Four things to think about when choosing a plan to fill gaps in Medicare, a “Medigap” or Medicare supplemental insurance plan

While people with Medicare have the choice of public health insurance, government-administered traditional Medicare, or private health insurance, a commercial Medicare Advantage plan that provides Medicare benefits, most people opt for traditional Medicare. Traditional Medicare gives them easy access to the doctors and hospitals they know and trust anywhere in the U.S. Moreover, with traditional Medicare, you can  protect yourself against high out-of-pocket costs.

With a Medicare Advantage plan, each year, depending upon the plan you join, you can incur up to $7,550 in annual out-of-pocket costs, including deductibles and copays for medical and hospital care. On top of that you have deductibles and copays for your drugs, for which you cannot budget.

There are three ways to fill gaps in traditional Medicare: A “Medigap” policy, sometimes called Medicare supplemental insurance, that you buy in the individual market, Medicaid (including Medicare Savings Programs administered through Medicaid) or retiree coverage, if it’s available to you from a former employer.

1. Enrollment: To avoid what could be high out-of-pocket costs if you need care, you should sign up for a Medigap plan at the same time you enroll in traditional Medicare. You will then be fully covered for medical and hospital care.  (Your local area agency on aging, www.eldercare.gov, can provide you with a list of private insurers that sell Medigap policies in your state. You also can call your local State Health Insurance Assistance Program (SHIP) for free assistance choosing a Medigap policy. And, you can go to Medicare.gov for Medigap options in your state.) If you wait to buy Medigap insurance, you might not be eligible to get it right away and, in many states, your premium will be based on your health status. (N.B. You cannot buy a Medigap plan to fill gaps in coverage in a Medicare Advantage plan,)
2. Choice: You have a choice of many different Medigap plans lettered A through N. Every plan covers basic gaps in traditional Medicare coverage, including gaps in medical and hospital coverage and 365 days of additional hospital coverage. Plan A is the most stripped down of the plans but covers the basics, including the 20 percent coinsurance for doctors’ services. Plans D, covers almost all your basic needs. Plan G is also popular and covers a little more. (As of 2020, if you are new to Medicare, you can no longer buy Plans C or F).
3. Standardization: With Medigap coverage, the gaps filled by plans A, B, C, D, F, G, K, L, M, N, will be the same no matter which insurer you buy the coverage from.  (Keep in mind that these lettered plans are different from Medicare Parts A, B, C and D.) These plans can be compared on price alone.
4. Premiums: Premiums can be based on the age at which you buy the policy (issue-age rated), your current age (attained age-rated) or the cost of providing the coverage to everyone in your area (community-rated).  Community-rated premiums will be the same for everyone in your area no matter what age you buy the policy, so they tend to cost more at 65 and less later in life. The lowest priced policy at 65–usually the age-rated policy–will likely not be the lowest priced policy over time.

Choose your Medigap plan carefully. The cost of a policy can vary considerably, depending upon the insurer from whom you buy the policy and how the premium is calculated. And, if you are considering a switch to Medicare Advantage, for which you do not need a Medigap plan, keep in mind that depending upon where you live and your health status, you might not be able to switch back to traditional Medicare and buy a Medigap plan. Only four states require companies to sell people Medigap policies regardless of their health condition: New York, Connecticut, Massachusetts and Maine.

• Four key differences between traditional Medicare and a Medicare Advantage plan
• Why traditional Medicare remains so popular
• Four things to know if your income is low and you have Medicare
• Enrolling in Medicare: Here’s a checklist
• People with Medicare typically spend over $4,000 for care