Medicare supplement insurance (also called Medicare supplemental insurance or Medigap) is a type of private health insurance sold to supplement Medicare in the United States. Medigap insurance provides coverage for many of the co-pays and some of the co-insurance related to Medicare-covered hospitals, skilled nursing facilities, home health care, ambulance, durable medical equipment, and doctor charges.
The name Medigap is derived from the notion that it exists to cover the “gap” between the amounts reimbursed to providers by Medicare Parts A and B and the amounts authorized by the United States Centers for Medicare and Medicaid Services (CMS).
Approximately 14 million Americans had Medicare Supplement insurance in 2018, according to a report by the American Association for Medicare Supplement Insurance.
Every Medigap policy must follow federal and state laws designed to protect you, and it must be clearly identified as “Medicare Supplement Insurance.” Insurance companies can sell you only a “standardized” policy identified in most states by letters.
All policies offer the same basic benefits but some offer additional benefits, so you can choose which one meets your needs. In Massachusetts, Minnesota, and Wisconsin, Medigap policies are standardized in a different way.
Each insurance company decides which Medigap policies it wants to sell, although state laws might affect which ones they offer. Insurance companies that sell Medigap policies:
The cost of a Medigap plan can vary due to several factors, including the type of plan you enroll in, where you live, and the company selling the plan.
Each Medigap policy has a monthly premium. The exact amount can vary by individual policy. Insurance companies can set monthly premiums for their policies in three different ways:
Community rated. Everyone that buys the policy pays the same monthly premium regardless of age.
Issue-age rated. Monthly premiums are tied to the age at which you first purchase a policy, with younger buyers having lower premiums. Premiums don’t increase as you get older.
Attained-age rated. Monthly premiums are tied to your current age. That means your premium will go up as you get older.
Note: Medigap plans sold to people who are newly eligible for Medicare aren’t allowed to cover the Part B deductible. Because of this, Plans C and F aren’t available to people newly eligible for Medicare on or after January 1, 2020. If you already have or were covered by Plan C or F (or the Plan F high deductible version) before January 1, 2020, you can keep your plan. If you were eligible for Medicare before January 1, 2020, but not yet enrolled, you may be able to buy one of these plans that cover the Part B deductible.
If you are interested in enrolling in a Medigap policy, it is crucial to compare multiple plans available to you. You can use this information to determine how premiums are set and how much you should expect to pay monthly.
