Original Medicare Part A and Part B covers many costs for medical services and supplies, but some Medicare recipients find that out-of-pocket costs can still be too high. Supplemental insurance is offered by private insurance companies to help pay for some of the expenses Original Medicare does not cover. Medigap, or Medicare Supplement, policies are sold in most states. Medigap plans are sold as standardized policies and identified by a letter, but each plan’s coverage and costs may vary.
How Medigap Supplements Original Medicare Coverage
Original Medicare is a combination of hospital insurance, known as Part A, and medical insurance, known as Part B. While Part A does not have a monthly premium for the majority of recipients, Part B does have a monthly premium and it must be paid in order to receive coverage. Both Part A and Part B have their own deductibles, copayments and coinsurance amounts that you are obligated to pay when you receive qualifying services.
Medigap plans have monthly premiums that are separate from Part B’s monthly premium, and the cost varies depending on the supplemental insurance benefits each plan offers. Generally speaking, the more comprehensive the benefits are, the more expensive the premium will be. Many Medigap plans cover out-of-pocket expenses such as some deductibles, copayments and coinsurance amounts, provide coverage while traveling outside of the country, as well as increase the coverage period for in-hospital stays.
Both Medigap and Original Medicare do not cover prescriptions. A separate Medicare Part D Prescription Drug Plan would need to be purchased in order to receive prescription drug coverage.
Differences Between Medigap and Medicare Advantage Plans
A Medicare Advantage Plan offers all the same benefits of Part A and Part B, in addition to extra coverage options that are specific to each private insurer’s policies. Medigap only works as a supplement to Part A and Part B, not as a replacement.
While Medicare Advantage plans may also help reduce costs for your cost-sharing obligations, they are not standardized across all carriers, which means policies can vary depending on insurer and location. Additional benefits can include vision and dental coverage in addition to prescription drug coverage, which are not covered by any Medigap plans.
In order to receive supplemental coverage with a Medigap Plan, you must be enrolled in Original Medicare Part A and Part B. However, if you choose to enroll in a Medicare Advantage plan, you may not purchase supplemental coverage through any Medigap Plan.
Medigap Plan N
With supplemental insurance through Medigap Plan N, all your Part B coinsurance costs are covered beyond a $20 copay for office visits and a $50 copay for visits to the emergency room. Preventive care coinsurance through Part B is fully covered.
While Medigap Plan N does not cover the Part B deductible or excess charges with Part B, it does cover the Part A deductible, hospital coinsurance and hospital costs for up to 365 days once Part A’s coverage runs out. The copayment and coinsurance amounts for Part A’s hospice care are also covered, as well as any skilled nursing facility coinsurance amount. With medical procedures that require a blood transfusion, the first three pints are covered by Medigap Plan N.
These plans are sold by private insurers who can choose which Medigap plans they sell, so Medigap Plan N may not be available through every Medicare Supplement Insurance provider or in every state. Where it is available, the benefits offered through Medigap Plan N will be the same across all carriers. The laws that regulate what Medigap plans can cover may change from year to year. Your provider should notify you of any pending changes before they take place.