If you decide to enroll in original Medicare, one way you can help pay the extra costs the program doesn’t cover is to buy a supplemental — or Medigap — insurance policy. Here’s what you need to know if you’re in the market for a supplemental policy.
1. Medigap plans are only for original Medicare enrollees
They are sold by private insurance companies but regulated by states and the federal government. Original Medicare pays 80 percent of covered Part B health care services. Medigap insurance typically covers the 20 percent that is your responsibility to pay, along with some other health care costs. In contrast, a Medicare Advantage plan doesn’t allow supplemental insurance, even though it does have various out-of-pocket costs.
2. Medigap isn’t your only supplemental insurance option
You may be eligible for a policy offered by a past or present employer. If you qualify for Medicaid, it too will pick up most out-of-pocket medical costs. About 36 percent of original Medicare enrollees buy a private Medigap plan.
3. You likely have eight to 10 Medigap options
The federal government, not insurers, determines what coverage a Medigap policy provides (except in three states: Massachusetts, Minnesota and Wisconsin). There are 10 federally approved plans, each known by a letter: A, B, C, D, F, G, K, L, M and N. They’re standardized, meaning plans with the same letter name must provide the same basic benefits regardless of the insurer or location.
4. Some options aren’t available to all
Starting in 2020, a cost-cutting move by Congress ended sales of Medigap plans C, F and high-deductible F to individuals newly eligible for Medicare. These plans may still be available if you became eligible for Medicare before Jan. 1, 2020. And if you already have one, you can keep it.
5. Policies are sold by private insurance companies
This means you’ll likely have several choices of plans that have the same letter but are offered by different insurers in your locale. What they charge can vary dramatically.