If you’re 65 or getting there (or under 65 with certain qualifying conditions), you are eligible for Medicare health insurance. Prepare yourself for an alphabet soup of decisions, including whether or not to supplement Medicare with a Medigap insurance policy. Because Medicare won’t cover all your medical expenses, Medigap can be a big help after you’re retired and living on a fixed income. Here is some basic information about Medigap coverage, plus updates on recent changes to federal law that affect it. For complete details, see the online brochure published by the Center for Medicare & Medicaid Services, Choosing a Medigap Policy.
Medigap is an optional policy you buy from a private (non-government) insurance provider. It’s called Medigap because it can help you pay for some costs and services that aren’t paid for by Medicare. These include (but aren’t limited to) deductibles, co-pays and co-insurance. (You can also opt for a Medicare Advantage Plan, also called Medicare Plan C, in which case you shouldn’t buy Medigap coverage, since Medigap won’t pay out if you have an Advantage managed care plan.) Medigap does not cover long-term care, glasses, hearing aids, or dental or vision care.
Note that all Medigap plans are regulated by government, so there’s very little difference in the details, unless you live in Wisconsin, Minnesota or Massachusetts. In that case, check with your state’s insurance regulator.
How much your Medigap insurance policy costs will depend on which of three methods are used by your insurer:
- Attained Age. Premiums go up as you age, so you’ll get the lowest Medigap premiums if you take out you policy when you turn 65. Expect premium increases every year, 3 years or 5 years after that, along with additional bumps resulting from Medicare COLAs (cost of living adjustments).
- Issue Age. Premiums don’t increase with age, but can go up with the COLAs. Your premium will depend on how old you are when you purchase Medigap coverage, so the earlier you buy, the cheaper the Medigap.
- Community Rating. You pay the same premium as everyone else living in your geo-area, no matter what you age.
Medigap Insurance Coverage Changes
As of June 1, 2010, Plans E, H, I and J could no longer be sold. However, they were grandfathered for anyone who bought them prior to that date. You still have your choice of A through D, F through G and K through N. A is bare-bones basic coverage, with something extra added to each subsequent plan B to N.