Medicare Supplement Insurance

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A Medicare Supplement Insurance (Medigap) policy, available from private companies, can assist in covering some of the health care costs that Original Medicare does not include, such as copayments, coinsurance, and deductibles.

Certain Medigap policies also provide coverage for services that Original Medicare excludes, like medical care while traveling outside the U.S. If you have Original Medicare and purchase a Medigap policy, Medicare will cover its portion of the Medicare-approved amount for eligible health care costs, with your Medigap policy handling its portion thereafter.

It's important to note that a Medigap policy is distinct from a Medicare Advantage Plan. The latter serves as a means to obtain Medicare benefits, whereas a Medigap policy functions solely to supplement your Original Medicare benefits.

Here are 8 essential points to consider about Medigap policies:

1. You must enroll in Medicare Part A and Part B to obtain a Medigap policy.

2. If you are enrolled in a Medicare Advantage Plan, you can apply for a Medigap policy, but ensure that you can disenroll from the Medicare Advantage Plan before your new policy starts.

3. You will pay a monthly premium to the private insurance company for your Medigap policy in addition to the monthly Part B premium to Medicare.

4. A Medigap policy is designed to cover only one individual. If both you and your spouse wish to have Medigap coverage, each of you will need to purchase separate policies.

5. You can acquire a Medigap policy from any insurance company licensed in your state to offer such policies.

6. Any standardized Medigap policy is guaranteed renewable, even if health issues arise, meaning that the insurance company cannot cancel your policy as long as premiums are maintained.

7. Some Medigap policies previously included coverage for prescription drugs, but after January 1, 2006, new Medigap policies are not permitted to offer this coverage. If prescription drug coverage is needed, you may join a Medicare Prescription Drug Plan (Part D).

8. It is illegal for anyone to sell you a Medigap policy if you already have a Medicare Medical Savings Account (MSA) Plan.

Also, keep in mind that Medigap policies do not cover everything. Generally, Medigap policies exclude coverage for long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing.

Types of insurance that are not considered Medigap plans include:

- Medicare Advantage Plans (like HMO, PPO, or Private Fee-for-Service Plan)

- Medicare Prescription Drug Plans

- Medicaid

- Employer or union plans, including the Federal Employees Health Benefits Program (FEHBP)

- TRICARE

- Veterans' benefits

- Long-term care insurance policies

- Indian Health Service, Tribal, and Urban Indian Health plans

If you decide to drop your entire Medigap policy (not just the prescription drug coverage), be cautious about the timing. You may want an entirely different Medigap policy rather than just modifying your existing Medigap policy by removing drug coverage, or you might opt to switch to a Medicare Advantage Plan that includes drug coverage.

If you cancel your entire Medigap policy and the previous drug coverage wasn't considered creditable, or if there’s a gap of 63 days or more before your new Medicare drug coverage starts, you may incur a late enrollment penalty when joining a new Medicare drug plan.