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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, such as coverage for a foreign travel emergency.

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 enrolling in Medicare Part B initially. 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. Some states have more generous rules. 
  • 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.
  • As of January 1, 2020, newly-eligible Medicare beneficiaries will no longer be able to purchase Medigap policies that include the Part B deductible benefit. In the majority of states, that would be Plan C and Plan F. 
  • 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: 07-08-2020