Key Takeaways:

• Many people misunderstand how Medigap policies work with Medicare, often confusing them with other types of supplemental plans.
• Understanding the gaps in Medicare coverage and how Medigap addresses them is essential for making informed decisions.

Picking a Medicare Supplement Plan? Here’s What People Get Wrong About Medigap

Medigap, also known as Medicare Supplement Insurance, plays an important role in covering out-of-pocket expenses that Original Medicare doesn’t handle. However, many people get the details wrong when it comes to choosing the right plan, and this can lead to unexpected costs or gaps in coverage. This guide will address some of the most common misconceptions about Medigap and offer insights into making a well-informed decision.

Medigap Isn’t the Same as Medicare Advantage

One of the most common mistakes people make is confusing Medigap with Medicare Advantage plans. While both can help reduce out-of-pocket costs, they operate very differently. Medicare Advantage (Part C) is an alternative way to receive Medicare benefits through private companies, often including drug coverage and other additional benefits. Medigap, on the other hand, supplements Original Medicare, helping to pay for costs like coinsurance, copayments, and deductibles that Medicare Parts A and B don’t fully cover.

A Medigap policy works alongside your Original Medicare coverage. It doesn’t replace it, nor does it offer extra benefits beyond covering specific gaps. Understanding this distinction is crucial to avoid confusion when evaluating healthcare options.

What Medigap Covers and What It Doesn’t

Medigap policies are designed to cover the “gaps” in Original Medicare, but it’s important to know that not all expenses are covered. Medigap typically helps with:

• Part A coinsurance and hospital costs
• Part B coinsurance or copayments
• Blood (first three pints)
• Part A hospice care coinsurance or copayments
• Skilled nursing facility care coinsurance

However, Medigap plans do not cover:

• Long-term care
• Vision or dental care
• Hearing aids
• Private-duty nursing
• Prescription drugs (in most cases)

It’s essential to understand these limitations, so you don’t mistakenly assume that Medigap will cover all your healthcare expenses.

When to Buy a Medigap Plan: Timing Is Everything

Another common mistake is misunderstanding the timing for purchasing a Medigap plan. The best time to buy a Medigap policy is during your Medigap Open Enrollment Period, which is the six-month window that starts the month you turn 65 and are enrolled in Medicare Part B. During this time, insurance companies cannot deny you coverage or charge you more based on pre-existing conditions.

If you try to purchase a Medigap plan outside this window, you may face medical underwriting, which could result in higher premiums or denial of coverage altogether. Knowing when to act is critical to securing the coverage you need without facing unnecessary barriers.

The Different Medigap Plans: Standardized, But Not the Same

While Medigap plans are standardized across most states, meaning Plan G from one insurer provides the same benefits as Plan G from another, that doesn’t mean all Medigap plans are the same. The premiums you pay can vary widely between insurance companies, even for the same level of coverage.

Additionally, some states, like Massachusetts, Minnesota, and Wisconsin, have their own standardized Medigap plans, which can differ from the national standard. This is why it’s important to not just look at the plan type but also compare pricing from different insurers to ensure you get the best deal for your needs.

The Misconception About Switching Medigap Plans

Many people believe that they can freely switch Medigap plans anytime they want, just like they might switch Medicare Advantage plans during the Annual Enrollment Period. However, this is not the case. In most states, after your Medigap Open Enrollment Period has passed, you may be required to go through medical underwriting if you want to switch plans.

This means that an insurance company can deny you coverage based on your health status or charge you higher premiums. There are some exceptions to this rule, but they are rare. For example, if you have a Medigap plan and move to a different state, you may be able to switch plans without underwriting, depending on the rules in your new state.

Prescription Drugs and Medigap: Don’t Get Caught Without Coverage

A significant mistake people make is assuming that Medigap plans include prescription drug coverage. However, Medigap plans sold after 2006 do not cover prescription drugs. If you want drug coverage, you’ll need to enroll in a Medicare Part D plan.

Failing to get drug coverage when you first become eligible could result in a late enrollment penalty. This penalty is added to your Medicare Part D premium for as long as you have drug coverage. Therefore, it’s important to understand that Medigap alone won’t cover your prescriptions, and you’ll need to pair it with a separate Part D plan if you require medication.

Medigap Costs: Understand What You’re Paying For

While Medigap plans help reduce out-of-pocket expenses, it’s important to be aware of what you’re paying for and how those costs can change over time. Medigap premiums can vary based on several factors, including:

• Your age: Some Medigap policies use “attained-age” pricing, meaning the premiums will increase as you get older.
• Location: Premiums can vary significantly by region.
• Health status: If you apply for Medigap outside of your Open Enrollment Period, your health could affect your premium costs.

Be sure to ask about how premiums may change in the future and whether a plan uses attained-age, issue-age, or community-rated pricing.

Medigap and Medicare Part B: A Coordinated Effort

People often forget that Medigap policies don’t work independently; they coordinate closely with Medicare Part B. If Medicare Part B doesn’t cover a service, your Medigap plan won’t cover it either. For example, routine dental care or vision services are not covered under Medicare Part B, and thus, Medigap will not help with these expenses.

Should You Choose a High-Deductible Plan?

Some Medigap plans offer high-deductible options, which come with lower premiums but higher out-of-pocket costs. This may seem like an attractive option if you don’t expect to need frequent medical care. However, be cautious with this choice, especially if your health needs change over time.

A high-deductible plan might save you money upfront but could cost more in the long run if you need significant medical care. Consider your current health status and potential future needs before opting for a high-deductible Medigap plan.

Choosing Wisely for Long-Term Peace of Mind

Selecting the right Medigap plan requires careful consideration of your healthcare needs, financial situation, and future expectations. By avoiding common mistakes like confusing Medigap with Medicare Advantage, misunderstanding what Medigap covers, or missing your enrollment window, you can make a more informed decision that provides peace of mind.

To get the most out of your Medigap plan, be sure to evaluate different options carefully and consult a licensed insurance agent who can help you navigate the nuances of these supplemental policies. It’s always better to ask questions upfront than to be surprised by gaps in your coverage later.