Understanding and using medicare's 'medigap' plans

What Medigap plans cover

Original Medicare, which includes Part A (hospital insurance) and Part B (medical insurance), covers a significant portion of healthcare costs. However, it doesn't cover everything. You'll still be responsible for deductibles, copayments, and coinsurance. This is where Medigap plans come in. These plans are sold by private insurance companies and are designed to fill in the "gaps" in original Medicare coverage. They help pay for some of the out-of-pocket costs that original Medicare doesn't cover.

It's important to understand that Medigap plans work alongside your original Medicare. They do not replace it. If you have a Medigap policy, original Medicare will pay its share of the approved amount for covered healthcare costs, and then your Medigap policy pays its share. For example, if Medicare Part B covers 80% of a doctor's visit after your deductible, a Medigap plan might cover the remaining 20%.

When to enroll in a medigap plan

The best time to buy a Medigap policy is during your Medigap Open Enrollment Period. This six-month period begins on the first day of the month in which you are 65 or older and enrolled in Medicare Part B. During this time, insurance companies are required to sell you any Medigap policy they offer, regardless of your health status. They cannot use medical underwriting to refuse you coverage or charge you higher premiums based on pre-existing conditions.

If you miss this window, you may still be able to buy a Medigap policy, but insurance companies may be able to deny you coverage or charge you more based on your health. Certain situations, such as losing other health coverage, may grant you a special enrollment period, but the guaranteed issue rights are strongest during your initial open enrollment. Planning ahead to enroll during this period can save you considerable worry and cost.

Choosing the right medigap plan for you

There are several standardized Medigap plans, each identified by a letter (A, B, C, D, F, G, K, L, M, N). Each plan of the same letter offers the exact same basic benefits, no matter which insurance company sells it. The only difference between plans of the same letter sold by different companies is the premium charged.

When choosing a plan, consider your current health, anticipated healthcare needs, and financial situation. For instance, Plan G is a popular choice as it covers all Medicare Part A and B deductibles, copayments, and coinsurance, except for the Part B deductible. Plan N offers lower premiums but requires copayments for some office visits and emergency room visits that don't result in an inpatient admission. Compare the benefits of each plan letter against your potential out-of-pocket costs and premiums to find the best fit. Your State Health Insurance Assistance Program (SHIP) can offer personalized, unbiased advice.