Medigap

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What Is Medigap?

Medicare Parts A & B cover many medical supplies and services, but they don’t pay for all health care costs. Some people decide to buy Medigap policies to fill in the coverage “gaps.” Medigap policies are supplemental insurance policies sold by private insurers to help beneficiaries pay the coinsurance, copays, and deductibles associated with Medicare Parts A & B. Some Medigap policies also cover additional services, such as emergency medical care while traveling overseas, or prescription drugs. People who choose to buy Medigap policies must pay a monthly premium to the private insurance company that sold them the policy.

Who Can Buy a Medigap Policy? 

In order to be eligible to buy a Medigap policy, you must already have Medicare Parts A & B.

How Much Will It Cost? 

Medigap policies are standardized. The federal government has established 12 different types of plans, labeled A through L. Private insurers in every state except Massachusetts, Minnesota, or Wisconsin can sell any, all, or none of these standardized Medigap policies. This chart summarizes what each of the 12 standardized Medigap plans covers.

If you live in Massachusetts, Minnesot and Wisconsin, you will have different plans to choose from. People living in these states should contact their state’s Department of Insurance to find out what types of Medigap policies they can buy.

It is important to shop around for a Medigap policy. The plan benefits are standardized, but the premiums are not. One company may offer Plan A for $70/month, while another could offer Plan A for $60.

Your Rights 

It is illegal for anyone to sell you a Medigap policy if:

• You are in a Medicare Advantage or Medicare + Choice plan;
• You are also on Medicaid; or
• You already have a Medigap policy – unless you are canceling your old one.

Furthermore, Medigap policies purchased after 1990 are all guaranteed renewable. This means that as long as you keep paying the premium, you cannot be cancelled because you get sick or make a lot of claims.

The Medigap open enrollment period begins the day you enroll in Medicare Part B and lasts for 6 months. If you buy Medigap during open enrollment, you cannot be turned down based on your health status. There are other limited special circumstances where you are guaranteed the right to buy Medigap coverage, even if you do not do so during open enrollment.

Upcoming Changes 

Medicare is going through some major changes right now, and Medigap policies will be affected. Starting January 1, 2006, insurance companies can no longer sell Medigap H, I, and J plans which include prescription drug coverage. This is because Medicare will be offering prescription drug coverage through the new Part D prescription drug program. You will still be able to buy plans H, I, and J – just without the prescription drug coverage component.

So what do you do if you already have prescription drug coverage through Medigap? You should have received instructions from your Medigap insurance company detailing your options. You can:

• Enroll in a Medicare Part D plan and keep your existing Medigap plan with the prescription drug component removed.
• Enroll in a Medicare Part D plan and buy a different Medigap plan that does not include drug coverage.
• Enroll in a Medicare Advantage plan that has prescription drug coverage.
• Do nothing – keep your existing Medigap plan with its prescription drug coverage.

Please keep in mind that if you decide to keep your Medigap plan as is, you may have to pay more if you change your mind later and enroll in Medicare Part D after May 15, 2006.