Medigap - Medicare Supplement Insurance

Key Takeaways

medigap insurance

  • Medigap is Medicare Supplement Insurance that helps to fill in the gaps of what Medicare Part A and Part B do not cover.

  • There are 10 different Medicare Supplement plans to choose from that are sold by private companies. The most common is Plan G, which covers everything except for your Part B Deductible.

  • Coverage is not mandatory but is beneficial for those that uses medical services frequently or requires overseas coverage.

  • 6-month Open Enrollment period starts when one turns 65. Special Enrollment period opens under certain circumstances (loss of coverage, etc.).  If trying to apply outside of these periods, you may need to go through the underwriting process.

We know that government programs – such as Medicare and all the parts that come with it, including Medigap plans – are as straight-forward as a ball of spaghetti. We hope that you find our insights helpful as you plan out your medical expenses during retirement.

What Is Medigap?

You may have heard about Medicare Supplement Insurance and not even realized it, as it is often referred to as “Medigap”. It got this name because it fills coverage gaps between Medicare policies and helps you pay for copayments, coinsurance, deductibles and certain healthcare services or supplies that usually are not covered by Traditional Medicare.

What Do Medicare Supplement Insurance Plans Cover?

There are 10 Medigap plans that are standardized by the government and sold through private companies. The easiest way to see what each Medigap plan covers is to review the table below – the percentages provided (%) indicates how much of your expenses a particular Medigap Plan will cover:

What Do Medigap Plans Cover?

*If you became eligible for Medicare on, or after January 1, 2020 you will no longer be eligible to enroll in Plans C and F. Those who became eligible for Medicare coverage prior to January 1, 2020 may still be able to enroll as long plans are offered in their area.
¹ Plans F and G offer high deductible versions starting in 2022, after deductible of $2,490 is met the plan pays 100% of covered expenses. High Deductible plan F average costs are $51-91 and G costs between $51-$83.
² Plan K annual limit is $6,620 in 2022 – after you pay the limit and Part B deductible, the plan pays 100% of covered expenses.
³ Plan L annual limit is $3,310 in 2022 – after you pay the limit and Part B deductible, the plan pays 100% of covered expenses.
⁴ Plan N pays 100% of the Part B coinsurance.
⁵ 2021 Data provided by www.HealthMarkets.com

Of note, Plan C and Plan F are not available to new enrollees, as they are in the process of being phased out due to their similarities to Plan G. Plan G covers all the same items as Plans C and F, except for the Part B deductible, which is $233 in 2022.  If you look at the average premium range of Plan G, it also has lower monthly premiums than C and F.

You may be looking at the number of Medigap plans available and wondering why there are so many and why wouldn’t someone “just pick one that covers everything”. In fact, about 49% of all enrollees had the same idea and signed up for Plan F in years past. However, now that Plans C and F are no longer available to new enrollees – Plan G enrollment spiked 39%.

Do I have to get Medigap?

There is no mandate to sign up for Medigap coverage. Meaning it is entirely one’s preference. Typically it makes sense to sign up if you frequently use medical services, since Medicare Supplement Plans cover things like deductibles and co-insurance charges. Another consideration is travel: if you plan to travel beyond the U.S. borders during your retirement, purchasing Medigap is strongly encouraged. Traditional Medicare does NOT cover medical expenses incurred abroad; however, Plan G would cover 80% if you were to need medical attention while abroad. So, while it is not mandated – it is a good choice for those who travel overseas on a frequent basis. We would encourage you to discuss this with an expert to see if you may benefit from having Medigap Coverage as some benefits/uses may not be immediately apparent.

A situation when Medigap coverage is unnecessary is if you have robust Retiree Group benefits, as this coverage could be used to pay for out-of-pocket costs typically addressed by Medigap coverage. Retiree Group benefits may also cover Vision and Dental expenses which Medicare does not provide.

How Do I Enroll in Medicare Supplement Insurance?

For most, the best time to enroll in a Medigap policy is during your open enrollment period. The “Open Enrollment Period” for Supplement Plans is a 6-month window that starts once you are age 65 or older and have enrolled in a Part B plan.

During this period no insurer can refuse coverage or raise premiums because of pre-existing conditions. If you do not enroll during this window – you would have to qualify under a “Special Enrollment Period” to have those same rights.

So, while you can purchase Medigap coverage at any point in time – it is in your best interest to do so during the Open Enrollment Period or Special Enrollment period in order to know you will qualify. Most states require one to undergo standard “underwriting” if applying outside of either the Open or Special enrollment periods. Unfortunately if applying outside of those enrollment periods, your coverage may be refused or your premiums could be increased due to a pre-existing condition.

What Is a Special Enrollment Window?

There are a few life events that trigger a Special Enrollment window to open. This gives you the ability to make necessary adjustments due to your change in circumstances. Some situations when the Special Enrollment Window opens are:

  • If you relocate your current plan may not be available. In which case you could sign up for a plan that serves the location you moved to.

  • If you lose your current coverage due to retirement after you turned age 65, or if your COBRA coverage ran out.

  • If you signed up for an Advantage Plan as soon as you were Medicare-eligible and are switching to Original Medicare within a year, and it was your first time on a Medicare Advantage plan.

Keep in mind that there are several other situations not covered that could allow you to qualify for the Special Enrollment Window. A lot will depend on your particular set of circumstances. For those that need take advantage of the Special Enrollment Window, the most common duration is 63 days after your other health care coverage ends. However, it is always best to check Medicare’s website for guidance that is more specific to your situation: Special Circumstances Window.

What Does the Medigap Claims Process Look Like?

Your doctor submits a claim to Traditional Medicare first, then to your Medigap plan and may send a bill to you for anything that was not covered by either plan. In some instances, you may need to coordinate benefits and claims between Traditional Medicare and Medigap plan coverage.

Additional Resources & Up Next

If you care to learn more about Medigap plans and Medicare, we suggest watching our video course tailored specifically for retirees, called  The Retirement Continuum Class - Medicare Segment. While the numbers are from 2020 and slightly outdated, the content contained within the course remains relevant today.

Stay tuned for our next blog article in our Medicare series, where Jenn King will be overviewing the topic of Medicare Advantage Plans.

Sources:

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Paragon Wealth Strategies, LLC [“Paragon”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Paragon.  Please remember that if you are a Paragon client, it remains your responsibility to advise Paragon, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Paragon is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Paragon’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.wealthguards.com. Please Note: Paragon does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Paragon’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Also Note: IF you are a Paragon client, Please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Health InsuranceMichael Mikonismedicare series, Michael Mikonis