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How to choose the best medigap plan

What you need to know about Medicare supplements

Last updated: April 2017

Medigap health plans are basically bookkeeping operations. Unlike Medicare Advantage plans, Medigap plans don't make any decisions about what to cover. They don't have networks of doctors or hospitals. All they do is pick up a specified share of your medical bills that Medicare doesn't pay, such as Part A or Part B deductibles or co-pays. If Medicare paid for it and you still owe a part of the bill, Medigap will pay it, no questions asked.

Medigap plans come in standardized varieties

In all but three states (Massachusetts, Minnesota, and Wisconsin), Medigap plans are available in 10 standardized benefits packages, which vary according to how much of your expenses they will pick up. The more expenses the plan will pick up, the higher its premium will be.  

The most popular plan is F, which pays for pretty much everything Medicare doesn't, including the 15 percent excess charge that you can be billed by doctors who don't accept Medicare as payment in full. Here's a chart of the various kinds of Medigap plans.

You can find a complete list of Medigap carriers in your area on Medicare.gov.

When you put your ZIP code into the search box, you will see a list of which plans are available in your area and which companies sell them. You will see a range of prices for each type of plan, and the names, websites, and other contact information for companies that sell them. But it's up to you to contact the carriers directly to get their specific pricing information.

There are no ratings for Medigap plans

Consumers are often surprised to find this out because there is plenty of rating information available for Medicare Advantage plans. Basically, there is very little to base Medigap plan ratings on. The benefits of Plan F are the same no matter which company you buy it from.

In almost every case, the companies get information on your Medicare bills straight from Medicare and pay their share automatically. They don't have networks of doctors or hospitals.

And the rules for Medigap are not the same everywhere, the way they are for Medicare Advantage. The federal government sets some minimum rules to protect consumers but many states have decided to add additional consumer protections on top of those.

The type of premium pricing method you choose will affect your future costs

A policy that looks inexpensive when you first buy it at age 65 could end up being the most expensive when you hit 80.

Insurance companies use three different ways of setting premium prices. In some states you may have a choice of only one or two.

Community-rated (also called no-age rated). The same premium is charged to everyone, regardless of age. Medigap experts say these plans are the least expensive over time, though not necessarily when you first purchase them.

Issue-age-rated. The premium is based on your age when you buy the policy. It won't go up as you age, but will increase due to cost inflation.

Attained-age rated. The premium starts low but goes up as you get older. Over time, this type of policy is the most expensive.

Learn more about policy pricing.

Medigap plans can turn you down or charge you more for pre-existing conditions at certain times

In every state, you have a guaranteed right to buy a Medigap policy for six months starting the first day of the month you are at least 65 and enrolled in Part B. During this grace period, the insurance company is not allowed to turn you down or charge you more because you have a pre-existing condition. This is called "guaranteed issue."

After that, you're only entitled to guaranteed issue Medigap in specific situations, such as these.

  • Your Medicare Advantage plan shuts down or you move out of its service area.
  • Your retiree plan shuts down.
  • You joined Medicare Advantage at 65 but decide to switch back to original Medicare within a year.
  • Your Medigap plan shuts down.

The minimum rules for when Medigap must sell you a plan are explained in this publication from Medicare. But some states have chosen to go beyond these minimums, for example, by requiring insurers to sell Medigap plans to applicants at any time. Your State Health Insurance Assistance program or state insurance department can give you information on your state's rules.

The rules are different if you are under 65

If you are under 65 but have Medicare because of a disability or other qualifying condition, you do not have the same blanket right to buy a Medigap plan guaranteed issue. Some states have gone above and beyond the minimum rules about this and do require at least some Medigap plans to be made available. You can learn more from Medicare's free publication on choosing a Medigap policy.

If you are in this category and cannot buy a Medigap plan, you have the option of getting a Medicare Advantage plan instead. These must be sold to anyone on Medicare, regardless of age. Then when you turn 65 you can switch to a Medigap plan if you want.

How to buy a Medigap plan

You can't buy a Medigap plan directly through Healthcare.gov the way you can a Medicare Advantage plan. You can buy the plan directly from an insurance company. Or you can work with a reputable local insurance broker to close the deal.

Consumer tip: Download this excellent Medicare pamphlet on Medigap

Medicare's free publication "Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare" has much more detailed information on Medigap than we have room for here. Highly recommended.

Medigap plans don't cover prescription drugs so you will need to select a standalone Part D plan. If you take prescription drugs regularly, finding the best prescription plan is going to take some work. Use our step-by-step guide to researching plans on Medicare.gov so you don't end up paying more for your medications than you have to.


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