What’s Medicare Supplement Insurance (Medigap)?

Medicare supplement insurance policies, also known as Medigap policies, are health insurance policies sold by many private insurance companies. These policies help policyholders pay for some of their health care expenses that aren’t covered by their Medicare policies. Medicare, a health insurance plan administered by the federal government, does not cover coinsurance, copayments, or deductibles.

These Medigap policies will sometimes cover additional services not covered by Medicare, such as health care for those traveling outside the boundaries of the United States and its territories. For those who have both Medicare and a Medigap policy, health care bills go to both insurers and each pays it part of the expense.

Medicare supplement insurance is not the same thing as a Medicare Advantage Plan. When someone has a Medicare Advantage Plan, they get additional Medicare benefits. A Medigap policy is a separate policy that supplements the original Medicare policy but doesn’t add any new benefits to Medicare itself.

Chart of MediGap Plans

Here are eight important facts about Medigap health insurance policies:

  • To qualify for a Medigap policy, you have to have either Medicare Part A or Medicare Part B.
  • You can’t have a Medicare Advantage Plan and a Medigap policy at the same time. If you have a Medicare Advantage Plan and you want to apply for a Medigap policy, you have to make sure your Medicare Advantage Plan ends before the Medigap policy begins.
  •  With a Medigap policy, you’ll pay a premium once per month to the private insurance company as well as paying your monthly premium to Medicare Part B.
  • For you and your spouse to both be covered by Medigap insurance, you’ll have to get two policies, because Medigap policies only cover one person each.
  • Any insurance company licensed to sell Medigap policies in the state where you live can sell you a Medigap policy.
  • Even if you have health concerns, a standard Medigap policy is guaranteed to be renewable. Insurance companies aren’t allowed to cancel a Medigap health care insurance policy as long as the owner of the policy pays his or her monthly premium.
  • Medigap policies that were purchased after the first of January 2006 do not cover prescription medications. Some individuals are still covered by older policies that do cover prescriptions, but no new buyers can get these policies. Those who want prescription drug coverage now can sign up for Medicare Part D, the Medicare Prescription Drug Plan.
  • If you have a Medicare Medical Saving Account (MSA) Plan, you can’t legally be sold a Medigap policy.

Exclusions to Medigap Policies: Some expenses that Medigap health insurance coverage policies do not cover include eyeglasses, dental care, hearing aids, long-term nursing care, private nursing, or vision care expenses.

Some health insurance plans that aren’t types of Medigap coverage include:

  • Employer health coverage plans, including the Federal Employees Health Benefits Program (FEHBP)
  • Tribal, Indian Health Service, and Urban Indian Health care plans
  • Long-term care insurance policies
  • Medicaid (which covers mainly low-income Americans)
  • Medicare Advantage Plans, including Medicare HMO, PPO, and Private Fee-for-Service Plans
  • Medicare Prescription Drug Plans
  • TRICARE (which covers members of the military and their dependents)
  • Veterans’ benefits

Should you ever decide to drop your Medigap policy (the entire policy, that is, not only the prescription drug coverage), be aware of the timing. If you decide to purchase an entirely different Medigap policy instead, or you decide that you want to switch over to a Medicare Advantage Plan policy, you may have to pay a late enrollment penalty. If it’s been more than 63 consecutive days between the end of your old Medigap policy and the start of your new Medicare prescription drug policy, or if your old Medigap policy didn’t include creditable drug coverage, you’ll probably have to pay the late enrollment fee.