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Do You Need Medigap Insurance?

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If you are just turning 65, or have been at a Medicare eligible age for some time, you may be asking yourself if you need Medigap Insurance. This is insurance you purchase through a private company to supplement costs that are not covered by Medicare. You may also see it referred to as Medicare Supplemental Insurance.

What Is the Benefit of Medigap Insurance?

It is intended to help defray the costs of medical coverage that are not covered by basic Medicare, and can be especially beneficial in the event that something happens leaving you with large medical expenses.  There are some scenarios where you may not need Medigap insurance, for instance if you have some type of retiree insurance through a former employer, but for most people having some supplemental insurance is a good idea.

Some of the things you will find that a Medigap policy will help with include co-payments, deductibles, and health care if you travel outside of the country (which many of you may be considering in retirement years).  Medigap policies on the other hand do not typically help with coverage for long-term care, dental care, vision, eyeglasses, hearing aids, and private nursing care.  You may also want to check out other types of retirement insurance you should consider as you approach your retirement years.

How Many People Have Medigap Insurance?

According to a report by the Gorman Health Group, as of December 31, 2015, 22% of the Medicare population currently purchases some type of medigap insurance.  That comes to about 12 million people who have this coverage, and that number is expected to grow exponentially over the coming years as the baby boomer generation becomes Medicare eligible.

As there are no major changes expected in relation to the way Medicare benefits are distributed, as long as there remains a 20% burden on the consumer, it can be expected that these supplemental medigap plans will continue to be offered.

Are You Eligible for Medigap?

The majority of people enroll in Medicare when they turn age 65, and there is a a 6 month “guaranteed enrollment” period for Medigap plans at that time, when you cannot be denied coverage regardless of medical condition.  You still are eligible to apply and received Medigap insurance after this 6 month period, but you may be subject to a medical check, and higher rates or even the possibility of having coverage denied depending on medical conditions.  Because of that fact, it is highly recommended that if you will need Medigap, that you sign up within that 6 month window.

Medigap Pricing

While the Medigap plans themselves are standardized to help protect the consumer, the pricing of each plan may change based on the insurer, and the state in which you are purchasing the plan.  Because insurance companies can set their own pricing for these plans, you will find that some companies charge a higher price for the exact same services.  As you search for the right insurance company to fill your needs, make sure you compare similar supplemental plans across multiple companies to ensure you understand all your options.

If you’d like to learn about the different methods insurance companies us to determine pricing, Medicare.gov has a good overview of the different pricing schemes used.  Basically the pricing is either based on a group rate where everyone in the group pays the same rate, or there is age based pricing where you pay different pricing based age criteria.

Medigap Plans

Medigap plans are standardized and must indicate that they are a Medicare Supplemental Insurance plan.  Those plans are identified by a letter system as shown by the graphic below provided by Medicare.gov.

Medigap Plan Comparison

Medigap BenefitsMedigap Plans
Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used upYesYesYesYesYesYesYesYesYesYes
Part B coinsurance or copaymentYesYesYesYesYesYes0.50.75YesYes***
Blood (first 3 pints)YesYesYesYesYesYes0.50.75YesYes
Part A hospice care coinsurance or copaymentYesYesYesYesYesYes0.50.75YesYes
Skilled nursing facility care coinsuranceNoNoYesYesYesYes0.50.75YesYes
Part A deductibleNoYesYesYesYesYes0.50.750.5Yes
Part B deductibleNoNoYesNoYesNoNoNoNoNo
Part B excess chargeNoNoNoNoYesYesNoNoNoNo
Foreign travel exchange (up to plan limits)NoNo0.
Out-of-pocket limit**N/AN/AN/AN/AN/AN/A $5,1202560N/AN/A

* Plan F also offers a high-deductible plan. If you choose this option, this means you must pay for Medicare-covered costs up to the deductible amount of $2,200 in 2017 before your Medigap plan pays anything.

** After you meet your out-of-pocket yearly limit and your yearly Part B deductible, the Medigap plan pays 100% of covered services for the rest of the calendar year.

*** Plan N pays 100% 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 inpatient admission.

Medigap Insurance Summary

There are many different things to consider when talking about your overall insurance coverage starting at age 65.  If you are enrolling in Medicare Part A and B, then you should strongly consider looking at one of the above Medigap plans.

Even though standard Medicare covers a decent amount of expenses, there is no question that as we age the chances of a major medical issue popping up increases dramatically.  In these situations, even the 20% cost left to the individual in a standard Medicare program can add up quickly, and you will sleep better knowing that you have a Medigap plan as a backup to assist with these expenses.

Remember to shop around to ensure you are getting the best price with an insurance company you are comfortable with.  Lastly, remember to sign up within 6 months of turning 65 to ensure you are able to access all the plans at reasonable prices, regardless of your current health status.


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