Medicare supplement insurance, also known as Medigap, helps cover healthcare costs not covered by Original Medicare. These policies are sold by private insurance companies and can help pay for deductibles, copayments, and coinsurance. To qualify for a Medigap policy, you must already be enrolled in Medicare Parts A and B. Premiums vary based on the type of plan chosen, your location, and the insurance company. The best time to purchase a Medigap policy is during your six-month open enrollment period that begins when you turn 65 and enroll in Medicare Part B.
Understanding Medigap Plan Letters
Medigap plans are standardized and identified by letters (A through N), with each plan offering a different level of coverage at various price points. Plan G has become increasingly popular as it covers most out-of-pocket costs except for the Medicare Part B deductible. Plan N offers lower premiums but requires copayments for some office and emergency room visits. Some plans offer coverage for emergency medical care when traveling outside the United States, which Original Medicare doesn’t provide. It’s important to note that Medigap policies only cover one person, so spouses need separate policies. Insurance companies can price Medigap policies in three different ways: community-rated, issue-age-rated, or attained-age-rated, each affecting how premiums change over time. Since 2020, newly eligible Medicare beneficiaries can no longer purchase Plans C and F, which previously covered the Part B deductible.
Comparing Medicare Supplement vs. Medicare Advantage
While Medicare Supplement plans work alongside Original Medicare, Medicare Advantage plans replace Original Medicare and typically include prescription drug coverage. Medigap policies generally offer more flexibility in choosing healthcare providers since you can visit any doctor who accepts Medicare. Medicare Supplement plans typically have higher monthly premiums but fewer out-of-pocket costs at the time of service compared to Medicare Advantage plans. Understanding the differences between these two options is crucial for making an informed decision about your healthcare coverage in retirement.