As the name implies, Medigap is insurance which covers the gaps in Medicare, which is why officially the coverage is referred to as Medicare Supplement Insurance. These insurance plans are designed by the United States government as unalterable by the insurance companies which distribute the plans; as a result, shopping around for the most affordable Medicare supplement plan is important because insurance companies compete based on price alone.
Medigap plans are meant to be easily understood. They are organized by letters — A, B, C, D, F, G, K, L, M and N, the most popular of which are F, G and N because they offer 100% coverage on most benefits. These benefits include the first three pints of blood required during a procedure; an extension of Medicare Part A for one year following the exhaustion of benefits; foreign travel emergency; coinsurance or copayment for Part A hospice care; excess charges, deductibles, copayment or coinsurance for Medicare Part B; as well as hospice care coinsurance or copayment and deductibles for Part A.
Medigap Plan F offers 100% coverage on all the previously mentioned benefits with both a high and low deductible option. With the high deductible the monthly costs are lower but the full deductible must be paid before the insurer pays out. Plan G offers the same coverage but only at a low deductible. Plan N does not cover the deductible or excess charges for Medicare Part B, though it does cover the coinsurance or copayment.
Medigap is an attractive and beneficial supplemental insurance for those 65 and older because it is easily understandable and offers better coverage — except RX, which is not covered — over a larger network of doctors than alternatives like Medicare Advantage. Although the premiums are higher, the benefits of establishing relationships with more highly qualified doctors which are also conveniently located should not be underestimated, particularly for the elderly who need care often.
Even those on a fixed income can save when medical bills are due by paying more up front to insurance providers. Furthermore, Medicare Advantage rates are not locked-in and as a result may subject a policyholder to more financial uncertainty than they’d sought to avoid.