A Medigap policy is a supplemental health insurance plan offered by private insurance carriers to fill the “gaps” in Original Medicare Plan coverage. Insurance carriers selling Medigap plans must follow all Federal laws as well as state laws that protect people with Medicare. All Medigap policies must clearly be identified as “Medicare Supplement Insurance”on the front of the policy. The Original Medicare Plan pays for many healthcare services and medical supplies, however it will not cover all your healthcare expenses. There are a number of costs you have to pay, such as co-payments, co-insurance, and your deductibles. These charges are usually called “gaps” in your Medicare coverage.
All new Medigap policies sold must be one of twelve standardized insurance plans, A through L. This is true for all states except Wisconsin, Massachusetts, and Minnesota. The actual benefits in any Medigap Plan A through Plan L are required to be exactly the same for every insurance company. For example, the features and benefits in one insurance carrier’s Medigap Plan C are exactly the same as every other insurance carrier’s Medigap Plan C. However, the premiums for a Medigap policy can be quite different, and are determined by the insurance carrier. The twelve plans include two additional plans, K and L which were added in 2005. The insurance carriers are not required to offer all of the twelve plans.
Some individuals might still own a Medigap policy they bought prior to the plans being standardized. Once you purchase a Medigap plan, you pay your premiums directly to the insurance carrier. You must still pay your Medicare Part B premiums every month. So long as you continue to pay your Medigap premiums, any policy bought after 1990 is renewed automatically each year. Your coverage carries on year after year provided you pay your premiums; because of this, we say your policy is guaranteed renewable. In some states, insurance carriers can legally refuse to renew Medigap plans purchased before 1990.
Your Medigap policy works only with the Original Medicare Plan. You may not want to have a Medigap policy if you are a member of a Medicare Advantage Plan or another Medicare plan. Medigap policies do not work with the Medicare Advantage Plans or any other Medicare plans. In fact, it is actually illegal for anyone to sell you a Medigap policy if you:
- Are a member of one of the Medicare Advantage Plans (unless your actual enrollment period is about to end)
- Already own a Medigap policy, unless you are about to cancel your current Medigap policy, or
- Are a Medicaid member, unless your Medicaid pays the premiums for your Medigap policy, or only pays your Medicare Part B premium.
You may want to think about dropping your Medigap policy if you decide to become a member of a Medicare Advantage Plan or any other type of Medicare plan. You are allowed to keep it, but it cannot pay for any health benefits you receive from your Medicare Advantage Plan or other Medicare plan. Also, it cannot pay any kind of cost-sharing under these other plans.
If you are in the Original Medicare Plan and you do have a Medigap policy, you can go to any kind of physician, hospital, or other healthcare provider that accepts Medicare. On the other hand, when you have the kind of Medigap plan called Medicare SELECT, you are required to use specific hospitals of the plans choice, and in most cases, specific physicians to utilize your full insurance benefits. It is also important that you understand that when you enroll in a Medicare Advantage Plan when you are 65, or drop your Medigap policy to join a Medicare Advantage Plan for the first time, you are allowed to dis-enroll from the plan any time during the first twelve months. This is called your trial period. If you choose to, you can return to the Original Medicare Plan on the 1st day of the following month, and there is a guaranteed right to purchase a Medigap policy.
