Medigap Basics & Details.  This training module was developed and approved by the Centers for Medicare & Medicaid Services (CMS), the Federal agency that administers Medicare and Medicaid. This set of National Medicare Training Program materials is not a legal document. The official Medicare program provisions are contained in the relevant laws, regulations, and rulings. The information in this module was correct as of April  23, 2007.

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What is a Medigap policy?

The Original Medicare Plan pays for many health care services and supplies, but it doesn’t pay all of your health care costs. There are costs you must pay, like coinsurance, copayments, and deductibles. These costs are sometimes called “gaps” in Medicare coverage. A Medigap policy is a health insurance policy sold by private insurance companies to fill the “gaps” in Original Medicare Plan coverage. The companies must follow Federal and state laws that protect people with Medicare. The front of the Medigap policy must clearly identify it as “Medicare Supplement Insurance.”

In all states except Massachusetts, Minnesota, and Wisconsin, any new Medigap policy sold must be one of 12 standardized plans, A through L. The benefits in any Medigap Plan A through L are the same for any insurance company. For example, the benefits in one insurance company’s Medigap Plan C are the same as any other insurance company’s Medigap Plan C. However, the cost for a policy may be different depending on the insurance company. The 12 plans include two plans that were added in 2005, plans K and L.

Insurance companies are not required to sell all 12 plans. Some people may still have a Medigap policy they purchased before the plans were standardized. When you buy a Medigap policy, you pay a premium to the insurance company. You still must pay your monthly Medicare Part B premium. As long as you pay your Medigap premium, a policy bought after 1990 is automatically renewed each year. This means that your coverage continues year after year as long as you pay your premium; we say your policy is guaranteed renewable. (In some states, insurance companies may legally refuse to renew Medigap policies that were bought before 1990.)

A Medigap policy only works with the Original Medicare Plan. If you are in a Medicare Advantage Plan or other Medicare plan, you may not want a Medigap policy. Medigap policies won’t work with Medicare Advantage Plans or other Medicare plans. In fact, it is illegal for anyone to sell you a Medigap policy if you: Are in a Medicare Advantage Plan (unless your enrollment is ending) Have Medicaid (unless Medicaid pays for your Medigap policy or only pays your Medicare Part B premium), or Already have a Medigap policy (unless you are canceling your old Medigap policy). If you have a Medigap policy and you join a Medicare Advantage Plan or other Medicare plan, you may want to drop your Medigap policy. Even though you are entitled to keep it, it can’t pay for benefits you get under your Medicare Advantage Plan or other Medicare plan and can’t pay any cost-sharing under these plans. (It is important to know that if you enroll in a Medicare Advantage Plan at age 65, or drop a Medigap policy to enroll in a Medicare Advantage Plan for the first time, you can generally disenroll from the plan any time within the first 12 months, called your trial period. You can go back to the Original Medicare Plan on the first day of the following month, and you have a guaranteed right to buy a Medigap policy.) If you are in the Original Medicare Plan and you have a Medigap policy, you can go to any doctor, hospital, or other health care provider that accepts Medicare. However, if you have the type of Medigap policy called Medicare SELECT, you must use specific hospitals and, in some cases, specific doctors to get your full insurance benefits.