What You Need to Know about Medigap Insurance Now

The fact that healthcare costs are rising fast is no surprise, but the latest figures are still shocking. Fidelity Investments estimated in August that the average 65-year old couple needs $260,000 to cover Medicare premiums and out of pocket expenses after retirement, plus another $130,000 for long-term care. Many people think supplemental Medigap insurance will save them money, but experts say “maybe.” It depends on your Medicare plan, your health status, and how much you have saved. Here’s what you need to know about Medigap insurance right now.

What is Medigap insurance?

According to the Medicare.gov site, Medigap policies pay some (but not necessarily all) of the out of pocket costs owed by Original Medicare beneficiaries, such as deductibles and copays. However, vision care and glasses, dental care, hearing aids, and long-term care at home or in a facility are not covered by most Medigap plans. Medigap policies issued within the past decade do not cover prescription drug costs.

Private insurers sell Medigap (Medicare supplement insurance) policies, and available plans vary by state. Policies are standardized by letter code, and more than one company may offer each type of plan in your area.

Who can get Medigap, and who cannot?

To buy a Medigap policy, you’re required to have Medicare Parts A and B. If you are under 65 and covered by Medicare due to disability, Medigap insurance may or may not be available to you. The Kaiser Family Foundation has a new map showing which states require this option.

Is Medigap the same thing as Medicare Advantage?

No. AARP explains that Medicare Advantage is a suite of HMO and PPO plans managed by private insurers that provide the same benefits as Medicare’s standard program, sometimes with prescription coverage included in the premium. You cannot have both Medicare Advantage and Medigap coverage. Medicare Advantage Plan holders can buy Medigap insurance but must drop the Advantage plan before their Medigap coverage begins.

What’s the best way to choose a Medigap plan?

Take your time, compare plans, and ask lots of questions before you make a decision. Companies charge much higher rates if you’re already in poor health (in my area, more than twice as much), so your health status can determine whether Medigap is worth it.

If you travel internationally, it’s a good idea to look at Medigap plans that offer coverage outside the US. Medicare does not, so a Medigap plan that does could spare you any out of pocket costs resulting from an illness or injury while you’re out of the country.

The best place to start your search is on the government’s Medigap Policy Search page. Enter your zip code (or the home zip code of the person you’re helping), health status, and whether or not you already hold a Medigap policy. Based on your information, the site will return a list of available policies with each option’s monthly premium range, the estimated annual cost of the policy, and whether or not the policy includes these benefits:

• Skilled nursing facilities
• Part A and/or Part B deductibles
• Part B excess charges
• Foreign travel emergencies
• Preventive services

There’s also a “View All Benefits” link you can click to see the dollar amounts each plan pays in detail.

The choices can be daunting. For example, in my area, there are 43 companies that offer Medigap Policy A – and there are also Policies B, C, D, F, G, K, L, M, and N to consider. That’s why it’s important to take your time, print out benefits information on the plans you’re considering so you can make notes, and talk to your financial advisor about the best course of action for your situation.

Learn more about Medicare coverage and financial assistance for seniors on the SeniorAdvisor.com blog.

Casey Kelly-Barton

Casey Kelly-Barton is an Austin-based freelance writer whose childhood was made awesome by her grandmothers, great-grandmother, great-aunts and -uncles, and their friends.