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What is a Medigap policy?

What is a Medigap policy?

A Medigap policy, also known as Medicare Supplement Insurance, is a health insurance policy sold by private companies to fill gaps in Original Medicare coverage. These gaps include Part A and Part B deductibles, coinsurance, and copayments for hospitalization, skilled nursing facility stays, physician visits, equipment, and more. Some Medigap policies also offer other benefits that aren’t provided by Medicare.

Here are some important facts to remember:

  • Insurance companies can apply medical underwriting when issuing a Medigap policy.  (Medical underwriting means an insurance company can review health history when deciding whether or not to issue a policy.) However, federal law provides a guaranteed right to purchase a policy to anyone initially enrolling in Medicare. That means an insurance company cannot refuse to sell a plan, modify coverage, or charge a higher premium, because of an individual’s health status.
  • Not everyone will pay the same price for a Medigap policy. There are many factors that can affect the price of a policy such as age, gender, zip code, and marital status, along with whether or not the individual smokes. 
  • A Medigap policy can follow a person for life. Unlike a Medicare Advantage plan, if the policyholder moves, there is no need to find a new plan. Also, if the premium is paid on time, the company cannot cancel the policy, no matter the changes in health. 
  • There are three ways the insurance companies price Medigap policies: attained-age-rated, issue-age-rated, and community rated. 
  • Plans are standardized with defined sets of benefits. In most states, there are 10 different types of plans available, identified by the letters A through G, K, L, M, and N. The letters represent different combinations of benefits and prices. Plan A is the basic plan with four benefits and Plan F is the "cadillac," including all the available benefits. 
  • Three states (Wisconsin, Massachusetts, Minnesota) have their own requirements.
  • It is illegal for an insurance company to sell a Medigap policy to someone enrolled in a Medicare Advantage plan.

For more information, check out Choosing a Medigap Policy:  A Guide to Health Insurance for People with Medicare.” 

Last updated: 06-12-2017