Because Original Medicare covers a significant portion of its recipients’ healthcare expenses, eligibility for Medicare is a welcome milestone. But for all that Medicare covers, its enrollees learn quickly that Original Medicare doesn’t pick up the tab for everything.

What is Medicare supplement insurance?

Medicare enrollees typically find that they need help with many Medicare expenses – including copayments, coinsurance, and deductibles, in addition to any medical expenses incurred during travel outside the United States and its territories. To cover those expenses, millions of people – more than a third of all Original Medicare beneficiaries – purchase Medicare supplement insurance, also known as Medigap. These plans are designed to fill in the gaps in Medicare and limit enrollees’ out-of-pocket exposure.

Are there gaps in Medigap coverage?

Yes. Medigap plans are designed to cover some or all of the out-of-pocket expenses for services that Medicare covers. But they do not cover care that’s not covered at all by Medicare. The list of expenses that Medigap policies don’t cover includes long-term care in a nursing home, vision and dental care, hearing aids, eyeglasses, private-duty nursing care, or prescription drugs. (Plans purchased prior to 2006 were allowed to cover prescriptions, and if you’ve still got one of those plans, you’re allowed to keep it. But Medigap plans sold since 2006 cannot include prescription coverage.)

Also, Medigap policies aren’t compatible with the following types of coverage:

employer or union plans; veterans’ benefits;
Indian health services;
Medicare Advantage plans;
Medicare prescription drug plans (you’ll need a prescription drug plan in addition to the Medigap policy, since they cover different things.); and
Medicaid.

Finally, Medigap policies are for individuals only – not for couples or families. So if you and your spouse are both eligible for Medicare, you’ll each need to select an individual Medigap plan. (Some carriers offer a discount if both spouses select the same plan.)

How do Medigap insurers set their prices?

The cost of a Medigap policy can vary with each insurance company. There are three ways in which insurers set Medigap rates:

With community-rated pricing, enrollees are charged the same premium regardless of age. So a 65-year-old enrollee will pay the same premium as an 85-year-old enrollee. Premiums can change over time, but they change by the same amount for all enrollees. There are eight states that require all Medigap plans to be community rated.
Issue-age-rated premiums are based on the age of the purchaser. So the older the person is at the time of purchase, the higher the premium, and that difference continues as long as they have the plan. For plans with this rating structure, it’s particularly important to enroll as soon as you’re eligible for Medicare coverage, because your premium will always be as low as possible that way.
With attained-age-rated pricing, the premium goes up as the insured person ages. These plans might be the least expensive option when you’re first eligible for coverage, since you’ll be among the youngest enrollees. But as you get older, the price will increase based on your age as well as factors like inflation and overall medical cost trends.

Be aware that Medigap plans in most states are only guaranteed issue during the six-month window that starts the month you turn 65 (or when you enroll in Medicare Part B, which might be after you turn 65 if you still had employer-sponsored coverage), and during limited special enrollment periods. There’s no annual open enrollment period like there is for Medicare Advantage, Medicare D, and Original Medicare.

If you don’t enroll during your initial enrollment period, you may have to pay a higher premium – or be declined altogether – if you’re in poor health, as carriers are allowed to use medical underwriting after your initial enrollment period has passed.

How can I pay less for Medigap coverage?

Make sure you enroll as soon as you’re eligible, in order to get coverage that’s guaranteed issue with no premium rate-ups based on your medical history.

Some Medigap carriers offer discounts that might apply to you. Some insurers offer discounts for women, non-smokers, married people, and for paying annually. States also offer a health insurance assistance program, providing up-to-date Medigap insurance information and a list of qualified private insurers. Check our state pages to find your state’s assistance program.

Is there a best time to purchase a Medigap policy?

The best window of time in which to buy a Medigap policy begins on the first day of the month in which you’re at least 65 and enrolled in Medicare A and B (you have to be enrolled in both Medicare A and B in order to get a Medigap plan). This is the start of your initial enrollment period, and it lasts for six months. Under federal rules, Medigap coverage in every state is guaranteed during this window.

Will I have to wait for my Medigap policy to take effect?

An insurer can’t make you wait for your coverage to start, but it can make you wait for coverage of a pre-existing condition – and may also refuse to cover your out-of-pocket costs for that pre-existing condition for up to six months during a pre-existing condition waiting period. That said, if you recently had “credible coverage” – or if you have guaranteed issue “Medigap protection” – you may be able to shorten or avoid entirely the waiting period.

Have more questions about Medicare Supplement Insurance? Find additional answers here: “Have Questions About Medicare Supplement Insurance? Find the Answers Here!”

By David Lasman – “Ask Medicare Dave” | President – Senior Healthcare Team

wwww.SeniorHealthcareTeam.com | 866-333-7340

Selecting the right healthcare plan through Medicare can be overwhelming and downright stressful. Senior Healthcare Team is a nationwide resource that provides guidance and support about Medicare to seniors at no cost to them and helps them to choose the most suitable insurance plan tailored to their specific needs and budget. Our goal is to educate and empower our clients to make the best decisions regarding their healthcare and clear up the confusion of Medicare. At Senior Healthcare Team, we aren’t partial to any one insurance company. Our loyalty is to our clients and our mission is to provide them with the best healthcare options at the very lowest cost.