Q: What are Medigap plans and how do they work?
A: Medigap plans are Medicare supplement insurance plans, and are sold by private insurance companies that agree to abide by federal Medicare guidelines. A Medicare enrollee cannot purchase a Medigap policy unless he or she also has Medicare Part A and Part B, and Medigap policies only cover one person – there is no joint policy for husband and wife.
The purpose of a Medigap plan is to cover all or part of the charges that an Original Medicare (Medicare A and B) beneficiary would otherwise have to pay out-of-pocket. Medicare A and B both have deductibles and coinsurance (after the deductibles, Medicare typically pays 80 percent, leaving the patient to pay the other 20 percent, with no cap on the out-of-pocket charges). Medigap plans protect Medicare beneficiaries from those deductibles and coinsurance charges – that is, they bridge the “gap” in Medicare.
If you have Medicare A and B along with a Medigap plan, you’ll pay two premiums: one for Medicare Part B, and another for the Medigap plan (assuming you have premium-free Medicare A). Medicare B premiums are deducted from your Social Security check, but Medigap premiums are paid directly to the private insurance carrier that provides the plan.
Although Medigap plans are issued by private insurance carriers, the policies are standardized. As of 2015, there are ten different Medigap plans: A, B, C, D, F, G, K, L, M, and N. In all plans, a hospice benefit has been added; Plans C, D, F, G, K, L, M, and N pay for a portion of skilled nursing facility care; Plans C, D, F, G, M, and N pay for emergency medical care when the enrollee is traveling in a foreign country. Also, Plans F and G can pay for excess doctor fees you may be charged under Medicare Part B.
Plan F is the most comprehensive and is quite popular with Medigap enrollees, but it also tends to be the most expensive of the Medigap plans (carriers set their own prices, so although the benefits are standardized, the prices can vary from one carrier to another).
There are three states where Medigap plans are standardized differently: