Medigap aims to provide additional medical insurance coverage for people on a Medicare plan, especially those who do not have the option to enjoy pensioner benefits (as provided by employers). This also applies to people who do not meet the requirements for Medicaid insurance. Just under a quarter of all Medicare clients have supplemented their medical insurance with Medigap insurance policies. Not surprisingly, there are a higher number of Medigap clients living in rural areas. Between 2006 and 2010, the rate of Medigap enrolment has remained mostly stable, even though other forms of medical insurance coverage have become available. Most people under the swathe of Medigap plans enjoy the benefit of being covered for Plan A and B deductibles as well as a few other Medicare cost-sharing obligations. These plans are fairly popular because they drastically reduce the potential for unexpected additional costs.

A few policymakers have suggested that Medigap coverage be discouraged. This would be their attempt at lowering the debt and deficit which causes the company so much trouble. The aforementioned restrictions would, in turn, necessitate more cost-sharing responsibilities. Naturally, these additional obligations could push policyholders to avoid looking for additional services provided by Medicare. Some want to charge the maximum allowable price for both Medigap and employer-sponsored pensioner health schemes. Others would only prohibit the first-dollar policy to new customers, leaving existing policyholders in the clear.

What These Discussions Could Mean for You

For beneficiaries, there would be cost implications hand in hand with proposals aimed to restrict Medigap plans coverage. If a premium surcharge happens, as many as five million 2010 first-dollar policyholders could have raised Medigap rates. Premium surcharges would not affect current policyholders and fewer beneficiaries would choose the first-dollar option in the future. As could be expected some beneficiaries may experience lower out-of-pocket costs while others who suffer comparatively poorer health or who have multiple hospital visits could be faced with more expensive care in years to come.

In the future, Medigap might continue to do great work in supplementary medicare, especially if Medicare Advantage crumbles in the face of reduced ACA payment or if employees slow on providing pensioner coverage. If cost-sharing needs rise to lower deficits, the demand for Medigap may rise as people seek more financial protection. Alternatively, demand could slow as time goes on if policymakers bring about changes to discourage or totally prohibit the purchase of Medigap policies in a part of a wider effort to stop an increase in Medicare spending.

by Lindsay Malzone, Lindsay Malzone is the Medicare expert for She's been contributing to many well-known publications as an industry expert since 2017. Her passion is educating Medicare beneficiaries on all their supplemental Medicare options so they can make an informed decision on their healthcare coverage.