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Medicare 101

What is Medigap Insurance?

Christian Worstell

by Christian Worstell | Published March 16, 2021 | Reviewed by John Krahnert

Medigap insurance, also known as Medicare Supplement Insurance, helps cover some of the out-of-pocket costs that are not covered by Original Medicare (Medicare Part A and Part B). With a Medigap insurance policy, you can more closely tailor your health care plan to fit your personal needs and budget.

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How Does Medigap Insurance Work?

Here are a few basic things to know about this type of health insurance:

  • Medicare Supplement Insurance is entirely optional and is available to most Medicare beneficiaries age 65 years or older.
  • If a doctor or other health care provider accepts Medicare, they accept Medicare Supplement Insurance as well.
  • When a patient receives care, their Medigap policy will cover some of the costs that Medicare does not.
  • The costs covered by a Medicare Supplement Insurance plan and the monthly premiums you pay for your policy depend on which plan you choose and the insurance company from which you buy it.

There are 10 standardized Medigap plan types (labeled A, B, C, D, F, G, K, L, M and N). The chart below outlines which basic benefits are covered by each plan. 

Important: Plan F and Plan C are not available to beneficiaries who became eligible for Medicare on or after January 1, 2020.

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Medicare Supplement Benefits

Part A coinsurance and hospital coverage

Part B coinsurance or copayment

Part A hospice care coinsurance or copayment

First 3 pints of blood

Skilled nursing facility coinsurance

Part A deductible

Part B deductible

Part B excess charges

Foreign travel emergency

A B C* D F1* G1 K2 L3 M N4
50% 75%
50% 75%
50% 75%
50% 75%
50% 75% 50%
80% 80% 80% 80% 80% 80%

* Plan F and Plan C are not available to Medicare beneficiaries who became eligible for Medicare on or after January 1, 2020. If you became eligible for Medicare before 2020, you may still be able to enroll in Plan F or Plan C as long as they are available in your area.

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1 Plans F and G offer high-deductible plans that each have an annual deductible of $2,370 in 2021. Once the annual deductible is met, the plan pays 100% of covered services for the rest of the year. The high-deductible Plan F is not available to new beneficiaries who became eligible for Medicare on or after January 1, 2020.

2 Plan K has an out-of-pocket yearly limit of $6,220 in 2021. After you pay the out-of-pocket yearly limit and yearly Part B deductible, it pays 100% of covered services for the rest of the calendar year.

3 Plan L has an out-of-pocket yearly limit of $3,110 in 2021. After you pay the out-of-pocket yearly limit and yearly Part B deductible, it pays 100% of covered services for the rest of the calendar year.

4 Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to $50 copayment for emergency room visits that don’t result in an inpatient admission.

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What Does Medigap Cover?

Medicare covers a lot of expenses, but it doesn’t cover everything. Medicare beneficiaries must meet deductibles and pay coinsurance and copayments. And although Medicare Part A is premium free for most, many patients still end up paying large out-of-pocket costs when more serious health complications arise.

That’s where Medigap insurance comes in. These policies provide coverage in nine designated areas where Medicare leaves patients with out-of-pocket expenses. These nine areas include:

  1. Medicare Part A coinsurance and hospital costs
  2. Medicare Part B coinsurance and copayments
  3. The first three pints of blood needed for a transfusion
  4. Medicare Part A hospice care coinsurance or copayments
  5. Skilled nursing facility care coinsurance
  6. Medicare Part A deductible
  7. Medicare Part B deductible
  8. Medicare Part B excess charges
  9. Foreign travel emergency care

Three of these areas are not typically covered at all by Medicare: the three pints of blood, Medicare Part B excess charges and foreign travel emergency care.

Each Medicare Supplement Insurance plan provides its own combination of coverage for these nine benefits. The coverage offered by a Medigap plan for each benefit area may be full, partial or none at all.

Because Medigap plans are standardized, each plan must offer the same coverage as other plans of the same corresponding letter no matter where they are sold. However, Medigap policies sold in Massachusetts, Minnesota and Wisconsin are standardized differently.

Advantages of Medicare Supplement Insurance

Having a Medigap plan can come with a number of advantages, including:

  • Cost savings
    The cost of a Medigap premium will often be far less than the out-of-pocket expenses required by Medicare, especially during times of serious health complications. For example, Medicare Part A requires a deductible of $1,484 for each benefit period (in 2021), which may reset during the same calendar year. But some Medigap policies cover the cost of this deductible in full.
  • Increased predictability
    Having a Medigap plan can allow for more predictability and easier budgeting because the number of surprise medical bills can be greatly reduced. Two of the Medigap plans even come with an out-of-pocket limit.
  • Flexibility
    Because each of the 10 Medigap plans offer their own combination of basic benefits, patients have the ability to select the right plan for them based on their individual health care needs.
  • Guaranteed renewals
    As long as patients continue to pay their premiums, their Medigap policies will automatically renew every year.
  • Provider freedom
    There are no networks or referrals needed. Medigap insurance can be used at any health care provider that accepts Medicare.
  • Portability
    In most cases, patients can keep their Medigap plans when they move within the U.S. And Medigap insurance can provide coverage for emergency care received outside of the U.S., a benefit not offered by Medicare in most situations.

How Much Does Medigap Insurance Cost?

Original Medicare costs are standardized by the federal government. But Medigap insurance is sold by private insurance companies which are free to set their own prices. A few different factors may influence the cost of a Medigap plan:

  • Location
    Like many things, local and regional market prices may dictate the cost of a plan.

  • Plan type
    Plans offering more coverage may come at a higher price. 

  • Pricing model
    There are a few different pricing models that insurance companies may use that can influence the cost of a plan.

  • Discounts
    Insurance companies may offer discounts for Medigap plans for non-smokers, married couples and other criteria.

  • Medical underwriting
    There are certain situations in which an insurance company may be allowed to base a price for a patient’s Medigap plan on the results of medical underwriting.

  • A high-deductible option
    There is one Medigap policy (Plan F) that offers a high-deductible option which has a lower monthly premium than it's non-high-deductible counterpart. 

How Can You Enroll in Medicare Supplement Insurance?

The best time to enroll in a Medigap Insurance plan is during your Medigap open enrollment period. This is a six-month period that begins the month you turn 65 years old and are enrolled in Medicare Part B. During your enrollment period, insurance companies are not allowed to use medical underwriting to affect the price of a plan.

Once your open enrollment period has passed, insurance companies can use medical underwriting to charge a higher price for a Medigap plan or even deny you coverage altogether — unless you are entitled to a guaranteed issue right.

It's important to compare quotes for Medigap plans in your area (not all 10 Medigap plans are offered in each state). A licensed agent can help you analyze your needs and determine which Medigap plan may be right for you.

Get your free initial Medigap insurance consultation and quote today! Call 1-800-995-4219 today to speak to one of our licensed insurance agents.

Resource Center

Compare Medigap Plans 2021

See how the 10 Medigap plans differ. Review our chart for a detailed comparison of Medicare Supplement insurance benefits and compare Medigap options where you live. Read more
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