Medigap Plans: When Do They Make Sense?

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If you're on Medicare and are considering a Medicare Supplement plan, you may feel a bit confused when it comes to choosing the right coverage. What exactly do these plans cover, and is supplemental insurance something you really need? How do you choose the best plan for your situation? Let's take a closer look at the specifics of Medicare Supplement plans and discuss when it might make sense to spend the money on a policy.

What is a Medigap Plan?

Medicare pays for many of your health-related expenses, but not all of them. That's where Medicare Supplement plans, also called "Medigap" plans, come in. Unlike government-run Medicare, Medigap plans are offered and serviced by private insurance companies, to whom you'll pay a monthly premium above and beyond what you pay for Medicare Part B.

To be eligible for a Medigap plan, you must already be enrolled in Medicare parts A and B. Additionally, Medigap plans only cover one person, so if you and your spouse both want coverage, you'll need to buy separate policies for each of you. Finally, Medigap plans do not cover things like vision or dental care, hearing aids, long-term care such as what you'd receive in a nursing home, or private-duty nursing. So if you're interested in getting coverage for these types of services, you'll need to explore additional insurance options.

Should I Consider Medigap Coverage?

Medigap coverage effectively helps you close the gap between what Medicare pays for and the costs for which you are responsible. Obtaining Medigap coverage is likely a good idea for seniors who:

  • Anticipate the Potential for Frequent or Long-Term Hospital Stays
    The deductibles, coinsurance, and co-payments associated with a hospital stay can quickly add up. If you know you'll be undergoing surgery or have a chronic condition that requires regular hospitalizations, a Medigap plan will almost certainly save you money.
  • Are Healthy, but Risk Averse
    The older we get, the more our chance of experiencing unforeseen health issues increases. A stroke, heart attack, or cancer diagnosis can quickly derail both personal and financial plans. Medigap plans help you more effectively plan for the unknown. If you're unwilling to bet your financial future on the hopes that you'll always be relatively healthy, it may make sense to invest in Medigap coverage.
  • Travel Out of the Country
    Medicare plans cover a variety of different services here in the United States. If you get sick or need to be hospitalized in a foreign country, you're on your own. Medicare doesn't cover you outside of the U.S., but some Medigap plans offer emergency coverage for medical expenses incurred in a foreign country. If your retirement plans include travel abroad, getting a Medigap plan is probably a smart bet.

How to Choose the Right Medigap Plan

Medigap plans—which range from "Medigap A" through "Medigap N"—offer varying levels of benefits and coverage, though all plans of a certain type offer the same basic benefits. However, different insurance companies sell the same Medigap plans for radically different prices, so it's important to shop around.

The plan you select ultimately depends on your budget and health care requirements. Some plans help pay for Medicare-related expenses, like co-payments and deductibles; other plans offer coverage against foreign travel emergencies. A trusted insurance agent or broker can help explain the similarities and differences between each plan and help you determine which is right for you.

Advisors Can Help You Make Medigap Decisions

Navigating the Medicare Supplemental insurance marketplace can be overwhelming. If you're having trouble figuring everything out on your own, consider turning to a trusted licensed insurance agent or broker who can help you sort out your options. With a licensed agent's help, you'll be better able to understand what Medigap covers and what it doesn't, determine if Medigap coverage is a good financial choice, and ultimately decide which plan best meets your needs.

Ryan Smolek is the Vice President of Marketplace Operation for GoHealth Insurance, the nation’s most complete online portal for finding health insurance coverage. Possessing the experience, technology and infrastructure procured over the past decade, GoHealth is committed to the continual strengthening of the health insurance community.

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4 Comments

Work with a reliable insurance agent.
One trip to the er without medigap ins could cost you more than a years premiums. Regular medicare does not cover hospitals and anyone who thinks they will never go to hospital may want to rethink. You will also have co pays for test ordered from primary doc. There are many very affordable plans and if you are low income you can apply for medicaid as your medigap.
How do i find a licensed insurance agent that may steer me to the appropriate insurance plan for myself? i'm disabled, and just found out that my Medigap policy, which i had for over 30 years, is going to triple in monthly premiums. i have only SSDI income - and pay separately for the Pt D/RX plan. Thank you. i have no family anymore [my Mom went Home in Feb] to help me i'd really appreciate guidance. Thank you for the article and for an info you can share. Blessings