Medicare provides a whole lot of coverage, but it doesn’t cover everything. So some people choose to buy a separate policy to provide coverage for the areas Medicare falls short on. This is known as Medigap insurance. You buy Medigap from a private insurance company.
You can also use your Medigap policy to cover expenses you have under Medicare, such as annual co-pays and deductibles.
Important note: If you opt for a Medicare Advantage Plan (Medicare Part C), any Medigap policy you have won’t pay out. So if you decide to move into a Medicare Advantage Plan and you already have a Medigap policy, drop the Medigap.
Here’s how it works: You pay a monthly premium for your Medicare supplement plan. These plans are also called Medigap. In return, the plan pays most of your out-of-pocket expenses. So when you go to the doctor, for example, you don’t have to pay the 20 percent coinsurance required by Medicare. Your Medigap plan pays it for you. With some Medigap plans, you might have a copay instead of the 20 percent coinsurance.
Medicare supplement plans aren’t your only option. Medicare Advantage plans help with your Medicare costs, too. They also offer additional health coverage that Medicare supplement plans don’t.
The table below breaks down the differences between Medicare supplement plans and Medicare Advantage plans. It might be a good place to start if you’re wondering which type of plan is right for you.
|Medicare supplement vs. Medicare Advantage plans|
|Medicare supplement||Medicare Advantage|
|You could have up to three different insurance cards.||You have one insurance card.|
|You coordinate between Medicare, your Medigap plan and your Part D prescription drug plan, if you have one.||One company coordinates all your care.|
|Helps pay for costs you have with Original Medicare.||Many plans include extra benefits Original Medicare doesn’t offer like dental, vision and prescription coverage.|
|No network rules. You can see any doctor that accepts Medicare.||Some plans won’t cover care you get outside their network.|
Medicare supplement plans don’t include Part D prescription drug coverage. So if you’re thinking about buying one of these plans, you’ll want to make sure you buy a separate Part D plan. A Medicare supplement plan might be a good choice for you if you already have prescription coverage through an employer or military benefits.
You can read more about how supplement and Medigap plans work in our help section.
What’s Medicare Supplement Insurance (Medigap)?
A Medicare Supplement Insurance (Medigap) policy, sold by private companies, can help pay some of the health care costs that Original Medicare doesn’t cover, like copayments, coinsurance, and deductibles.
Some Medigap policies also offer coverage for services that Original Medicare doesn’t cover, like medical care when you travel outside the U.S. If you have Original Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for covered health care costs. Then your Medigap policy pays its share.
A Medigap policy is different from a Medicare Advantage Plan. Those plans are ways to get Medicare benefits, while a Medigap policy only supplements your Original Medicare benefits.
8 things to know about Medigap policies
- You must have Medicare Part A and Part B.
- If you have a Medicare Advantage Plan, you can apply for a Medigap policy, but make sure you can leave the Medicare Advantage Plan before your Medigap policy begins.
- You pay the private insurance company a monthly premium for your Medigap policy in addition to the monthly Part B premium that you pay to Medicare.
- A Medigap policy only covers one person. If you and your spouse both want Medigap coverage, you’ll each have to buy separate policies.
- You can buy a Medigap policy from any insurance company that’s licensed in your state to sell one.
- Any standardized Medigap policy is guaranteed renewable even if you have health problems. This means the insurance company can’t cancel your Medigap policy as long as you pay the premium.
- Some Medigap policies sold in the past cover prescription drugs, but Medigap policies sold after January 1, 2006 aren’t allowed to include prescription drug coverage. If you want prescription drug coverage, you can join a Medicare Prescription Drug Plan (Part D).
- It’s illegal for anyone to sell you a Medigap policy if you have a Medicare Medical Savings Account (MSA) Plan.
Medigap policies don’t cover everything
Medigap policies generally don’t cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing.
Insurance plans that aren’t Medigap
Some types of insurance aren’t Medigap plans, they include:
- Medicare Advantage Plans (like an HMO, PPO, or Private Fee-for-Service Plan)
- Medicare Prescription Drug Plans
- Employer or union plans, including the Federal Employees Health Benefits Program (FEHBP)
- Veterans’ benefits
- Long-term care insurance policies
- Indian Health Service, Tribal, and Urban Indian Health plans
Dropping your entire Medigap policy (not just the drug coverage)
If you decide to drop your entire Medigap policy, you need to be careful about the timing. For example, you may want a completely different Medigap policy—not just your old Medigap policy without the prescription drug coverage. Or you might decide to switch to a Medicare Advantage Plan that offers prescription drug coverage.
You have to pay a late enrollment penalty when you join a new Medicare drug plan if:
- You drop your entire Medigap policy and the drug coverage wasn’t creditable prescription drug coverage, or
- You go 63 days or more in a row before your new Medicare drug coverage begins