Outside the Box: Do you need a Medigap plan? How to pick the right one

United States

If you’ve turned 65 or are about to, it may be time to consider a Medigap plan.

You are eligible for a Medigap plan, also known as Medicare supplement insurance, if you have chosen Original Medicare, Part A for hospital costs and Part B for doctor and other out-patient medical visits.

Why purchase a Medigap plan? Because Original Medicare typically covers only 80% of your doctor visits, leaving you to pay the rest.

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There are 10 different Medigap plans, all regulated by the federal government. Yet, you purchase a gap plan through private insurance carriers, either directly through the carrier or through an agent that sells Medigap plans from several carriers. Wherever you buy any gap plan you will receive the same benefits for that particular plan. Yet, the cost of the plan can vary depending on from which insurance carrier you purchase it.

The Medigap plan you chose depends on a number of factors:

  • Your overall health status: Do you have chronic health conditions?
  • Your budget;
  • Your tolerance for risk;
  • Whether you want to be covered when you are out of state or traveling in general.

To help determine the right Medigap plan for you, consider how often you have visited doctors and other healthcare professionals such as physical therapists in recent years before turning 65. Say you get your screenings but otherwise visit doctors only a few times a year at most. You may want to choose a high deductible Medigap plan such as a high-deductible F plan (if you turned 65 before Jan. 1, 2020) or a high-deductible G plan. The premium on high-deductible plans is typically considerably lower than the standard F and G and other plans including Plans A, B, C, D, K, L, M, and N. Reminder: These plans are distinct from Part A and Part B or Original Medicare.

The Medicare.gov website shows a side-by-side comparison of Medigap plans. If you buy a high-deductible plan, it might be fine for this year or next but you may want more coverage in the years ahead. If it’s important for you to know precisely what your costs will be per month or year, you may prefer, for example, a higher premium plan that has a lower deductible.

“Insurance is for ‘what if’?” says Alex Wender, owner of Bluewave Insurance Services, San Diego.

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The most popular Medigap plan, for example, is a standard Plan G. Its premium cost, which depends on the state you live in and your age, can range from approximately $ 80 to $ 250 per month. A Plan N can range from $ 70 to $ 220 per month.

In most states, the price of the monthly premium for any Medigap plan depends on which carrier you buy from, your gender, ZIP Code, and age, Wender says. If you decide to switch carriers or to a plan that does not have a high-deductible, you may pay a higher monthly premium and will be asked a series of questions about your health. Yet, sometimes when you switch carriers you may be able to save $ 10, $ 20 or $ 30 on your monthly premium, if you keep the same type of plan, he says. If you purchase your Medigap plan when you are 65, or are new to Part B, you will not have to answer health questions.

If you have already turned 65 and signed up for Medicare but haven’t yet bought a Medigap plan, review your recent Medicare claims.

The federal Centers for Medicare and Medicaid Services sends you official summaries of claims that Medicare has processed and paid.

Once you have met your $ 203 Medicare Part B deductible, Medicare would begin to cover 80% of your doctor visits. For example, say a podiatrist billed Medicare $ 124.97 for an office visit, Medicare approved $ 124.97, and Medicare paid the podiatrist $ 100.14. The maximum your podiatrist could bill you would be $ 24.99 or 20% of the $ 124.97. However, some services, such as screening mammograms and bone density tests, are covered at 100%.

The minimum premium for Medicare Part B is $ 148.50 per month during 2021. Most people pay the standard premium amount. If your modified adjusted gross income from two years ago is higher than $ 88,000 annually for an individual tax return or $ 176,000 for a joint tax return you will pay the $ 148.50 per month plus an Income Related Monthly Adjustment Amount (IRMAA) for 2021.

Read more about Medicare Part B costs

Once you turn 65, or within the three months before or after your birthday, typically you can sign up for Medicare Part A and Medicare Part B. At that point, you may no longer need to pay for an individual health insurance plan. However, if you have been covered by an employer’s or spouse’s employer group health plan you may choose to keep that plan, and may not need a Medigap plan.

Those who are not covered by an employer or spouse’s employer group plan at 65, and sign up for Medicare, are candidates for a Medigap plan. For example, maybe you are a sole proprietor and have been paying for an individual health insurance plan. When you turn 65 you may decide to stop your individual coverage, and choose Medicare in combination with a Medigap plan.

Many others who opt for Medicare and a Medigap plan at 65 previously had a group plan with a high deductible such as $ 4,000 or higher a year, Wender says. “They came from a small employer or medium size employer or had an individual plan,” he says. Those who were working or are still working for a large company or a city, county, state or the federal government may have good options from their employer. “Some employers offer employer-sponsored retiree coverage,” says Jennifer Hanson, head of Fidelity Medicare Services. Check with your employer’s benefits manager before you retire to find out what will be offered and your cost once you retire.

Only people who have elected Original Medicare – Part A and Part B – are eligible to buy a Medigap plan. If you have opted to buy a Medicare Advantage plan — Part C — you cannot purchase a Medigap plan. Typically, Medicare Advantage charges no monthly premium but requires you to use a network of healthcare professionals or pay more for services if you utilize practitioners outside the network; some Medicare Advantage plans won’t cover out-of-network services at all.

If your Medigap plan does not include prescription drug coverage you’ll have to purchase a separate Medicare Part D plan to cover prescription drugs. If you have questions about your specific situation, contact State Health Insurance Assistance Programs, a national network. If you still have a group health plan from an employer or spouse’s employer and you have questions about how it coordinates with Medicare, call 1-855-798-2627.