Medicare’s open enrollment season is here. And with it comes that mad scramble to check health insurance plans and see what is changing and whether you should switch for more savings.
Perhaps you have heard of Medigap? But are not quite sure what kind of coverage it provides? Here’s a quick primer on what Medigap is and isn’t, and when it will help cover costs and when it’s not worth paying for.
- Medigap or Medicare Advantage?
Maybe you’ve heard of both policies in a way that made them seem similar? Good for you for investigating further. These two plans are fundamentally different. First, Medicare consists of 4 parts. Part A covers hospital stays and medically necessary care. Part B supplements visits to the doctor’s office and medication received while an outpatient. Part C is also known as Medicare Advantage where private insurance companies provide tailored plans that cover Part A and Part B.
Part D provides coverage for drug costs. Your options are to sign up for Part A and B, or instead use a Part C plan–Medicare Advantage. Medigap on the other hand is for those who are using Part A and B but want further coverage in case of unexpected bills.
- What type of extra coverage does Medigap provide?
According to the Medicare.gov site, among the plans available, they will provide some or all of the following:
- Part A coverage for hospital costs for an additional 365 days after your Medicare benefits are depleted.
- Part B co-insurance or co-payment.
- Blood (up to first 3 pints) .
- Part A hospice co-insurance or co-payment.
- Skilled nursing facility care co-insurance.
- Part A deductibles.
- Part B deductibles.
- Up to 80 percent of foreign travel health insurance.
Medigap plans pay 100 percent of their covered services for the rest of the year, after meeting the out of pocket yearly limit and Part B deductible. Read details here.
- What plans are available within Medigap?
Here we face even more alphabet-titled plans. Getting them all straight is a test of mental fortitude. Here is what you should know. Medigap policies are labeled with letters from A to L. An A policy plan has the bare essentials that make up Medigap. As you move through the lettered plans toward L, you get increasingly more coverage.
Plans offered by different insurers all cover the same thing because the details of what a plan can include are set by the government. However, Minnesota, Wisconsin, and Massachusetts have different Medigap policies than the other 47 states. So keep that in mind if you live where exceptions may apply.
- Do you need Medigap or is Medicare Advantage better?
The average Medigap premium is $150 a month. Whereas Medicare Advantage premiums are lower.
If you suspect that you will have high medical bills in the coming year, you may want to sign up for Medigap. However, this is a bit of a catch-22. Insurance companies that sell Medigap are required by law to allow you to purchase a plan with them during the six months after your 65th birthday. After this time period, they can refuse to sell you a Medigap policy or charge you more for the policy they do make available. Also, if you have signed up to a Medigap policy and find that you need to switch, finding an insurance company who will sell you a plan may be difficult. Medicare Advantage on the other hand must offer all the benefits that Medicare Part A and Part B offer. But the plans can charge different co-payments (often lower) and extra benefits.
To find out the right plan for you, first assess your health needs and then find out what each plan offers. Read the fine print of the various plans, whether Medigap or Medicare Advantage. And assess how effective each will be in covering your medical costs.