What Is Medigap Insurance and How Does it Work?

For those who are 65 and older or living with certain disabilities, Medicare is a federal health insurance program designed to cover certain expenses such as hospital stays, doctor’s appointments and prescriptions.¹ What each individual or couple has coverage for depends on the different Medicare parts and options - such as Part A, Part B and Part D or a combination of the three, called Part C or Medicare Advantage. For those who wish to gain additional coverage or cover medical expenses that these Medicare options don’t, Medigap insurance can be a viable option. Below we’ll discuss what exactly Medigap is (and isn’t) and how it works.

What Is Medigap?

According to Medicare.gov, Medigap is a supplemental insurance policy designed to help cover the costs of certain medical expenses that Medicare doesn’t cover, such as:

Copayments
Coinsurance
Deductibles
Medical care when traveling abroad²

Unlike Medicare, Medigap policies are offered by private insurance companies, and their availability and coverage options can vary state by state. Just like most other insurance policies, you pay the company a monthly premium for the coverage, in addition to any Medicare premium you may be required to pay.

When using a Medigap policy, users are not limited to visiting certain doctors within a network. Instead, Medigap allows the policyholder to visit any doctor, regardless of whether or not they accept Medicare assignments.

How Does Medigap Insurance Work?

Medigap is designed to “pick up” where Medicare leaves off. If you have Medigap coverage, Medicare will pay its share of any approved amounts for covered costs, and then your Medigap policy will pay its share. In order to be eligible for Medigap, you must already have Medicare Part A and Part B.²

Medigap policies are only designed to provide coverage for one person, meaning you and your spouse will each need to select your own policies. In addition, Medigap policies have guaranteed renewal. The insurance company providing the policy can’t drop you as long as you continue to make your monthly payments.²

What Is Not Covered By Medigap?

There are certain services and medical costs that no Medigap policy will cover. According to Medicare.gov, these typically include:

Long-term care
Vision or dental care
Hearing aids
Eyeglasses
Private-duty nursing

Medigap vs. Medicare Advantage

It’s important to note that it is illegal for an insurance company to sell you a Medigap policy if you already have a Medicare Advantage plan, as these two options usually cannot be combined. This would only be allowed if you currently have Medicare Advantage and are planning on switching back to an original Medicare plan.²

Medicare Advantage (or Part C) is a type of healthcare plan offered by private companies contracted through Medicare. It’s designed to combine Part A (hospital insurance) and Part B (medical insurance) as well as, in some instances, offer a prescription drug plan or other additional coverage.³ Medicare Advantage is an alternative to original Medicare offerings, whereas Medigap is considered supplemental.

Whether you’re nearing the enrollment period for Medicare or considering switching your policy, it’s important to understand your options when it comes to supplemental coverage and alternatives. As you decide what’s the right choice for you, compare plans across different providers and discuss this decision with your trusted financial professional.