Medigap: Plugging the Holes in Medicare

With all the deductibles, copayments and coverage exclusions, Medicare pays for only about half of the medical costs of America's senior citizens. Much of the balance not covered by Medicare can be covered by purchasing a “Medigap” insurance policy.

Insurance companies may sell only Medigap policies that fall into one of 10 standard benefit packages, ranging from basic coverage to the most comprehensive coverage. The 10 available Medigap policy packages are identified by the letters A, B, C, D, F, G, K, L, M, and N (see chart below). Plans E, H, I, and J are no longer sold, but, if you already have one, you can keep it. Each plan package offers a different combination of benefits, allowing purchasers to choose the combination that is right for them. However, each plan package is the same across insurance companies — thus, a C package from one insurer will be identical to a C package offered by another. Of course, the more Medigap coverage you purchase, the more you will have to pay in premiums. All Medigap policies must provide at least the following core benefits:

• The coinsurance for days 61 to 90 of a hospital stay
• The coinsurance for days 91-150 of a hospital stay (lifetime reserve days)
• All hospital-approved costs from day 151 through 365

In addition, plans A, B, C, D, F, and G also cover the following:

• The cost of the first three pints of blood not covered by Medicare
• The 20 percent coinsurance for Part B medical charges

Plan K offers the following benefits:

• 50 percent of the coinsurance for Part B medical services and 100 percent of preventative services
• 50 percent of the first three pints of blood
• 50 percent of hospice care cost sharing

Plan L offers the following benefits:

• 75 percent of the coinsurance for Part B medical services and 100 percent of preventative services
• 75 percent of the first three pints of blood
• 75 percent of hospice care cost sharing

The plans provide a combination of eight other areas of coverage on top of the basic set. These areas of coverage include the coinsurance for days 21 to 100 in a skilled nursing facility, the Part A and Part B deductibles, foreign travel emergencies, and prescription drug coverage.

States may authorize the sale by insurance companies of the basic plan package and any number of the other nine approved combinations of benefits, so there may be fewer than 10 options to choose from in your state. Also, if you live in Massachusetts, Minnesota or Wisconsin, different types of standardized Medigap plans from the ones outlined below are sold.

A Medicare recipient cannot be denied a Medigap policy if he or she applies for one within six months of enrolling in Medicare Part B. Otherwise, claims relating to pre-existing conditions can be denied only during the first six months that the policy is in effect. However, federal law does not require that fee-for-service Medigap policies be offered to those who enroll in Medicare Part B because they are disabled, although state requirements differ. (For more on this, click here.)

Medigap policies do not fill all the gaps in Medicare coverage. The biggest gap they fail to bridge is for custodial care in a nursing facility or for skilled care in a nursing home beyond the first 100 days. For coverage of this type of care, you must either purchase long-term care insurance or qualify for Medicaid coverage.

Medigap also does not cover vision care, eyeglasses, hearing aids or dental care unless such treatment or equipment is needed as the result of an injury. In addition, Medigap plans do not cover prescription drugs. Before January 1, 2006, prescription drugs were covered in three plan packages (plans H, I and J). But under the Medicare Improvement Act, which created a Medicare prescription drug program, Medigap policies offering prescription drug coverage may no longer be sold.  However, existing Medigap policies may be renewed. But be aware that if you keep your Medigap policy and later decide you want to enroll in Medicare’s drug program, you may have to pay a premium penalty, although you won't have to pay a penalty if your Medigap plan is considered as good as the Medicare prescription drug plan. Medigap issuers should have sent notice to let you know if your Medigap plan is as good as Medicare prescription coverage.

It pays to shop around for a policy as premiums vary widely not only from state to state, but within states as well.  To help you find and compare Medigap programs available in your area, the Medicare program offers a Web site called Medigap Policy Search. This interactive tool gives contact information for insurance companies in your state that sell Medigap policies, and offers basic information about the policies of some (but by no means all) of these insurers, including which plans they offer; if the plans are offered to persons at or over age 65, under 65 with disabilities and/or End-Stage Renal Disease (ESRD); how they price their plans based on what rating method they use; and if you need to be a member of a certain organization to buy one of their plans. For an ElderLawAnswers article with information on how to choose a Medigap plan, click here.  For Medicare's own guide, “Choosing a Medigap Policy,” click here.

Also, the Center for Medicare Advocacy offers excellent online information about Medigap; click here.  

Benefits Covered by Standardized Medigap Policies

Benefits	Plan A	Plan B	Plan C	Plan D	Plan F*	Plan G	Plan K**	Plan L**	Plan M	Plan N
Coverage for: Part A coinsurance 365 additional hospital days during lifetime	X	X	X	X	X	X	X	X	X	X
Part B coinsurance	X	X	X	X	X	X	50%	75%	X	X***
Blood products	X	X	X	X	X	X	50%	75%	X	X
Skilled nursing facility coinsurance			X	X	X	X	50%	75%	X	X
Part A deductible		X	X	X	X	X	50%	75%	50%	X
Part B deductible			X		X
Foreign travel emergency			X	X	X	X			X	X
Home health care				X		X

 

* Plan F also has a high-deductible option that requires the beneficiary to pay $2,300 (in 2018) before receiving Medigap coverage. You must also pay a separate deductible for a foreign travel emergency ($250 per year). ** After you meet your out-of-pocket yearly limit and your yearly Part B deductible, the Medigap plan pays 100 percent of covered services for the rest of the calendar year. Plan K's out of pocket limit in 2019 is $5,560. Plan L's out of pocket limit is $2,780 in 2019. *** Plan N pays 100 percent of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to a $50 copayment for emergency room visits that don’t result in an inpatient admission. Source: CMS, Medicare and You Handbook 2019.  Click here to download in PDF format.