Supplemental 'Medigap' Plans Fill Medicare Coverage Holes 


By Mary Lou Jay

Are you approaching your 65th birthday and getting ready to sign up for Medicare? One decision you'll have to make is whether to purchase Medigap coverage.

Medicare will cover many of the health expenses you'll encounter as a senior -- but to get those benefits, you'll have to pay deductibles, co-pays and co-insurance. Medigap plans are offered by private insurers to help cover those extra costs.

Who can buy a Medigap plan?

When you enroll in Medicare, you have two choices. You can go with original Medicare, which includes:

  • Medicare Part A: Coverage for some (but not all) inpatient hospital expenses and inpatient skilled nursing care.
  • Medicare Part B: Coverage for some outpatient health care charges.

Or you can choose a Medicare Advantage Plan (Medicare Part C), which usually provides more comprehensive coverage through some kind of health maintenance organization (HMO) or preferred provider organization (PPO) system.

Because Parts A and B are somewhat limited, they leave seniors on Medicare with high out-of-pocket costs. Medigap policies are designed to fill those gaps. You can't purchase a Medigap policy if you select a Medicare Advantage Plan, however.

What Medigap plans cover

What your plan covers depends on which plan you purchase -- and where you live, as different states have different requirements for insurers. As of 2011, there are 10 different Medigap policies available, according to the federal Centers for Medicaid and Medicare Services.

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All Medigap plans cover some co-insurance costs and co-pays. More comprehensive plans cover co-insurance for care at skilled nursing facilities and Medicare deductibles.

Insurers don't have to sell every type of Medigap plan that the state allows, but they are required to at least offer Medigap Plan A (limited coverage), according to the Centers for Medicaid and Medicare Services. If they want to offer any plans beyond Plan A, they must offer either Medigap Plan C or Plan F (both of which have fairly extensive coverage).

What Medigap plans don't cover

No matter which type of Medigap plan you choose, some expenses -- like long-term care, dental services, vision care, hearing aids and eyeglasses -- aren't covered, according to AARP. Medigap policies also don't cover prescription drugs; for that coverage, you'll have to join a Medicare Prescription Drug Plan (Part D).

At first, your Medigap plan may not cover expenses related to a pre-existing condition. Although Medicare covers pre-existing conditions, you may have to wait six months for your Medigap plan to cover any out-of-pocket expenses associated with them.

When to enroll in a Medigap plan

The best time to enroll in a Medigap policy is within the first six months of signing up for Medicare Part B. During this open enrollment period, insurers cannot use medical underwriting to deny coverage or to set premiums, according to AARP.

If you already have some type of supplemental health insurance through your employer, former employer or union, you may not need a Medigap policy. Compare coverage options and costs carefully before deciding whether the company-sponsored plan or a Medigap plan is a better deal.

Editor's note: This is an updated version of an article originally posted on Dec. 31, 2013.