3 Benefits of Signing Up for a Medigap Plan


Photo: Deposit Photos

By Lindsay Engle

Many people are under the impression that Medicare pays for everything. Unfortunately, this is not true. Medicare Supplement (also known as Medigap) plans help fill in the holes that the program leaves open.

There are several benefits of signing up for a Medigap plan. These include your health care costs becoming more predictable, no changes in coverage from year to year, and the ability to keep your doctors. For a better understanding of these benefits, it’s helpful to know how these plans work with Medicare.

Predictable Costs

Original Medicare consists of Part A (inpatient coverage) and Part B (outpatient coverage). On their own, these only cover 80% of health care costs. Yet, for a monthly premium, a Medigap plan can cover the remaining 20% of costs.

The premium can make some people hesitate to sign up for supplemental insurance. Yet, without this coverage, out-of-pocket costs can add up more quickly than premiums over the years. This is especially true if you encounter unexpected medical needs. When medical appointments and procedures are frequent, protecting your retirement savings by enrolling in a Medigap plan can go a long way.

All Medigap plans cover at minimum the coinsurance and copays for Part A and B, hospital costs of up to 365 extra days beyond the use of Medicare benefits, the first three pints of blood if needed, and coinsurance for preventive care under Part B. There is a range of coverage options, beginning with Plan A, which includes only the benefits mentioned.

The most popular plans, however, are the ones that offer more benefits. Plans F, G, and N also include skilled nursing facility care coinsurance and cover the Part A deductible, foreign travel emergency (up to plan limit), and Part B preventive care coinsurance.

Without this coverage, those on Original Medicare are responsible for their share of these costs, out-of-pocket. Should an unforeseen medical emergency occur, expenses can add up and leave you vulnerable to financial risk.

Consistent Coverage

There are 12 different Medigap plans, including two high-deductible options. These plans are all standardized by the federal government, so each plan’s coverage is the same regardless of which carrier you choose. So, while your monthly premium might increase each year, the benefits will remain the same over time.

Medicare Advantage plans are subject to change each year, as are Part D prescription drug plans. If you have either of these types of coverage, you’ll receive a letter in the mail each September, known as the Annual Notice of Change (ANoC). This letter outlines which changes are coming to your plan in the next calendar year. You then have the Annual Enrollment Period, from October 7 through December 15, to change plans if need be.

The Medigap plans are identified by letters, A through N, with high-deductible options for Plans F and G. Three states – Massachusetts, Minnesota, and Wisconsin – offer differently named options, but their coverage is similar to the lettered plans available in the other states. Note that Plans C and F, or any coverage considered “first-dollar” (meaning covering the Part B deductible), are only available to those eligible before January 1, 2020.

It’s important to note that although coverage for a lettered plan is the same regardless of carrier, premiums vary depending on several factors. The carrier and location, as well as the participant’s age and gender, can affect premium rates. The only way to get the most accurate quotes is to speak to an agent.

The older you are when you sign up for a Medigap plan, the higher your premiums will be. That is why you should take advantage of the Medicare Supplement Open Enrollment Period, which is a six-month timeframe beginning the month you’re eligible for and enroll in Part B. During this time, you’ll be guaranteed issue of a Medigap plan. Otherwise, you’ll have to answer medical underwriting questions, and a carrier could deny you.

No Restrictive Doctor Networks

Unlike Advantage and other HMO or PPO plans, Medigap doesn’t come with a network of doctors that you must utilize. Instead, you’ll need to make sure that your practitioners accept Medicare assignment. Luckily, 93% of primary care physicians who treat adults accept it. Thus, with a Medigap plan, you can consider this large number of physicians to be your “network.”

The wide selection of providers makes it easier to find a specialist near you and continue to see the doctors you prefer. With Medigap, you also won’t need a referral to see a specialist. In contrast, Advantage plans often require referrals for specialists.

Additionally, an Advantage plan can drop your doctor. It’s much less likely, though, that a practitioner will cease to accept Medicare assignments. As many patients build relationships with medical professionals, they prefer to maintain them. A Medigap plan offers this ability more than Advantage plans.

Choosing the Right Medigap Plan for You

Once you weigh the benefits and decide that a Medicare Supplement plan is the best option for your coverage, you’ll need to find the right fit for your needs. The plans offering more benefits come with higher premiums but could save more in medical expenses than their total monthly costs.

Although you possibly don’t have many medical needs at the present moment, it’s important to keep the future in mind when selecting coverage. Advantage plans can seem tempting with included dental, vision, hearing, and prescription drug coverage.

Additionally, many Advantage plans boast premiums as low as zero dollars. Keep in mind, even with a premium-free Advantage plan, you’d still be responsible for your Part B premium. Also, you can always purchase ancillary coverage and a Part D plan to pair with your Medigap plan for more complete coverage.

When you consider the out-of-pocket costs and restrictive doctor networks of Advantage plans, Medigap often makes more sense for your future needs. For a monthly premium, you can safeguard your savings against future medical costs and continue to see the doctors you prefer. Speak to an agent about your health and budget needs to find the Medigap plan that will work for you.

Lindsay Engle is a Medicare expert for MedicareFAQ. She hosts the MedicareFAQ YouTube channel, which is a learning resource center for individuals 65 and older to learn about Medicare options and plans.
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