What is Medicare and What is Medigap

What Is Medicare

What is Medicare and what is Medigap? These are two of the most common questions we are asked on a daily basis, so we decided to dedicate an entire page to the what is Medicare, what is Medigap trivia question. While both Medicare and Medigap are very in-depth, this page should give you a broad understanding of how to discern one from the other and how to see if either of them applies to you. As always, you can call us with questions at (888) 918-0518 if need be. We’re here to help!

Medicare Part A and B are provided by the government. Your Part A is paid for through 40 quarters of Medicare taxes while working and Part B is paid monthly once you enroll in Medicare. For most people, as of 2022, the Part B premium is $170.10, however, it is based on your income. Medicare Part A and B by themselves leave you with many gaps in coverage, so using them alone isn’t a great idea.

So, what is Medigap? A Medigap plan fills the gaps in Part A and B. For most people, the best Medigap plan (Plan F) runs between $125 to $165 at age 65, depending on where in the country you live. Plan F fills all of the gaps in coverage (Prescriptions aside, that’s Part D, below), however, around here, we are big fans of Plan G, the second-best plan. More on that later.

  • People 65 or older
  • People under 65 with certain disabilities
  • People of any age with End-Stage Renal Disease (ESRD) (permanent kidney failure requiring dialysis or a kidney transplant)
  • Inpatient care in hospitals
  • Skilled nursing facilities
  • Hospice
  • Home health care

Usually, you don’t pay a monthly premium for Part A coverage if you or your spouse paid Medicare taxes while working. This is sometimes called premium-free Part A. If you aren’t eligible for premium-free Part A, you may be able to buy Part A, and pay a premium.

  • Services from doctors and other health care providers, hospital outpatient care, durable medical equipment, and home health care
  • Preventive services to help maintain your health and to keep certain illnesses from getting worse

Most people pay the standard monthly Part B premium. Note: You may want to get coverage that fills gaps in Original Medicare coverage. You can choose to buy a Medicare Supplement Insurance (Medigap) policy from a private company.

  • Includes all benefits and services covered under Part A and Part B
  • Run by Medicare-approved private insurance companies
  • Usually includes Medicare prescription drug coverage (Part D) as part of the plan
  • May include extra benefits and services for an extra cost

We have a great article about Medicare Advantage vs Medigap and how to choose.

  • Helps cover the cost of outpatient prescription drugs
  • Run by Medicare-approved private insurance companies
  • It May help lower your prescription drug costs and help protect against higher costs in the future

Note: If you have limited income and resources, you may qualify for help paying for your health care and prescription drug costs. For more information, visit socialsecurity.gov, call Social Security at 1-800-772-1213, or contact your local State Medical Assistance (Medicaid) office. Medicaid is a joint federal and state program that helps with medical costs for some people with limited income and resources. Medicaid may also cover services not normally covered by Medicare (like long-term supports and services and personal care services). Each state has different rules about eligibility and applying for Medicaid. If you qualify for Medicaid in your state, you automatically qualify for Extra Help paying your Medicare prescription drug coverage (Part D). You may be eligible for Medicaid if you have limited income and are any of these:

  • 65 or older
  • A child under 19
  • Pregnant
  • Living with a disability
  • A parent or adult caring for a child
  • An adult without dependent children (in certain states)
  • An eligible immigrant

In many states, more parents and other adults can get coverage now. If you were turned down in the past, you can try again and may qualify now.

When you enroll, you can get the health care benefits you need, like:

  • Doctor visits
  • Hospital stays
  • Long-term services and supports
  • Preventive care, including immunizations, mammograms, colonoscopies, and other needed care
  • Prenatal and maternity care
  • Mental health care
  • Necessary medications
  • Vision and dental care (for children)
  • You should apply for Medicaid if you or someone in your family needs health care. If you aren’t sure whether you qualify, a qualified caseworker in your state can look at your situation. Contact your local or state Medicaid office to see if you qualify and to apply. To get information about your state’s Medicaid program, visit HealthCare.gov/do-i-qualify-for-medicaid.

Dual Eligibility

Some people who are eligible for both Medicare and Medicaid are called “dual eligibles.” If you have Medicare and full Medicaid coverage, most of your health care costs are likely covered. You can get your Medicare coverage through Original Medicare or a Medicare Advantage Plan (like an HMO or PPO). If you have Medicare and full Medicaid, Medicare covers your Part D prescription drugs. Medicaid may still cover some drugs and other care that Medicare doesn’t cover.

Talking seniors discussing What is Medicare and What is Medigap.
Some people who are eligible for both Medicare and Medicaid are called “dual eligibles.”

What Is Medigap

A Medigap policy is private health insurance that helps supplement Original Medicare. This means it helps pay some of the health care costs that Original Medicare doesn’t cover (like copayments, coinsurance, and deductibles). These are “gaps” in Medicare coverage. If you have Original Medicare and a Medigap policy, Medicare will pay its share of the Medicare-approved amounts for covered health care costs. Then your Medigap policy pays its share. A Medigap policy is different from a Medicare Advantage Plan (like an HMO or PPO) because those plans are ways to get Medicare benefits, while a Medigap policy only supplements the costs of your Original Medicare benefits. Note: Medicare doesn’t pay any of your costs for a Medigap policy.

All Medigap policies must follow federal and state laws designed to protect you, and policies must be clearly identified as “Medicare Supplement Insurance.” Medigap insurance companies in most states can only sell you a “standardized” Medigap policy identified by letters A through N. Each standardized Medigap policy must offer the same basic benefits, no matter which insurance company sells it. Cost is usually the only difference between Medigap policies with the same letter sold by different insurance companies.

In Massachusetts, Minnesota, and Wisconsin, Medigap policies are standardized in a different way. In some states, you may be able to buy another type of Medigap policy called Medicare SELECT. Medicare SELECT plans are standardized plans that may require you to see certain providers and may cost less than other plans.

*Plan F is also offered as a high-deductible plan. With a high-deductible Plan F, you must pay for Medicare-covered expenses such as copays and deductibles up Plan deductible of $2,490 for 2022 before the policy pays anything.

*Plan N covers Basic Benefits after a $20 copay for office visits and a $50 copay for emergency room visits.

**Plans K and L pay 100% of hospitalization and preventive care Basic Benefits. All other Basic Benefits are paid at 50% for Plan K, and 75% for Plan L. Once you reach the annual limit, the plan pays 100% of the Medicare copayments, coinsurance, and deductibles for the rest of the calendar year. The annual out-of-pocket limit does NOT include costs from your provider that exceed Medicare-approved amounts (excess charges). For 2019, the out-of-pocket will be $6,220 for Plan K and $3,110 for Plan L.

  • Insurance companies selling Medigap policies are required to make Plan A available. If they offer any other Medigap policy, they must also offer either Medigap Plan C or Plan F.
  • Not all types of Medigap policies may be available in your state.
  • Plans D and G effective on or after June 1, 2010, have different benefits than plans D or G bought before June 1, 2010.
  • Plans E, H, I, and J are no longer sold, but, if you already have one, you can generally keep it.
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Jesse Smedley is the Principal Broker for iHealthBrokers and the founder, president, and CEO of Smedley Insurance Group, Inc. and iHealthBrokers.com. Since the inception of SIG in 2007, Jesse has been dedicated to helping people save money on their health insurance by providing them with resources to educate themselves on all their health insurance options, both under age 65 and Medicare beneficiaries. He is featured in many publications as well as writes regularly for expert columns regarding health insurance and Medicare.

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