Medigap premiums for plans from insurance companies offering the same benefits vary widely, so it pays to be a smart shopper.

So why do you need a Medigap? You need this supplemental coverage to cover the Medicare gaps in coverage.  With all the deductibles, copayments and coverage exclusions, Medicare pays for only about half of the medical costs for Medicare eligible persons.  Much of the balance not covered by Medicare can be covered by purchasing a Medigap insurance policy.

As always with Medicare, timing is important.  A Medicare recipient cannot be denied a Medigap policy if he or she applies for one within six months of enrolling in Medicare Part B. Otherwise, claims relating to pre-existing conditions can be denied only during the first six months that the policy is in effect. However, federal law does not require that fee-for-service Medigap policies be offered to those who enroll in Medicare Part B because they are disabled, although some states require the insurance companies to offer at least one kind of Medigap policy to people with Medicare under 65.   Alabama is not one of those states.

Medigap policies do not fill all the gaps in Medicare coverage. The biggest gap they fail to bridge is for custodial care in a nursing facility or for skilled care in a nursing home beyond the first 100 days. For coverage of this type of care, you must either purchase long-term care insurance or qualify for Medicaid coverage.

Federal law requires that each insurance company offers the same benefits for each of the Medigap plans lettered A through M, but each company sets its own premium rates.  The 8 available Medigap policy packages are identified by the letters A, B, D, G, K, L, M, and N. Plans E, H, I, and J are no longer sold, but, if those who already had that plan when discontinued were allowed to keep that coverage. As of January 1, 2020, Medigap plans sold to people new to Medicare were not allowed to cover the Part B deductible. Because of this, Plans C and F were no longer available to people who are new to Medicare on or after January 1, 2020, but those who already had either of these two plans were able to keep their plans.   

A Medigap insurance company sets premiums in three ways:

• Community-rated, where the premiums are the same, regardless of age
• Issue or entry age-related, where premiums are cheaper if purchased at a younger age
• Attained-age-related, where premiums are based on your age at the time of purchase

When choosing a Medigap plan, compare the different benefits each plan offers and the price for each company’s plan. Consider your current health status, what your health care needs might be in the years to come, as well as your future health care budget.

Premiums vary drastically from state to state.  For instance, The American Association for Medicare Supplement Insurance found that in 2022 the lowest costs for a female age 65 ranged from $99.24 per month in Dallas to $278.25 per month in New York City.

When shopping for a Medigap policy, get quotes from two or more insurance agents working for different insurance brokers. Every insurance broker may not represent all of the insurers offering a plan in the state or city where you live.

It will take time to shop around, but the money you save will be worth it.