6 Things To Know About Medigap

First things first, Medigap is a supplement insurance to your Medicare, which is why it’s also known as Medicare Supplement Insurance. It’s designed to help you fill the holes in your Medicare coverage, such as co-payments, co-insurance and deductibles.

Just like Medicare, Medigap follows a letter pattern. There are Medigap Plans A, B, C, D, F, G, K, L, M and N. You may already feel overwhelmed, but it’s not as complicated as it seems!

Medigap plans are standardized, which means all plans of the same letter have the same exact coverage (except for a few select states such as Wisconsin, Minnesota and Massachusetts), only the price differs. This means insurance provider 1 may charge you more or less for the same Medigap X plan than insurance provider 2.

By carefully shopping around and requesting quotes from different insurance providers (or licensed insurance agents which can run the same quote for a large number of providers), you can save hundreds if not thousands of dollars per year for the same exact coverage.

In fact, according to the 2017 National Medicare Supplement Price Index, the difference between the lowest and highest possible Medicare Supplement Insurance premium can vary by as much as 121 percent for virtually identical coverage! Of course, this is the percentage of the most extreme cases, but even if you “only” save 20-30% on average, that is still very meaningful. 

6 important facts to understand about Medigap before enrolling:


1. You must have Medicare Part A and Part B to enroll

You can only enroll in Medigap (Medicare Supplement Insurance) once you have enrolled in Medicare Part A & Part B.

2. Timing Matters!

One of the most important things, perhaps even before choosing the right plan, is to enroll during the Medigap Open Enrollment Period. This period starts automatically when you are 65 years old and lasts six months after your Medicare Part B enrollment.

During this important 6-month period, you can join any Medigap plan with guaranteed issue rights. This means that even if you have pre-existing conditions, you will pay the same exact price as a healthy person and more importantly, insurers cannot turn you down for coverage because of your health status!

If, however, you miss this Open Enrollment period, it could be difficult to join or change Medigap plans as insurers are legally allowed to turn you down because of health status, make you pay a higher premium because of pre-existing conditions, force you to wait up to six months until coverage begins (known as the “pre-existing condition waiting period”),  or have you submit medical underwriting.

3. Medigap only covers one person

You cannot add a spouse to your Medigap insurance as it applies to one person only. However, some insurers offer spousal discounts. This can save you up to 12% per enrolled plan. If you and your spouse want to enroll at the same time, make sure to discuss this with the insurance company or licensed insurance agent!

4. Medigap is paid in addition to your Medicare Part B premium

In addition to your Medicare Part B premium, you will also have to pay for your Medigap insurance. You can’t use your Medigap to pay for your Medicare Part B, however, some Medigap plans will ease your financial burden under the Medicare Part B plan by paying all of your deductibles, coinsurance and copayments. A good insurance agent can walk you through this and do the math for you.

 5. Once in, you cannot be declined

If you enroll during Open enrollment, you cannot be denied. Similarly, once you have Medigap, insurers cannot cancel your policy, no matter how serious your health problems might be, as long as you continue to pay your premium.

 6. Insurers calculate prices differently

Before signing up for a Medicare Supplement Insurance, make sure you understand what pricing method the private insurance company uses as this will not only affect your premiums now, but more importantly, the future. There are three types:

  • Community-rated (also called “no-age-rated”) – usually, the same premium is charged to everybody, regardless of age or gender. Premiums will not go up because of age (but they might because of inflation or other factors).
  • Issue-age-rated (also called “entry-age-rated”) — the premium is based on the age in which you buy. Someone buying insurance at age 65 will pay less than someone who buys it at age 72. Premiums can also increase because of inflation or other factors.
  • Attained-age-rated – premiums will go up as you grow older. Insurances under this model might be significantly cheaper at first (say you buy it at age 65), but will go up over time because of your age. They might also increase additionally because of inflation or other factors.

In summary

  1. Make sure you understand the dates of your Open Enrollment period.
  2. Compare and choose the best plan for you.
  3. Shop around extensively and compare prices.

How did you like this article? Are there any questions you still have? What do you find most confusing about Medigap? Tell us by reaching out to us directly via email or by engaging in a conversation with us on Facebook.