What Is Medigap Coverage Used For? A Comprehensive Guide

You may have heard that Original Medicare often requires supplemental coverage, such as a Medigap plan. But what is Medigap coverage used for?

Medigap plans help fill in some of the gaps in your Original Medicare coverage, covering some of the out-of-pocket costs you would otherwise pay. Let’s explore more fully what Medigap coverage is used for and why so many people choose this option.

Understanding Medicare’s Gaps

Original Medicare (Medicare Parts A and B) covers many healthcare costs. Part A covers inpatient hospital care, while Part B covers doctor visits and outpatient services. Think of these as the basic foundations of your healthcare coverage.

But even with those plans in place, there are still several types of cost-sharing for enrollees to contend with. These are also known as the “gaps” in Medicare coverage. The good news is that Medigap plans can help you cover some of those gaps.

The purpose of a Medigap insurance policy is to pay some of the out-of-pocket costs in Original Medicare, such as copayments, coinsurance, and deductibles.

To understand how these costs can stack up, in [medicare_costs value=”medicare-cost-year”] you’ll pay these costs with Original Medicare, even if you’re healthy and don’t require a lot of care:

Part A Costs ([medicare_costs value=”medicare-cost-year”])

Inpatient hospital deductible: [medicare_costs value=”parta-deductible”] per benefit period.
Coinsurance for hospital stays: [medicare_costs value=”parta-coins-t2″] per day for days 61-90, then [medicare_costs value=”parta-coins-t3″] per day for lifetime reserve days.
Skilled nursing facility (SNF) coinsurance: [medicare_costs value=”parta-snf-coins-t2″] per day for days 21-100.

Part B Costs ([medicare_costs value=”medicare-cost-year”])

Part B deductible: [medicare_costs value=”partb-deductible”] per year.
Coinsurance: 20% of all covered services.

If you’re in good health, these might be the only Medicare costs you must worry about in [medicare_costs value=”medicare-cost-year”] . You pay the Medicare Part B premium, and the various deductibles and copays are only applicable if and when you use Medicare benefits. However, if you do need extensive medical care, those out-of-pocket costs can add up in a hurry. A Medicare Supplement plan can help cover some of these costs.

How Medigap Works

If you are trying to figure out what Medigap coverage is used for, it helps to picture Medigap as a supplemental insurance policy. You purchase it from a private insurance company, and it pays for some or all of your out-of-pocket costs, such as:

Copayments.
Coinsurance.
Deductibles.

Medicare pays first for your covered healthcare costs. Medigap essentially “steps in” to cover some of your remaining costs. This can be a major help in making sure healthcare expenses are manageable. Understanding what Medicare Supplement Insurance is can help you make informed decisions about your healthcare.

What does Medigap Cover?

There are 10 different standardized Medigap plans that you can buy. The coverage for each one is a little different. Most (other than Plans K and L) cover 100% of some Original Medicare cost-sharing, and all 10 plans offer coverage for at least a portion of these out-of-pocket expenses.

It’s a little complex, though, because Plan C and Plan F are not available to people who turned 65 in 2020 or later, although people eligible for Medicare before that time can generally still keep their plans. Medicare Supplement plans are a great way to enhance your existing Medicare coverage.

Here’s a comparison chart (recreated from Medicare.gov) that outlines the basic coverage you can expect to find under each Medigap plan (all 10 are available in most states, although Massachusetts, Minnesota, and Wisconsin standardize their plans differently). Plan C and F (marked with asterisks) are unavailable for newly eligible enrollees. Make sure you explore all the Medigap policy options available to you.

[medigap_chart]

Medigap Plans F and G offer the most comprehensive coverage. However, Plan F is only available to people who were already eligible for Medicare by the end of 2019. Plan G covers nearly everything Plan F does, with the only exception being the Part B deductible, which is [medicare_costs value=”partb-deductible”] per year in [medicare_costs value=”medicare-cost-year”] . Check out the official Medicare website for more information on what Medicare covers.

Medigap Pros & Cons

Figuring out what Medigap coverage is used for is important. Before buying a plan, look at the pros and cons. If you need help figuring out if this plan is a good choice, the State Health Insurance Assistance Program, also known as SHIP, provides free, personalized counseling for people with Medicare. You can also call Medicare directly, at 800-MEDICARE, although SHIP is well-positioned to offer local guidance based on plans that are available where you live.

Pros:

Predictable out-of-pocket costs: With Medigap, you’ll generally know how much you’ll pay for covered medical expenses upfront. If you get sick, that can mean having a better sense of your finances and peace of mind during an otherwise stressful time.
Freedom to see any provider that accepts Medicare: One of the advantages of Original Medicare is visiting doctors, hospitals, and other medical facilities that accept Medicare assignment. Your choices aren’t limited to a network, meaning you can continue receiving care from your established providers or see specialists nationwide. That flexibility and freedom are also offered if you have a Medigap plan to accompany your Original Medicare benefits.
Travel benefits: Original Medicare does not generally provide coverage when you travel outside of the U.S. Medigap Plans C, D, F, G, M, and N offer some foreign travel emergency coverage that pays for some costs. Although this is generally not extensive coverage, it’s still valuable compared to having no coverage for foreign travel.

Cons

Monthly premium: Medigap is an additional expense. Private insurers determine premiums and may offer varying rates based on demographics like age, health history, and location. For healthy people, a Medigap plan may end up paying for itself because it will significantly reduce or eliminate most Medicare cost-sharing if a person develops health issues. However, for someone who stays in excellent health, paying Medigap premiums month after month, year after year, without ever having any healthcare claims could end up feeling like wasted money. That’s a tough decision to consider when choosing a Medigap plan.
Standardized plan options: Medigap plans are designed to cover specific expenses in a set fashion. That standardization helps to simplify plan comparisons and selection. However, some consumers may prefer the customized benefits packages found under some Medicare Advantage plans. (It’s important to note that Medigap and Medicare Advantage are separate plans, and you can’t enroll in both concurrently.)

What is Medigap coverage used for? If you prefer to go with Original Medicare rather than a private Medicare Advantage plan, adding a Medigap plan helps make the healthcare costs predictable, provides peace of mind, and gives you complete freedom when choosing doctors and healthcare providers. When considering Medigap, remember to compare plans and their costs.

FAQs about what Medigap Coverage is Used For

FAQ 1: What is Medigap insurance used to cover?

Medigap, or Medicare Supplement Insurance, is a private insurance plan that fills in the gaps of Original Medicare (Medicare Part A and Part B), covering some or all out-of-pocket costs you’d otherwise have to pay. Medigap policies offer different levels of coverage and have varying premiums. All ten Medigap plan options cover some or all of the following, according to the Washington State Office of the Insurance Commissioner:

Copayments.
Coinsurance.
Deductibles.
Medicare Part A coinsurance and hospital fees (up to an additional 365 days after your Medicare benefits run out).
Medicare Part A hospice coinsurance or copayment.
Medicare Part B coinsurance or copayments.
Blood transfusion costs, up to the first 3 pints.
Skilled nursing facility care coinsurance.

FAQ 2: What is the downside to Medigap plans?

Medigap policies offer valuable benefits. However, when deciding what Medigap coverage is used for, remember that there is a premium, which you pay to your Medigap insurer, in addition to your monthly Part B premium. Be sure to factor in these costs when budgeting for healthcare.

During your open enrollment window, there’s no medical underwriting (and you can’t be turned down for coverage based on your health status). But after that, insurers may consider your health status before agreeing to issue you a plan. They may also offer different prices based on your age. That’s something to be mindful of if you decide to get a Medigap plan later on in life.

FAQ 3: What is Medigap and why would someone choose it?

With Original Medicare, you pay a premium (a separate one for each part, Part A and Part B). There is also cost-sharing if you need to use the plan— you might owe copays, deductibles, and coinsurance, based on the services received. A Medigap plan steps in after Medicare pays its share and picks up some of those “gaps,” so that you aren’t shouldering all of the cost yourself. It’s important to remember that Medigap plans are separate policies and you buy them from private insurance companies.

Someone might choose a Medigap plan because they prefer Original Medicare and being able to see any provider in the country that accepts Medicare. This means they wouldn’t be limited by provider networks like those commonly seen with Medicare Advantage plans. The downside to Original Medicare is that the potential out-of-pocket costs are unlimited if a person develops very serious medical conditions. By adding a Medigap plan, a person knows in advance what they’ll pay for covered services, regardless of how high the overall medical bills are. This predictability can offer peace of mind.

FAQ 4: What is the main difference between Medicare Advantage and Medigap?

Medicare Advantage plans (sometimes called Medicare Part C) are private insurance plans that are an alternative to Original Medicare. When you have Original Medicare, you are directly insured by the government. But if you have a Medicare Advantage plan, your health insurer covers your benefits under contract with Medicare. These plans are also known as Medicare Advantage Plans.

You generally must stay within your Medicare Advantage plan’s provider network for most services to fully cover your medical costs. In exchange for that restriction, the out-of-pocket cost limit under a Medicare Advantage plan will be less than $9,000 (2024 estimate) for in-network benefits. Also, many (but not all) Medicare Advantage plans include prescription drug coverage. In contrast, enrollees in Original Medicare generally need to enroll in a separate Medicare Part D plan to have prescription coverage. This drug plan coverage is important when choosing between a Medigap plan and a Medicare Advantage Plan.

So if you’re considering what Medigap coverage is used for and wondering how it relates to Medicare Advantage, here’s a summary: You cannot be enrolled simultaneously in Medigap and Medicare Advantage, as these are separate options. You’ll need to choose one or the other. It’s essential to research and compare Medicare Advantage and Medigap plans for the best coverage options.

Conclusion

What is Medigap coverage used for? Essentially, this type of coverage bridges the “gaps” that come with having Original Medicare, leaving you with fewer (and in some cases, no) out-of-pocket costs for covered medical services. This extra peace of mind is invaluable. When choosing a plan, you’ll want to consider all the details and your specific circumstances. Deciding on the right health insurance plan for your needs is crucial.