Jane Dotson
Medicare is a federal health insurance program for people over 65 in the US. While Medicare covers a large share of healthcare costs, it does not cover everything, and beneficiaries may be responsible for some sizable out-of-pocket costs. This is where Medicare Supplement Insurance, also known as Medigap, comes in. Medigap policies are sold by private insurance companies and help to cover the gaps in Original Medicare, such as deductibles, coinsurance, and copays. Medigap policies do not usually cover prescription drugs, long-term care, vision, dental, or hearing aids, but some policies offer coverage for foreign travel. About 41% of Original Medicare beneficiaries had Medigap in 2022, and it is generally recommended for those who can afford it, as it can protect against unexpectedly high out-of-pocket costs. If Medigap is not affordable, there are other options to help with Medicare costs, such as Medicare Advantage plans, Medicare Savings Programs, and Extra Help subsidies.
| Characteristics | Values |
|---|---|
| What is Medicare Supplemental Insurance? | Extra insurance to help cover out-of-pocket costs not covered by Original Medicare. Also known as Medigap policies. |
| Who can buy it? | Anyone with Medicare Part A and Part B is eligible. If under 65, you may have to pay more or may not be eligible. |
| When to buy it? | Best time to buy is when turning 65, during the Medigap open enrollment period. |
| Cost | Monthly premiums vary by plan type, location, age, and insurance company. |
| What does it cover? | Deductibles, coinsurance, and other out-of-pocket costs. Some plans offer coverage for foreign travel, vision, hearing, and dental services. |
| What is not covered? | Long-term care, prescription drugs, private-duty nursing, or hearing aids. |
| How does it work with other insurance? | If you have multiple insurance coverages, the "primary payer" pays up to its limit, then sends the remaining balance to the "secondary payer". |
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What You'll Learn
Medicare Supplement Insurance (Medigap)
Medicare Supplement Insurance, also known as Medigap, is extra insurance that you can purchase from a private health insurance company. It helps cover your share of out-of-pocket costs in Original Medicare (Part A and Part B). Medigap policies are standardized, and you must already have Original Medicare to be eligible to buy a Medigap policy. These policies are generally named by letters, like Plan G or Plan K, and the benefits offered by each lettered plan are the same across insurance companies, with the price being the only differentiating factor.
Medigap can help cover costs such as certain vision, hearing, and dental services that Original Medicare does not typically include. Additionally, some Medigap policies offer coverage when travelling outside the U.S., but they generally do not cover long-term care, prescription drugs, or private-duty nursing. It is important to note that if you are under 65, you may face challenges in purchasing a Medigap policy or may have to pay higher premiums.
If you have both Medicare and supplemental insurance, such as Medigap or coverage from a former employer, each type of coverage is designated as a "payer." The "primary payer" pays up to the limits of its coverage and then forwards the remaining balance to the "secondary payer." If the secondary payer does not cover the entire remaining balance, you may be responsible for any outstanding costs. This coordination of benefits ensures that your healthcare costs are shared between the two payers to minimize your out-of-pocket expenses.
When considering Medicare Supplement Insurance (Medigap), it is important to understand the options available to you and the specific benefits and costs associated with each plan. You can refer to resources such as Medicare.gov or contact your local State Health Insurance Assistance Program (SHIP) to receive free personalized health insurance counselling and make an informed decision about your coverage options.
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Coverage from a former employer or union, or Medicaid
If you have retiree coverage from a previous employer or union, it may not pay for your health services if you don't have both Medicare Part A (Hospital Insurance) and Part B (Medical Insurance). Check with your former employer to see if they offer coverage when you have Medicare, such as a supplemental plan, drug coverage, or Medicare Advantage Plan. Ask if you or your family will lose your retiree coverage if you join a plan that your former employer doesn't offer.
If you have Medicare and qualify for full Medicaid coverage, your state will pay your Medicare Part B monthly premiums. Depending on the level of Medicaid you qualify for, your state might also pay for your share of Medicare costs, like deductibles, coinsurance, and copayments. People who have both Medicare and full Medicaid coverage are considered "dually eligible". As a dual eligible, Medicare pays first when you receive Medicare-covered services. Medicaid pays last, after Medicare and any other health insurance you have. However, if you are dually eligible, you will automatically be enrolled in a Medicare drug plan that will cover your drug costs instead of Medicaid.
Medicaid is a joint federal and state program that helps cover medical costs for certain low-income people, families and children, pregnant women, the elderly, and people with disabilities. Eligibility requirements and benefits can vary from state to state. Generally, you must meet your state's rules for income and resources and be a resident of the state. Some states allow you to “spend down” your income to qualify for Medicaid. This means you can pay for non-covered medical expenses and cost-sharing until your income is lowered to a level that qualifies you for Medicaid.
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Medicare Advantage Plan
If you have Medicare and supplemental insurance, you may have what is called "dual coverage". In this case, each type of coverage is called a "payer". The "primary payer" pays up to the limits of its coverage and then sends the rest of the balance to the "secondary payer". If the secondary payer doesn’t cover the remaining balance, you may be responsible for the remaining costs.
To be eligible for a Medicare Advantage Plan, you must have Part A and Part B. In some cases, joining a Medicare Advantage Plan might cause you to lose your employer or union coverage, which could also result in a loss of coverage for your spouse and dependents. Therefore, it is important to talk to your employer, union, or other benefits administrator about their rules before joining a Medicare Advantage Plan.
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Medicare Part B
If you have Part B and Medicare Supplement Insurance (Medigap) that pays your Part B coinsurance, your Medigap plan should cover the cost of insulin (up to $35). Generally, you need Part A and Part B to buy a Medigap policy. Some Medigap policies offer coverage when you travel outside the US. However, they generally do not cover long-term care, vision, dental, hearing aids, private-duty nursing, or prescription drugs. If you don't buy a Medigap policy within 6 months of getting Part A and Part B, you may not be able to buy a policy or you may have to pay more.
If you are under 65, you may not be able to buy a Medigap policy, or you may have to pay more. If you've been covered by an active employer group health plan (either yours or your spouse's) since turning 65, and it ended within the last 8 months, you can enroll in Part B without any penalty. This is considered a "Special Enrollment Period." During this period, you can apply any time of the year.
To learn more about enrolling in Medicare, you can refer to your copy of the "Medicare & You" handbook, call Social Security at 1-800-772-1213, or visit your local Social Security office. If you get benefits from the Railroad Retirement Board (RRB), call your local RRB office or 1-800-808-0772.
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Medicare Savings Programs
There are four types of Medicare Savings Programs: QMB, SLMB, QI-1, and QDWI. Each program has different income and resource eligibility limits, and these limits go up each year. For instance, the resource limits for QMB, SLMB and QI-1 are $11,160 for one person and $17,470 for a married couple, while the resource limits for the QDWI program are $4,000 for one person and $6,000 for a married couple.
The Medicare Savings Programs help pay for Part A and Part B premiums, deductibles, coinsurance, and copayments. In some cases, MSPs may also pay for Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) deductibles and coinsurance. To qualify for a Medicare Savings Program, you must have income and resources below a certain limit, and you must have both Part A and Part B. However, in some states, you may qualify for these programs even if your income or resources are higher than the federal limits listed.
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Frequently asked questions
Medicare Supplement Insurance, also known as Medigap, is extra insurance you can buy from a private health insurance company to help pay your share of out-of-pocket costs in Original Medicare.
While Medicare covers a large share of your health care bills, it will not pay for everything. Medicare Supplement Insurance helps cover the gaps in Medicare coverage, such as deductibles, co-payments, and coinsurance costs.
Anyone who has Medicare Part A and Part B is eligible to apply for a Medicare supplement plan. You can compare options on Medicare.gov, shop online, or work with an agent or broker to find the best policy for you.
