What Is Medigap Insurance?

Discover the federal laws that regulate the sale of Medigap policies. It is illegal for insurance companies to pressure you into buying one or provide false information about coverage.

Medigap insurance helps pay some of the health-care costs that Original Medicare does not, such as copayments, coinsurance and deductibles. There are 10 government-standardized plans with different benefits and premiums.

What is Medigap?

Medigap insurance (commonly referred to as Medicare Supplemental insurance) provides extra coverage that helps cover some of the out-of-pocket expenses not covered by Original Medicare, such as copayments, coinsurance and deductibles. With so many plans available and customizable to individual needs, it’s essential that research be performed before selecting one for yourself.

Your Medigap policy can be purchased from any private insurance provider licensed to sell them in your state. Each insurance provider sets its own premium rate; therefore it’s wise to compare prices from several providers before purchasing the coverage that best meets your needs at an economical cost.

Medigap policies purchased during the open enrollment period that starts when you turn 65 and enroll in Medicare Part B is typically guaranteed renewable; meaning the insurance company won’t cancel it as long as your premium payments remain on time and you don’t falsify information covered by it or they become insolvent. The only time your policy could possibly be cancelled by them would be if either premium payments stop, you falsify information covered by it, or they go bankrupt themselves.

Medigap plans often offer extras like foreign travel emergency healthcare coverage and home healthcare protection as well as hospitalization stipends. There are even tailored Medigap policies available for people needing skilled nursing facility or hospice coverage.

As you consider which plan best meets your health needs, take note of which additional health services may arise in the future. It’s also essential to look at cost and premium increases over time; some Medigap plans offer community rating so the premium stays the same regardless of age, while others use an issue age rating which will cause premium increases over time.

Medigap policies shouldn’t be seen as an alternative way of receiving Medicare benefits; Medicare Advantage plans offer additional services beyond what standard Medicare coverage can offer, including vision and hearing protection.

Who is eligible for Medigap?

Federal law mandates all Medigap policies be standard, making it easy to compare plans and benefits. Most states also regulate premiums for private Medigap policies and determine which rating systems insurers may employ, as well as when their premiums may change depending on age or health status.

Typically, in order to be eligible for one of the ten different standardized Medigap plans available today, Medicare Parts A and B must both exist first. These plans offer coverage from basic copayment and coinsurance payments up to extra benefits such as at-home recovery support or prescription drug coverage – some even include travel benefits! You can select the plan which best meets your budget needs.

Federal rules mandate insurers provide limited guaranteed issue periods, during which an insurer cannot deny coverage or charge more than another person with similar health histories. Such periods include when first enrolling in Medicare Advantage plans and changing back to traditional Medicare, or moving within or out of one’s coverage area of an MA plan.

Other states add their own rules and protections; Connecticut (CT), for instance, permits current Medigap policyholders to switch annually without incurring coverage gaps; similar policies exist elsewhere. Furthermore, all insurers selling Medigap must follow certain consumer protection laws such as not pressuring you into purchasing it quickly or misrepresenting a product to you.

Multiple states have made efforts to expand access to private Medigap policies for beneficiaries under 65, but these efforts have yet to prove successful. At present, the only way to obtain a private Medicare supplement is either through your employer-based health insurance plan or directly from an insurance provider. State and national programs offering high-risk pools are available to assist people with preexisting conditions in finding insurance coverage. Some of these pools can provide Medigap coverage; however, most do not. There are also private marketed plans available for people under 65 that do not fall under federal regulation but still offer coverage; these may have different underwriting criteria than standard Medicare supplements.

How much does Medigap cost?

Cost of Medigap plans varies based on numerous factors, including plan type and coverage selection. You can get help finding an appropriate policy by consulting a licensed broker with access to multiple carriers; some insurers even provide discounts for bundling plans together or paying through electronic funds transfer, among other options.

Cost can depend heavily on where you reside; premiums tend to be higher in metropolitan areas compared to rural communities. Even plans that appear cheaper at age 65 might become prohibitively costly when taken out at 85, so it is vitally important that you understand how each company prices its Medigap policies before making your selection.

There are three different methods of pricing policies depending on their type. Community, issue and attained age-rated policies will all have different monthly premiums; with community pricing, your monthly premium will depend on who else in your neighborhood is holding similar policies; although it won’t rise with inflation over time.

Issue-age-rated pricing is calculated based on your age at purchase; therefore, younger buyers will pay lower premiums due to inflationary increases. Attained-age-rated policies see their premiums increase over time as you age.

Certain Medigap plans offer maximum annual out-of-pocket costs that limit what you owe for approved services or items. Two popular plans, Plan K and L, feature these limits; in 2023, Plan K’s out-of-pocket expenses will top out at $6,940 while Plan L will cap them at $3,470.

Once you select your plan, it’s best to buy during your state’s open enrollment period from October 15 through December 7. During this time you can compare costs and benefits among various insurers; after this window closes you may have to wait six months before purchasing Medigap policies that cover preexisting conditions.

How do I get a Medigap policy?

Most people with original Medicare purchase a private Medigap policy to cover some or all of the expenses not covered by it. Others receive it from either their current or past employer or Medicaid, while still others get one through Medicaid. You can purchase such policies from any licensed insurer selling them within your state; typically standard plans A to N offer equal basic benefits regardless of which company sells them and may have different premium rates depending on which insurer sells them; once signed on you cannot be dropped from such coverage as long as payments continue being made to this policy provider! Premiums vary between providers but once paid will never drop out from such policies since there will never be cancellation charges attached as long as payments continue being paid each month – never fear being dropped!

Comparing policies available in your area is easy by calling your state’s health department or visiting Medicare.gov – both websites feature all plans available from insurers as well as prices. Prices change frequently so shopping around can help find you a great deal; an SHIP counselor (paid by insurance companies but does not recommend specific insurers or policies) may even assist in this endeavor.

Some companies that sell Medigap also provide Medicare SELECT policies – special Medicare Advantage plans designed for less costly services you receive at specific hospitals or doctors – enabling you to potentially save more with them by traveling or moving to warmer climates for the winter. These specialized policies often cost less than standard plans while offering greater coverage options than their predecessors.

If you’re turning 65, purchase a Medigap policy during either your open enrollment period or within 63 days after losing or changing other coverage (for instance when leaving an employment that provided health insurance). Under guaranteed issue rights, insurers cannot impose medical requirements or waiting periods–allowing you to choose any plan on the market.

Keep in mind, though, that Medigap or Medicare Advantage plans will only drop you if your premium stops being paid on time or if any material misrepresentations was made on your application. New policies can be reviewed for 30 days before they’re activated – cancellation within that window will result in a full refund being given back to you.