 1, 2006, aren’t permitted to do so. That coverage is only available through a Medicare Prescription Drug Plan (Part D).
  • It is illegal for anyone to sell you a Medigap policy if you have a Medicare Medical Savings Account (MSA) Plan.
  • Medigap policies don’t cover everything. Typically, long-term, vision and dental care, hearing aids, glasses or private duty nursing are excluded.

Insurance plans that aren’t Medigap

The following insurances are not Medigap plans:

  • Medicare Insurance Plans (HMO, PPO or Private Fee-for-Service)
  • Medicare Prescription Drug Plans
  • Medicaid
  • Employer or union plans, including the Federal Employees Health Benefits Program (FEHBP)
  • TRICARE
  • Veterans’ Benefits
  • Long-term care insurance policies
  • Indian Health Service, Tribal and Urban Indian Health Plans

Dropping your entire Medigap policy (not just the drug coverage)

If you decide you want to cancel your entire Medigap policy, you must be careful about when you do so. You might opt for a totally different Medigap policy (not just your current one minus the prescription drug coverage) or you may want a Medicare Advantage Plan that covers prescriptions.

If you discontinue your current Medigap policy and the drug coverage was not creditable, or you have to wait over 63 days before your new coverage takes effect, you’ll be responsible for a late enrollment fee for your Medicare Prescription Drug Plan (if you sign up for one).

For more information:

  • Find a Medigap policy
  • Call your State Health Insurance Assistance Program (SHIP)
  • Call your State Insurance Department
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