Original Medicare pays for a wide range of services, but it won’t cover everything. Even when something is included in your Medicare policy, you may have to pay a copay or hit a deductible before getting full coverage. Medigap insurance can help fill these gaps, offering you broader insurance coverage.
What Is Medicare Supplement Insurance (Medigap)?
Medigap insurance, also known as Medicare Supplement, is special private insurance standardized by the Medicare system. It's sold to people with Original Medicare (Parts A and B). In addition to paying deductibles, copayments, and coinsurance, some Medigap plans also cover additional services, or kick in when your Medicare benefits are maxed out.
Each insurer sets their own premium rates, so prices vary. The specific formula that the insurer uses to determine rates will affect costs now and in the future, according to the Centers for Medicare and Medicaid Services.
For example, attained-age-based premiums increase as you get older, while insurers using community-based pricing may charge a slightly higher premium, but the premium won’t increase due to age with time. An issue-age-based policy will charge a lower premium for people who enroll at a younger age, and will not increase due to age as time goes on.
In addition, you can’t buy Medigap insurance if you have a Medicare Advantage plan, according to the Centers for Medicare and Medicaid Services. Also, those who are newly eligible for Medicare after January 1, 2020 cannot use Medigap insurance to pay their Medicare Part B deductible.
What Do Medigap Policies Cover?
All Medigap policies can help you cover upfront costs like copays, coinsurance, and deductibles—as long as you meet eligibility requirements for this coverage.
70% of seniors who live past age 65 will need some form of long-term care, and 48% will receive some form of paid care during their lifetime, according to an analysis published by the U.S. Department of Health and Human Services. This care can have a massive financial burden on families, but Medicare almost never covers it. However, most Medigap policies do.
If you have a chronic or progressive illness, or a family history of conditions like dementia, a Medigap policy could offer peace of mind and save your family money.
It’s also worth noting that Medigap policies do not typically cover services like hearing aids or dental care. However, Medicare Advantage plans, which are private alternatives to traditional insurance, often do cover these services.
So, it’s important to consider which services you need most and compare the costs not only of each plan but of the services they do not cover.
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