If you have Medicare, you might be curious about whether or not a Medicare Supplement Insurance policy, commonly referred to as Medigap, is necessary. Continue reading to learn what a Medigap plan entails and its functioning.
What Is Medigap?
Medigap serves as an enhancement to Medicare plans, aiming to offer extra protection for standard services included under Medicare. In certain situations, these policies also address some or all costs not included by Medicare, such as expenses for dental care, vision services, or long-term care.
A Medigap policy assists people in recovering expenses they pay from their own funds. These policies are provided by private insurers, making it essential to evaluate options that suit your requirements and budget.
What Medicare Covers
Medicare is made up of Parts A and B, in addition to the optional Part D, which includes coverage for prescription medications.
Even standard medical services require co-payments and deductibles. Additionally, if you require costly prescription medications, it can significantly impact your financial resources.
With the implementation of the Affordable Care Act (ACA), the gap in prescription drug pricing has been narrowing annually. In 2024, once you reach the threshold of $5,030, you find yourself in the famous coverage gap, where you must pay as much as 25% for both covered brand-name and generic medications. If your expenses exceed $8,000, you exit the donut hole and are responsible for just 5% of your medication costs.
National Council on Aging. Understanding the Medicare Part D Coverage Gap: Essential Information You Should Have.
What Medicare Doesn’t Cover
Medigap assists in covering expenses not included by Medicare. When hospitalized, you receive full coverage for your stay following the $1,676 yearly deductible set by Original Medicare Part A in 2025. Nevertheless, certain expenses, including those from an anesthesiologist, may result in out-of-pocket costs of up to 20%.
If you remain hospitalized for over 60 days, the charge will be $419 each day in 2025. Comparable co-payments exist for extended durations in nursing homes and hospice care. Additionally, routine medical appointments and outpatient services could incur charges. In 2025, your deductible stands at $257, after which you’ll be responsible for up to 20% of the Medicare-approved fees for the majority of physician services, with no maximum cap.
Should you lack dental insurance, it might be beneficial to consider a separate dental insurance policy. Numerous plans offer protection for various dental treatments that individuals with Medicare might require, such as crowns, root canals, dentures, and dental implants.
Types of Medigap Plans
Medicare’s basic coverage is made up of Parts A and B, and you have the option to purchase Part D, a prescription drug plan, from a private company to enhance your Medicare benefits.
U.S. Department of Health and Human Services. Medicare Components.
Should you choose Original Medicare (Parts A and B) along with Part D, and wish to add a Medigap plan for enhanced protection, the leading selections are Medigap Plan F and Medicare Plan G.
Medigap vs. Plan C Medicare Advantage
A Medigap plan serves as an addition to coverage from Parts A and B, covering costs not included in Original Medicare. In contrast, a Medicare Advantage Plan (Medicare Part C) is a privately administered alternative to the governmental Medicare system.
Many of these programs function as health maintenance organizations (HMOs), which substitute all Original Medicare services while offering extra benefits like preventive care, all within a chosen network of physicians and medical facilities.
A Medigap policy, on the other hand, offers greater flexibility compared to Medicare Advantage, as long as your doctor or healthcare provider is Medicare-approved. Your coverage remains active for life as long as you continue to pay your premiums. It can only be terminated if you cease premium payments, provide inaccurate information on your application, or if the insurer declares bankruptcy.
U.S. Medicare and Medicaid Services. Discover the Functionality of Medigap.
Is My Spouse Covered Under My Medigap Policy?
No. A Medigap policy is designed for only one individual and does not extend to expenses related to your partner. Unlike employer-provided insurance, you cannot add your spouse to your Medigap coverage. Consequently, both you and your spouse must each acquire your own separate plans for supplemental insurance.
How Much Does Medigap Cost?
Because Medigap is a form of private insurance, various companies provide different premium rates for their policies. The cost will be influenced by factors like your age and the duration of your Medicare enrollment.
Why Do I Need Medigap?
A Medigap plan enhances your Original Medicare benefits. It offers additional options and encompasses a wide range of healthcare providers.
The Bottom Line
Medicare includes two main components: Parts A and B, which provide fundamental coverage. In contrast, Part D is an elective plan for prescription medications. A Medigap policy can enhance this coverage by covering extra costs or deductibles. Those who opt for Medicare Part C, referred to as Medicare Advantage, do not require a Medigap policy.