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Medicare Supplemental Insurance (AKA Medigap)

If you have Original Medicare (Part A and Part B), you are likely saddled with high out-of-pocket costs. Original Medicare does not have an out-of-pocket limit, and those costs can add up over the course of the year. You can add Medicare supplemental insurance (Medigap) in 2021 to reduce some of those costs. Learn more about how Medigap can help you save money if you have Original Medicare.

What Is Medigap Insurance?

Private insurance companies sell Medigap policies to work alongside original Medicare. There are 10 Medigap policies in all, and each one is labeled with a letter from A-N. Medigap policies are standardized in 47 states, while Massachusetts, Minnesota, and Wisconsin have their own policies. If you buy Medicare supplemental insurance in 2021 in one of 47 states, your benefits will be the same as everyone else who has that policy. For example, if you live in Hawaii and buy Medigap plan A, you will have the exact same coverage as someone in Illinois with Medigap plan A.

Medigap policies can offer up to 10 benefits that are not covered by Medicare. These benefits include coinsurance and deductible coverage. Some policies also include an out-of-pocket limit.

What Is Medigap Plan F?

Medigap Plan F is considered the top of all the Medigap plans. This plan is the most expensive, but it also offers the most coverage. Medigap Plan F covers:

  • Part A coinsurance and hospital costs for up to an extra 365 days once the Original Medicare benefits have been exhausted.
  • Part B coinsurance or copayment.
  • Part A hospice care copayment or coinsurance.
  • First three pints of blood.
  • Coinsurance for skilled nursing facility care.
  • Part A deductible.
  • Part B excess charge.
  • Part B deductible.
  • 80 percent of foreign travel exchange, up to the plan limits.

Medigap Plan F is available as both a standard and high-deductible plan. The high-deductible plan only provides coverage after you meet the $2,300 deductible. Because you have to meet the deductible, your monthly premium will be lower if you have a high-deductible plan.

While this is considered the best of the plans, you won’t be able to get it if you are new to Medicare in 2021. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) has made a significant change to what Medigap plans are allowed to offer. Newly eligible Medicare recipients can no longer buy Medigap plans in 2021 that pay the Part B deductible. Along with Medicare Part F, Medigap Part C will no longer be available to new enrollees.

If you already have Medigap Plan F or Plan C, you do not have to worry, though. You can keep your existing plan and continue to use the coverage. You also might be able to get Medigap Plan F in 2021 if you were eligible before Jan. 1, 2021 but did not buy the plan.

What Are the Best Medicare Supplemental Insurance Plans?

Medicare Plan F is the most comprehensive, so it is the best of the Medicare supplemental insurance options in 2021. If you are not eligible for this plan, there are other choices as well.

Medicare Supplement G is a top choice for seniors. It does not pay the Part B deductible, but it covers everything else that Plan F does. In 2019, the Medicare Part B deductible was $185. That means you will need to meet that deductible, but otherwise, you will receive the same coverage. Also, Medigap Plan G usually has lower premiums than Plan F, so this is an excellent choice for many people who need supplemental coverage.

Medicare Supplement Plan N is also a top choice. This plan was first offered in 2010 and has been widely popular ever since. It provides similar coverage to what you will get with Plan G. However, you will pay a $20 copay for medical visits and a $50 copay for ER visits. Also, you are responsible for excess charges. You can avoid excess charges by ensuring that your provider accepts the amount negotiated by Medicare. Also, if you live in a state that does not allow excess charges, you won’t have to worry about being charged. These states are:

  • Connecticut
  • Massachusetts
  • Minnesota
  • New York
  • Ohio
  • Pennsylvania
  • Rhode Island
  • Vermont

How to Get Medicare Supplemental Insurance 2021

If possible, get a Medicare Supplement Insurance policy during the open enrollment period. Medigap policies do not go through medical underwriting during this period. That means you cannot be denied coverage based on your medical history and you also cannot be charged more than healthy people are charged. If you choose to wait until after the open enrollment period, the insurance company will use medical underwriting to determine if you are eligible for a policy. It will also decide how much to charge you if you are approved. This makes it difficult to get an affordable policy.

Your open enrollment period depends on your situation. If you are turning 65, it will start on the first day of your birth month, as long as you are enrolled in Medicare Part B. For example, if you turn 65 on June 15 and you have Medicare Part B, your enrollment period will start on June 1. It will end six months later.

If you are 65 or older, you can enroll in Medigap as soon as you enroll in Medicare Part B and that enrollment cannot be repeated or changed.

If you are under 65 and have Medicare, you might be able to get a Medigap policy. Both the state and federal government regulate these policies. The federal government only requires that insurance companies offer them to people who are 65 and over, but some states have stepped in and require that all Medicare recipients are eligible for these policies. If you live in a state that allows people under the age of 65 to sign up for Medigap insurance, you will likely have to pay more each month for coverage.

What to Know About Medigap in 2021

There are some additional things you need to know about buying Medigap in 2021. First, you must have Medicare Part A and Part B prior to purchasing a policy. These plans only work with Original Medicare and cannot be used with Medicare Advantage.

You will be charged a monthly premium for your policy. This premium will go to the insurance company. You will need to also pay your Part B premium.

The coverage is limited to one person. If you are married, your spouse will also need to get a Medigap policy to receive coverage.

Once you get a Medigap policy, the insurance company cannot cancel it if you pay the premiums. This is true, even if your health changes.

Medigap policies do not cover prescription drugs. Some policies covered medications in the past, but that stopped in 2006. You can buy Medicare Part D to cover prescription drugs.

Do You Want Medicare Supplement Insurance in 2021?

Medigap plans are an excellent way to reduce your out-of-pocket costs. Of course, it is critical to choose the right plan to meet your healthcare needs. A licensed insurance agent can compare plans in your area and help you select the right one. Contact an agent to begin the process today.

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