Original Medicare (Parts A and Part B) pays for a majority (80%) of the cost of your medical services, but some services aren’t covered (receiving blood, for example). Medicare Supplemental Insurance, also called Medigap policies, “fills in the gaps” by covering the 20% coinsurance as well as some of the other medical costs Original Medicare doesn’t cover. Medigap plans are provided by private insurance companies. If your preferences align with Original Medicare, many professionals feel it is critical to enroll in a private Medigap/Supplemental plan to provide truly comprehensive coverage. Without a Medigap/Supplemental plan, your out-of-pocket expenses are uncapped, meaning there is no upper limit to what you may pay.

When to Enroll

When you’ve enrolled in Medicare Parts A and B and received your red, white, and blue Medicare card, you may choose a Medigap plan that best suits you. During this six-month Medigap Open Enrollment Period, you may buy any Medigap policy sold in your state regardless of your health status. You cannot be denied coverage for any reason, including pre-existing conditions. These policies are guaranteed to renew each year. The insurance company can't cancel your policy as long as you pay the premium.

Medigap Payment

When you select a Medigap policy you’ll pay a monthly premium to the insurer for that policy in addition to the Part B premium you pay to Medicare. Medigap policies are labeled in most states by letters (MN, WI, and MA have different plan designations). Each lettered plan is standardized and provides the same benefits regardless of the insurance company. Generally, the only difference between Medigap policies sold by different insurance companies is the cost of the monthly premium. Each insurer charges their premiums based on the number of people in that state they cover and their ages. Medigap plan premiums generally increase with age.

There are ten Medigap policies lettered A-N. This chart gives you an overview of what each lettered Medigap plan covers that original Medicare does not cover.

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Additional Notes:

• Plan F & Plan G also offer a high-deductible plan in some states.
• Plan K & Plan L show how much they'll pay for approved services before you meet your out-of-pocket yearly limit and Part B deductible. After you meet these amounts, the plan will pay 100% of your costs for approved services.
• Plan N pays 100% of the costs of Part B services, except for copays for some office visits and some emergency room visits.

Finally, a crucial aspect of Medigap plans is how they are priced, which is based on three primary rating systems. They are: community-rated, issue-age-rated, and attained-age-rated.