When it’s time to sign up for Medicare, you might find the process daunting from all the different options.
Navigating through the sea of information is crucial, especially when distinguishing between original Medicare and Medigap.
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Four Parts of Medicare
Medicare consists of four parts that provide a unique level of coverage. Each part plays an important role in giving beneficiaries comprehensive medical insurance, from hospital and physician care to drug coverage and other benefits.
The four parts of Medicare are:
— Part A (hospital insurance). Part of original Medicare, Part A includes benefits such as inpatient care in hospitals, skilled nursing facility care, hospice care and home health care. Most beneficiaries do not pay a monthly premium if they or their spouse have paid Medicare taxes, typically for 10 years, during their working years.
— Part B (medical insurance). Part of original Medicare, Medicare Part B covers medically necessary services and preventive services, including doctor and other health care provider visits, outpatient care, annual physical exams, vaccines, and durable medical equipment (such as walkers or wheelchairs). The standard monthly premium in 2024 is $174.70, but this can be adjusted depending on your income.
— Part C (Medicare Advantage). These plans are not part of original Medicare. Instead, Medicare Advantage plans are stand-alone insurance options administered by private insurance companies. They must include everything that original Medicare covers, as well as some benefits that Parts A and B do not cover, such as prescription drug coverage or some vision and dental care. They are not standardized like original Medicare, so each plan has different benefits as well as premiums, deductibles and out-of-pocket costs.
— Part D (prescription drugs). Medicare Part D can be used in tandem with original Medicare. Once you have signed up for Parts A and B, you can find your Part D options here. Part D plans are administered by private insurance companies and vary in terms of specific drugs covered, premium costs, deductibles and in-network pharmacies.
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What Is Medigap?
Medicare supplemental insurance, also known as Medigap, is extra insurance that you can purchase from a private health insurance company to help cover the “gaps” of original Medicare.
After all, it’s impossible to predict every medical need with certainty, and since original Medicare only covers 80% of costs after the deductible and lacks an out-of-pocket limit, medical bills can really add up. Medigap plans are designed to help cover the 20% you are responsible for.
This plan is helpful for those who have original Medicare but want a supplemental plan that helps cover both smaller costs, such as copays and deductibles, and larger costs, such as a long-term hospital stay.
Types of Medigap plans
There are 10 standardized Medigap plans available in most states, identified by letters: A, B, C, D, F, G, K, L, M, and N.
By law, each lettered plan offers the same core benefits regardless of the insurance provider. However, many times for the same plan the costs can vary between insurance companies, so it’s important to compare prices for the same lettered plan to ensure you get the best deal.
Keep in mind while you are looking for a plan that Medigap monthly premiums are in addition to your regular Medicare premiums.
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Who Is Eligible for Medigap Insurance?
To be eligible for a Medigap plan, certain criteria must be met. This includes:
— Age requirement. Those who are ages 65 and older qualify. Federal law does not require companies to sell Medigap plans to those who qualify for Medicare and are under 65, but some states do.
— Enrollment in original Medicare. You must sign up for Parts A and B to qualify. Those enrolled in an Advantage plan do not qualify for Medigap insurance.
— Residency. While each lettered plan provides the same benefits, that doesn’t mean that each one is offered in your state. Plans offered in Massachusetts, Minnesota and Wisconsin have different standards of coverage.
Benefits of Medigap Insurance
There are benefits of having a Medigap insurance plan. While the monthly premiums can be expensive depending on the plan selected and depending on your health, they can save you money in the long run.
— Parts A and B coinsurance coverage. No one likes to feel nickel-and-dimed by smaller charges, such as coinsurance or copays. If you visit the doctor often, these charges can really add up. If you need surgery or a long hospital stay, these plans can give you peace of mind knowing that you won’t have large and potentially financially crippling medical bills coming due.
— Predictable health care costs. Medigap plans also offer the benefit of predictability in your health care costs, making it easier to budget for medical expenses.
— Renewable coverage. Medigap plans are renewable as long as you pay the premiums, providing lifetime coverage.
— Foreign travel coverage. Another advantage is that Medigap plans often include coverage for foreign travel emergencies, which original Medicare does not cover, giving you additional protection if you travel internationally.
Choosing a Medigap Plan
Once you have found the lettered plan whose benefits best fit your needs, it’s time to do a little comparison shopping.
“No matter what plan you are considering, exploring plan details and speaking with providers and others who have already purchased the plan you are considering is worthwhile,” says Joe Baker, president emeritus of the Medicare Rights Center, a nonprofit that helps older adults understand Medicare benefits based in New York City.
The most comprehensive Medicare supplement insurance plan is Plan F, which covers an extensive array of benefits. Plan F is understandably the most popular plan, according to Baker. However, these plans have not been available to people new to Medicare since January 1, 2020. Individuals who were eligible for Medicare as of that date but not yet enrolled may still be able to buy one of these plans, and individuals who enrolled before January 1, 2020, have been allowed to keep their plan since the rule change.
New members who are not eligible for Plan F may want to consider Plan C, which covers nearly everything Plan F covers except excess charges. Excess charges allow a physician to charge up to 15% above the Medicare-approved amount, and this is passed on to the patient and billed directly to them.
When to Enroll in a Medigap Plan
The best time to purchase a plan is the six-month period after your 65th birthday and enroll in Parts A and B. This is known as your Medigap open enrollment period, and unlike the yearly Medicare open enrollment period, this only happens once. During this time, you can buy any policy available at preferred pricing regardless of pre-existing health conditions.
Changing your Medigap coverage outside of this period can result in losing your preferred status. There are some exceptions, and Medicare.gov provides an online tool to check if you have a legal right to switch or drop Medigap policies. Outside of this six-month window, insurers may charge higher premiums or decline coverage based on factors such as pre-existing conditions or age.
You can sign up for a Medicare supplemental insurance plan online by going to Medicare.gov or by calling Medicare at 1-800-633-4227.
Bottom Line
Medigap plans help fill in the “gaps” in coverage for those who have original Medicare. Signing up for a Medigap plan can be a smart financial move to help shield you from large medical bills. Additionally, Medigap plans offer the flexibility to choose any doctor or hospital that accepts Medicare, without the need for referrals.
Medigap policies are standardized, meaning the benefits of each plan type are the same across all insurance companies to ensure members receive consistent coverage regardless of the health care provider.
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What’s the Difference Between Medicare and Medigap? originally appeared on usnews.com
Update 07/25/24: This story was previously published at an earlier date and has been updated with new information.
