Healthcare costs in the U.S. are continuing to rise. One study showed that in 2017, one in 100 Americans under age 64 spent $5,000 or more out of pocket for medical services, and about one in 20 spent more than $1,700. And medical expenses can become even more common as you continue to age.
One way to help cover the cost of out-of-pocket healthcare expenses — items or services that Original Medicare doesn’t cover — is through a Medicare Supplement plan. Also known as Medigap, this supplemental health insurance plan is a way to provide additional coverage for medical services you may need. Here’s how it works.
What is supplemental health insurance?
Supplemental health insurance is any health insurance that you purchase on top of your primary health insurance plan. Unlike other insurance (which pays out to doctors or hospitals), this type of insurance pays cash benefits directly to you or someone you designate. It helps cover any medical care you receive for covered illnesses, injuries, or conditions.
Medicare Supplement insurance, also called Medigap, is a type of supplemental health insurance. Medigap is sold by private insurance companies. It’s a good way to help cover the cost of any out-of-pocket healthcare expenses that Original Medicare doesn’t cover — things like deductibles, coinsurance, copayments, and outpatient services.
How Medigap works
Medigap policies are standardized. No matter where you live or which insurance company you work with, you’ll receive the same benefits.
There are 10 Medigap plans: A, B, C, D, F, G, K, L, M, and N. The number of plans you have access to might vary based on the state where you live.
All Medigap plans cover some or all of:
- Your Medicare Part B coinsurance
- Medicare Part A hospice care
- Medicare Part A coinsurance and hospital costs for an additional 365 days once you’ve exhausted your Original Medicare benefits
How to get Medigap
If you have Original Medicare (Medicare Part A and Part B), you are likely eligible to purchase a Medigap plan. Your six-month enrollment period starts the first month that you are at least 65 and have Medicare Part B. This is the best time to enroll in a Medigap policy.
If you miss this window, you may not be able to purchase a Medigap plan. Or you may have less choices or have to pick from more expensive policies. At this point, most people have to undergo medical underwriting — a process that allows insurance companies to review your medical history and then decide whether they want to accept you as a customer.
Services not covered by Medigap
Medigap is a helpful and important way to cover services that Medicare may not cover. But Medigap doesn’t cover everything. Typically, most Medigap plans do not cover:
- Long-term care (for example, a nursing home or private nursing)
- Vision or dental care, including eyeglasses
- Hearing aids
Medigap plans are also not intended for prescription drug coverage. For that, you’ll need a Medicare Part D plan.
Should I get a Medicare supplement plan?
Medigap plans can help Medicare recipients cover the costs of medical expenses. Even if you’re currently healthy, accidents and illnesses happen. Just look at these statistics:
- One in three Americans may develop cancer in their lifetime1
- Someone in the U.S. has a heart attack every 40 seconds2
- More than 795,000 Americans have a stroke each year3
These are all scenarios where supplemental health insurance like Medigap can help provide the extra coverage you need.
Medicare Supplement coverage is valid everywhere in the U.S. You can visit any doctor, specialist, or hospital that takes Medicare coverage. Plus, in most cases, once you’ve purchased a Medigap policy, you can keep it for life so long as premiums are paid.
Learn more about Medigap
Here at Bankers Life, our agents are happy to help answer any Medigap questions you have. Click here to speak with somebody today.
1American Cancer Society, Lifetime Risk of Developing or Dying from Cancer, https://www.cancer.org/cancer/risk-prevention/understanding-cancer-risk/lifetime-probability-of-developing-or-dying-from-cancer.html, January 2023.
2Centers for Disease Control and Prevention, Heart Disease Facts, https://www.cdc.gov/heartdisease/facts.htm, May 2023.
3Centers for Disease Control and Prevention, Stroke Facts, https://www.cdc.gov/stroke/facts.htm, May 2023.