What is a Medigap plan?

Medigap plan Description

A Medigap plan is a private insurance plan that helps cover costs that are not covered by Original Medicare deductibles, coinsurance, and copayments.  Medigap plans are offered by health insurance companies such as Aetna, Cigna, and Humana.  Plans are identified by letter – for example, the “G” plan or the “N” plan.  Each lettered plan differs in its coverages.  As a Medicare recipient, you do not have to purchase a Medigap plan.  But without them, you may face high costs for hospital admission and doctor’s visits as some of these fees may not be fully covered by original Medicare.

Medigap plans are also known as Medicare supplement plans, supplemental Medicare plans, and Gap plans.  This can cause some confusion when you are looking at different kinds of plans.  An easy tip – Medigap plans have a letter associated with it – for example, G plan or Plan G.

Since Medicare Part A and B do not cover the full cost of health care, it is important to consider another way to cover out-of-pocket costs.  Typically, Medicare Part A and B cover about 80% of the cost of hospital care and doctor’s visits.  A Medigap plan covers some of the costs that remain – it may even cover the full cost, so you may pay $0 out of pocket when you have surgery or another procedure.

Medicare is your primary medical coverage.  A Medigap plan, if you choose to purchase one, will be considered your secondary medical coverage.  Medicare will be billed for your doctor’s visit or a health-related procedure.  After Medicare submits payment for your visit or procedure, your health care provider will bill your Medigap plan for the remaining amount (the costs not covered by Medicare).  Medicare supplemental plans (Medigap plans) are NOT the same, so your out-of-pocket costs will vary depending on the plan you select.

Are there really 10 Medigap Plans for 2023?

Many people review the Medigap plans available to them and find themselves asking many questions.  It can be confusing!  Part of the problem is that of the 10 plans, most people select either Medigap Plan G or a Medigap Plan N.  Only 10% of the people purchase the other plans.  Another important thing to know is that in 2020, Medigap Plan F is no longer available.  Those who were eligible for Medigap Plan F prior to January 1, 2020, could keep their plan or switch to another company for the same Plan F coverage.

Another option you have when choosing a Medigap plan is the company you choose to purchase the plan from.  So, you can choose your letter plan (for example, Medigap Plan G) and then choose the health care insurance company that will provide you with coverage for that plan (for example, Aetna or Humana).  Keep in mind that Medigap plans are standardized government plans.  This means that every company selling Medigap Plan G is selling the same Plan G.  So comparing Plan G’s across different companies is like comparing “apples to apples”.  However, the cost of the same plan differs across companies.  So a Medigap Plan G purchased from Company A can cost you more than the same plan from Company B.  So here is the trillion-dollar question: “Why would I purchase the plan from Company Q when the same plan from Company X is less expensive?”  The answer is because we are all different.  Some people want to purchase a plan from a large company like Aetna regardless of the cost while some people don’t care about the company as long as the cost is lower.  REMEMBER that companies offer the same coverage for Plan G (or any other Medigap plan) regardless of the cost.

Now let’s talk about the two most popular Medigap plans:

Medigap Plan G

Medicare supplement Plan G is the most comprehensive Medigap plan in 2022.  After Medicare pays its share of the bill, Medigap Plan G will cover everything else except the Medicare Part B deductible.  The Part B deductible is $203 in 2021, but my guess is it will go up by 3% a year indefinitely.  Let me give you an example.  With Medicare coverage and a Medigap plan G from any company, open-heart surgery, hip replacements, stints, emergency room visits, etc. is covered at 100%.  You will only have to pay the Part B deductible for outpatient care such as doctor’s visits.  Imagine having open heart surgery and paying $0.  That is Medicare Plan G.

Medigap Plan N

Medigap Plan N is the second most popular Medicare supplemental plan available today.  With the Medigap Plan N, you will pay the Medicare Part B deductible which is $203 per year.  In addition, with Medigap Plan N, you will also pay a copay up to $20 each time you visit a doctor or outpatient center.  This can get expensive if you are receiving any kind of outpatient treatment a few times a week.  For example, you could be paying $20 for each physical therapy visit and $60 if you have physical therapy three times a week. The copayments can add up.  Another copayment that you will be responsible for under the Medicare Supplemental Plan N is the $50 emergency room copayment (unless you are admitted into the hospital).  Lastly, some doctors charge an excess amount that the Medigap Plan N doesn’t cover.  In some states, some doctors are allowed to charge 15% above the Medicare-approved amount.  Less than 2% of the doctors in the US charge this excess charge, so I wouldn’t be alarmed – but it is information that you should know when considering Medigap Plan N.