Paul Sanchez
Medicare Supplement Insurance, also known as Medigap, is a popular form of additional coverage for traditional Medicare beneficiaries. Medigap policies are sold by private insurance companies and help cover out-of-pocket costs associated with Original Medicare (Part A and Part B), including deductibles, copayments, and coinsurance. In 2022, out of 29.7 million Medicare beneficiaries in traditional Medicare, 12.5 million (42%) had a Medigap policy. This percentage has decreased from previous years, as more beneficiaries have shifted to Medicare Advantage plans. Demographically, Medigap beneficiaries are more likely to be White, have higher incomes, and report better health. While most states guarantee issue protection for adults over 65, allowing them to purchase Medigap policies, this protection does not extend to younger adults with long-term disabilities.
| Characteristics | Values |
|---|---|
| Total number of Medicare beneficiaries in 2022 | 29.7 million |
| Percentage of beneficiaries with additional coverage | 89% |
| Percentage of beneficiaries with Medigap coverage | 42% |
| Number of beneficiaries with Medigap coverage | 12.5 million |
| Demographic characteristics of beneficiaries with Medigap coverage | More likely to be White, have higher incomes, and report better health |
| Federal law guarantee for adults 65 and older | 6-month guarantee for purchasing a supplemental Medigap policy |
| Number of states requiring insurers to offer Medigap policies to beneficiaries under 65 | 36 |
| Percentage of beneficiaries under 65 with Medigap coverage | 7% |
| Percentage of beneficiaries 65 and older with Medigap coverage | 46% |
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What You'll Learn
Medicare beneficiaries with Medicaid coverage do not need Medigap insurance
Medicare beneficiaries with Medicaid coverage do not need to purchase Medigap insurance. This is because Medicaid covers the cost of healthcare expenses, including out-of-pocket costs such as copayments, coinsurance, and deductibles. Medigap is a supplemental insurance policy that covers some of the costs not covered by Original Medicare (Parts A and B), such as emergency medical care when travelling outside the US. However, Medigap does not cover long-term care, vision, dental, hearing aids, private-duty nursing, or prescription drugs.
Medigap policies are designed to help high-income individuals who are not eligible for Medicaid pay for their out-of-pocket medical expenses. Traditional Medicare beneficiaries with Medigap are less likely to report cost-related problems than similar Medicare Advantage enrollees or traditional Medicare beneficiaries without supplemental coverage. Additionally, Medigap beneficiaries are more likely to be White, have higher incomes, and report better health.
While most states require Medigap insurers to offer at least one policy to individuals under 65 during an initial open enrollment period, premiums may be higher for this age group. Federal law does not guarantee Medigap coverage for Medicare beneficiaries under 65 who qualify on the basis of a long-term disability. However, some states have expanded on federal minimum standards to allow beneficiaries under 65 with disabilities to purchase Medigap during an initial open enrollment period.
Medigap policies are sold by private insurance companies and are standardized by the federal government. Individuals can choose from a variety of plans, each with different benefits, to find one that meets their needs. It is important to note that insurance companies are prohibited from selling a second Medigap policy to the same individual.
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Medigap policies cover out-of-pocket costs
Medigap, or Medicare Supplement Insurance, is an optional insurance policy that helps fill in the "gaps" in coverage that Original Medicare (Parts A and B) may not cover. Medigap policies are sold by private companies and help cover the costs of copayments, coinsurance, and deductibles that individuals would typically pay out of pocket with Original Medicare.
Medigap policies have out-of-pocket maximums, or limits, that cap the total amount a policyholder is required to pay for covered services within a year. These limits safeguard individuals from unlimited out-of-pocket expenses for Medicare-covered services. Once the policyholder reaches this maximum amount, the Medigap plan covers all additional Medicare-approved costs for the remainder of the year. It's important to note that not all Medigap plans have an out-of-pocket maximum, and the limits can vary among those that do.
Different Medigap plans offer different levels of coverage. More comprehensive coverage plans may have higher premiums but potentially lower out-of-pocket maximums. It's essential to understand the overall cost of the Medigap plan, including monthly premiums, when considering enrollment. Additionally, Medigap plans do not cover costs that Original Medicare doesn't cover, such as dental and vision expenses.
According to data from the National Association of Insurance Commissioners (NAIC) and the Centers for Medicare & Medicaid Services (CMS), in 2022, 12.5 million, or 42%, of people with traditional Medicare had a Medigap policy. Among traditional Medicare beneficiaries, a smaller share of those under 65 with disabilities have a Medigap policy compared to those 65 and older (7% vs. 46%). Medigap policies have helped traditional Medicare beneficiaries by reducing the likelihood of reporting cost-related problems and providing protection against catastrophic expenses for Medicare-covered services.
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Medigap premiums are a primary concern for beneficiaries
Medicare Supplement Insurance, or Medigap, is an extra insurance policy that Medicare beneficiaries can purchase from private health insurance companies. Medigap helps cover out-of-pocket costs associated with Original Medicare (Part A and Part B), such as deductibles, coinsurance, and copayments. It also covers some services that Original Medicare does not, like foreign travel emergency care. As of 2022, about 42% of people with traditional Medicare, or 12.5 million individuals, had a Medigap policy.
Several factors influence Medigap premium costs. States establish rules for Medigap insurers, including how premiums are set. Premiums may be based on factors such as the policyholder's age, smoking status, gender, and residential area, even during open enrollment and guaranteed issue periods. For instance, Connecticut requires insurance companies to sell Medigap plans to beneficiaries over 65 regardless of age, gender, or medical condition, while premiums in states that offer Medigap policies to individuals under 65 during initial open enrollment may be higher for this age group.
The variation in Medigap premiums across states and plans underscores the importance of beneficiaries carefully reviewing the different policy packages and considering their specific needs and financial abilities before purchasing Medigap insurance. While Medigap helps limit the financial exposure of Medicare beneficiaries, the premium costs are a significant consideration, especially given that Medicare beneficiaries often have modest incomes and limited savings.
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Medigap policies vary by state
Medigap policies, also known as private supplemental health insurance, help cover Medicare deductibles and cost-sharing requirements. They also protect against catastrophic expenses for Medicare-covered services. While Medigap plans are generally state-regulated, they are also subject to specific federal minimum requirements and consumer protections. For instance, federal law requires Medigap plans to be standardized, making it easier for consumers to compare benefits and premiums across different plans.
The share of Medicare beneficiaries with Medigap coverage varies significantly by state. In 2023, the percentage of traditional Medicare beneficiaries with Medigap policies ranged from 9% in Hawaii to 67% in Iowa. In 2022, 12.5 million, or four in 10 (42%) people in traditional Medicare, had a Medigap policy. States with higher Medigap enrollment tend to be in the Midwest and plains states, where relatively fewer beneficiaries opt for Medicare Advantage plans.
Medigap premiums also differ by state and policy type. For example, in 2023, the average monthly premium for Medigap enrollees was $164 per month, but this ranged from approximately $140 in D.C., Hawaii, and New Mexico to $236 in New York. The variation in premiums is influenced by factors such as the policyholder's age, smoking status, gender, and residential area.
It is important to note that not all Medigap plans are offered in every state. Additionally, states establish rules for Medigap insurers, including how to set premiums, and some states have expanded on federal minimum standards to allow beneficiaries to purchase Medigap on a guaranteed issue basis after certain qualifying events. As a result, it is advisable for older adults transitioning to Medicare to understand the Medigap rules and options available in their state of residence.
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Medicare beneficiaries under 65 are less likely to have Medigap insurance
Medicare, a health insurance program, provides financial protection to 67 million people in the US, including adults aged 65 and above, and younger adults with long-term disabilities. While Medicare offers critical financial protection, beneficiaries may face substantial cost-sharing requirements for covered services, and unlike most health insurance policies, Medicare does not limit out-of-pocket spending. This is where Medigap insurance, or Medicare Supplement Insurance, comes into play. Medigap policies help cover out-of-pocket costs associated with Original Medicare (Parts A and B), reducing the financial burden on beneficiaries.
Medigap policies are particularly beneficial for those with Medicare, as they limit financial exposure, provide protection against catastrophic expenses, and make healthcare costs more predictable through monthly premium payments. Additionally, Medigap plans may cover services that Original Medicare does not, such as emergency medical care during foreign travel. However, it's important to note that Medigap plans generally do not include prescription drug coverage; for that, one would need to enroll in a separate Medicare drug plan (Part D).
While Medigap insurance offers valuable benefits, Medicare beneficiaries under 65 are less likely to have this supplemental coverage. In 2022, only 2% of Medicare beneficiaries under 65 had a Medigap policy, compared to 11% of those 65 and older. This disparity is partly due to federal law, which does not guarantee issue rights to those under 65 who qualify for Medicare due to long-term disabilities. Consequently, a smaller share of younger beneficiaries has Medigap policies, and they are more likely to have no supplemental coverage at all.
Several factors contribute to the lower likelihood of Medigap insurance among beneficiaries under 65. Firstly, federal law does not require Medigap insurers to offer policies to those under 65 outside of specific circumstances. Secondly, Medigap insurers can use medical underwriting to deny coverage or charge higher premiums to those with pre-existing conditions, making it challenging for younger beneficiaries with long-term disabilities to obtain Medigap policies. Lastly, premium costs are a primary concern for all Medicare beneficiaries, and premiums may be higher for those under 65, even during initial open enrollment periods.
Despite the benefits of Medigap insurance, the lower adoption rate among younger beneficiaries highlights disparities in access to supplemental coverage. While most states require Medigap insurers to offer at least one policy to individuals under 65 during the initial open enrollment period, the varying premiums and lack of guaranteed issue rights contribute to the lower uptake in this demographic.
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Frequently asked questions
In 2022, 12.5 million, or 42% of people with traditional Medicare, had a Medigap policy. This is also described as 2 in 10 or 4 in 10 of traditional Medicare beneficiaries.
Medigap insurance, or Medicare Supplement Insurance, helps to cover the costs of services that are covered by Original Medicare (Part A and Part B). It also covers out-of-pocket costs and may cover services that Original Medicare doesn't, like emergency medical care outside the US.
All newly entitled Medicare beneficiaries aged 65 or older have a right to guaranteed issue of any Medigap policy for the first six months after their Medicare entitlement begins. People under 65 with disabilities may be able to purchase Medigap during an initial open enrollment period, depending on the state.
People with Medicare who want to limit their financial exposure to healthcare costs and protect against catastrophic expenses for Medicare-covered services may want to get Medigap. People who are eligible for Medicaid do not need Medigap, as Medicaid covers healthcare expenses. People who are covered by their employer's retiree health insurance may also not need Medigap.
The cost of Medigap policies varies depending on factors like the policyholder's age, smoking status, gender, and residential area. Premium costs are one of the primary concerns for people considering Medigap.
