Center for a Secure Retirement
How a Medigap Plan Helps You Pay for Health Care Costs

How a Medigap Plan Helps You Pay for Health Care Costs

Whether you're about to turn 65 (the age when most Americans are eligible to enroll in Medicare) or you're already enrolled, you may want to purchase a Medigap plan. Medigap, or Medicare Supplement insurance, policies fill in some of the gaps in coverage from Original Medicare, which helps pay for health care services but doesn't cover every situation or cost.

Alternatively, people seeking coverage not included in Original Medicare may decide to purchase a Medicare Advantage plan through a private insurer at a lower out-of-pocket cost. If you have a Medicare Advantage plan, you aren't allowed to purchase a Medigap policy as well. However, if you don't have a Medicare Advantage plan, you can fill Original Medicare coverage gaps with a Medigap plan purchased from a private insurer.

Before you decide to pursue a Medigap plan, make sure you understand what Medigap will and won't cover. Here we will discuss how Medigap can help cover copayments, coinsurance, deductibles and other costs in some common medical situations.

Making a Doctor's Appointment

Medicare Part B covers certain preventive services and a share of the Medicare-approved amount for appointments, exams and other services provided by doctors, including referrals to certain types of specialists. However, after Part B pays, you are responsible for any amount owed.

There are several types of Medigap plans, and each provides different coverage. Depending on which type of policy you have, coinsurance and copayments may be covered after you meet your Part B deductible. If you have Medigap Plan C or Plan F (policies unavailable to people who are newly eligible for Medicare after January 1, 2020), your policy would cover the $203 Part B deductible.

Being Admitted to the Hospital

Medicare Part A covers hospital stays of up to 60 days for each benefit period after you meet the $1,408 deductible. From day 61 to 90, however, you must pay $352 coinsurance per day, and after day 90, you would have to pay $704 per day. Generally, Part B covers 80% of Medicare-approved doctor services that you would receive in the hospital. Depending on which type of policy you purchase, Medigap may pay the entire $1,408 deductible or a percentage of it. However, most Medigap policies don't pay the $203 Part B deductible.

Most Medigap policies cover coinsurance and copayment costs once the Medicare deductibles are met. You can also purchase Medigap policies that pay for all Medicare-approved costs from hospital stays for up to 365 days after Medicare benefits are used up.

Requiring Skilled Nursing After a Hospital Stay

If your doctor orders care in a skilled nursing facility after a hospital stay, Medicare Part A covers costs for up to 20 days. After that, you would have to pay $185.50 from days 21 to 100, and you would be responsible for all additional costs beyond 100 days. However, some (but not all) types of Medigap policies can fill those expensive coinsurance gaps, paying for all, or at least a percentage of, skilled nursing services that extend beyond 20 days, for up to 100 days of service.

Buying Prescription Drugs

Medigap policies don't provide coverage for prescription drugs, which also aren't covered by Medicare Part A or Part B (Original Medicare). If you want Medigap and prescription drug coverage, you can purchase Medicare drug coverage (Plan D).

Traveling in a Foreign Country

Not every Medigap plan covers health care services outside the U.S. However, several Medigap plans pay for 80% of billed charges for emergency care within the first 60 days of your trip if Medicare doesn't cover the care, up to a lifetime limit of $50,000. This coverage is triggered once you meet a $250 yearly deductible.

What Medigap Policies Don't Cover

Generally, Medigap policies don't cover vision or dental care, long-term care, hearing aids, eyeglasses or private-duty nursing, which also aren't covered by Original Medicare.

Is a Medigap Policy Right for You?

Before purchasing a Medigap policy, first compare Medigap plans on the Medicare website. Note that it's best to buy a Medigap policy during your six-month Medigap open enrollment period, when existing health problems won't disqualify you. An insurance specialist can answer any questions you might have and can help you decide whether a Medigap plan is right for you.

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