15 Facts You Need To Know About Medigap (Including Coverage Restrictions)

Discover how Medigap can offer a financial safety net for your Medicare expenses.
Updated May 24, 2024
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Medicare can seem like a jumbled mess of choices. There are three parts to Original Medicare, or you can choose a Medicare Advantage plan.

Medicare Supplemental Insurance, or Medigap, is additional insurance you can purchase from a private health company. As the name implies, it's designed to fill in the gaps that Original Medicare does not cover. 

Before you sign up for Medigap during the open enrollment period, you need to know what a policy includes to avoid making mistakes with your health care coverage.

You can buy Medigap only if you have Original Medicare

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Original Medicare (Part A and Part B) is the standard type of Medicare insurance available to those who reach age 65. 

Part A, also known as hospital insurance, covers the costs you incur during hospitalization. Part B, or medical insurance, covers doctor visits and routine care.

Medigap policies cover copayments, coinsurance, and deductibles from your Original Medicare. It can also cover emergency medical care when you are overseas. 

Once you sign up for Original Medicare, you can then add on a Medigap policy.

Numerous Medigap policies are available

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Medigap is extra insurance you purchase. It is offered by one of numerous private insurers. You can shop around to choose the policy best suited for you.

There are 10 different types of Medigap policies, but these policies are standardized. That means that each insurance company offers the same thing based on the letter assigned to them (A-D, F, G, K-N). 

The difference is not in the insurance coverage one insurer offers but in how much they charge.

Medigap has restrictions on coverage

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Medigap helps cover the out-of-pocket costs you may pay when seeking care through your Original Medicare policy.

These policies do not provide vision or dental insurance, coverage for glasses or contact lenses, or coverage for hearing aids. 

They also don't provide long-term care coverage for a nursing home, and you can't use them to pay for any in-home health care you receive that goes above and beyond what Original Medicare offers.

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Medigap is not Medicare Advantage

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Medicare Advantage is a different means to access your Medicare coverage if you have Medicare Part A and Part B. Private health insurance companies provide it. You cannot buy and don’t need Medigap insurance with Medicare Advantage.

Seniors need to carefully consider whether they will benefit from Original Medicare or a Medicare Advantage plan. Consider both types of coverage before choosing which works for your needs.

Medigap covers deductibles

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With Original Medicare, you typically will have a deductible to pay. That’s the amount you pay before insurance kicks in. This deductible resets each year.

Part A's deductible is $1,632 for an inpatient hospital stay, and for Part B, that is $240. With a Medigap policy, you don't have to pay the deductible. The amount of coverage depends on the policy type you select, with some offering limited coverage.

Medigap covers copayments and coinsurance

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Copayments are a fee paid to the care provider when you get the service. For example, your doctor may charge you a copay of $50 for every visit. Medigap could pay for that.

Coinsurance is the amount of your bill you’re typically responsible for after insurance applies. For example, you may be responsible for 20% of your medical costs. Medigap covers this.

It pays for some costs related to long-term care

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Medicare, including Medigap, doesn't pay for your hospital stay once you reach the lifetime reserve limit.

However, the Medigap policy will cover a portion of this bill, including the coinsurance costs you may be required to pay and as many as 365 days of lifetime days. This extends some of your financial protection a bit longer.

Some Medigap will pay for foreign travel medical costs

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If you become ill while traveling overseas, your Original Medicare may not help with those costs, but Medigap will.

Some Medigap policies will cover foreign travel medical expenses up to the plan's limits. Available through Plans C, D, F, G, M, and N, consider these added protections if you frequently travel out of the country.

You can buy Medigap at anytime

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While available during open enrollment, you don't have to be in the annual open enrollment period to purchase Medigap.

You can buy a policy anytime once you sign up for Original Medicare. However, Medigap's private insurers can charge you more if you sign up outside of this period and have a pre-existing condition.

To avoid health questions and higher costs, the best time to buy Medigap is within six months, starting on the day you enroll in Medicare Part B.

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It’s critical to compare insurers

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Become a savvy shopper when buying Medigap. Your first step is determining which plan type is best for you, labeled A-N based on your needed coverage. Every Plan A policy, for example, has the same type of coverage. Every Plan B has the same coverage.

However, each private insurance company can charge you a different rate. That means that one Plan A may be significantly more expensive than another Plan A policy.

Medicare does not restrict premium cost differences, so you should shop around among multiple providers before choosing.

Consider the plan’s pricing structure

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Medigap plans have various pricing structures, which determine their costs to you. Some are attained-age plans, which means the premium is based on inflation and a person’s age. 

In a community-rated policy, the costs are equal across the board within a specific area, no matter a person's age.

They can also be issue-age policies. That means the premium will be based on the age at which you start the policy, though costs may increase based on inflation.

Medigap doesn’t cover prescription medications

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Medigap offers no benefit for prescription medications. You'll likely need a Part D plan to cover any medications your doctor prescribes you.

Original Medicare, Part A and B, does not cover medications either, so you may need a policy on top of Medigap to cover those costs.

Some plans cover hospice care

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Not all Medigap plans cover hospice care, though Plans K and L do (at 50% and 75%, respectively). If the policy covers hospice care, it will only cover the copayment and coinsurance charged to you.

Original Medicare may cover some hospice costs, but Medigap policies like Plans K and L help to extend that coverage.

Some Medigap policies have an out-of-pocket limit

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Some Medigap plans may have annual limits on your out-of-pocket costs for Plan A and Plan B. Specifically, for 2024, Plan K and Plan L have an out-of-pocket limit of $7,060 and $3,530, respectively.

Once you reach that limit, Plan K and Plan L will pay 100% of the costs.

Choose a policy based on your specific needs

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You can use the Medigap Plan Benefits chart on the Medicare website to easily compare what one policy offers and another does.

Choose based on what you expect to need. For example, if you may need skilled nursing care this year, Plan K and Plan L can offer a bit of help. 

If you know you have high costs related to visiting a doctor for specialist care, consider one of the plans that doesn’t have an out-of-pocket limit.

Bottom line

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Medigap policies are confusing because they offer so many options and limitations. Working with a professional who can learn more about your specific needs and then help you choose a policy may be a good idea. 

Also, you can contact your State Health Insurance Assistance Program (SHIP) for free help to choose a policy.

With health care costs rising as one ages, seniors may want to avoid wasting money on health insurance. Choosing the best policy and taking advantage of its benefits can improve your lifestyle even as you age.

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Author Details

Sandy Baker Sandy Baker is a has over 17 years of experience in the financial sector. Her experience includes website content, blogs, and social media. She’s worked with companies such as Realtor.com, Bankrate, TransUnion, Equifax, and Consumer Affairs.

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