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Medigap policies allow you to see any doctor who accepts Medicare

Medigap policies are very good supplemental coverage, but they are also expensive.
One of their chief benefits is that they do not have any network restrictions. That means policyholders have coverage if they go to any doctor or hospital that accepts Medicare (as long as they are going for a Medicare-covered treatment).

Another strong feature of Medigap policies is that they are convenient, since the doctor sends Medicare the bill and it forwards the balance to the insurance company. In addition, the four comprehensive plans have little or no cost-sharing. Medigap policies do not include prescription drug benefits, and people who choose them must also enroll in stand-alone drug plans.

There are ten Medigap plans, all of them are standardized. That means that a particular plan (Plan F, for example) has the same benefits regardless of the insurance company selling it. Three states — Massachusetts, Minnesota, and Wisconsin — do not have the nationally standardized plans, but have plans that are standardized within their states.

The ten plans are designated by letters of the alphabet – Plans A, B, C, etc. There are some gaps in the lettering since Plans E, H, I, and J are no longer sold. This chart shows the Medigap plans that are currently sold, and they are grouped according to the comprehensiveness of their benefits.

Medigap chart

When people decide they want to purchase a Medigap policy, they should first choose the plan they want (A, B, etc.). Then they should look for insurance companies that have low premiums for that plan. Most state insurance websites lists the companies that sell Medigap policies in their states as well as each company’s premiums.

These online comparisons are good places for people to begin their search to find a company that has lower premiums. Still, people should get current quotes, since occasionally the state information is out of date. Shoppers should call three or more insurance companies with low premiums, according to the website. Then they can choose the company they want to buy their policy from. A few states do not list premiums online, but do list names and phone numbers of the companies that sell Medigap policies in those states.

State Medigap Premium Comparisons

Click on a state’s link to see its Medigap premium comparisons.

Massachusetts, Minnesota, and Wisconsin do not have nationally standardized plans, but have plans that are standardized statewide.

*Georgia, Hawaii, Mississippi, and New Mexico do not have online premium comparisons for Medigap policies. Click on this Medicare web site link and enter your zip code to get a list of Medigap insurers in your area as well as their phone numbers. The Mississippi and New Mexico links show the insurance companies that sell Medigap policies in the state.

**Illinois has separate comparison lists for three areas in the state. Select the link to the area you’re interested in.

***These states list the names and phone numbers of companies that sell Medigap policies in the state. New Jersey’s web site has separate links for finding premiums for men, women, and for people under 65. Utah’s site has separate links to each insurance company’s Medigap premiums.

Managing Medicare’s Costs

  • Healthy people can save money with less comprehensive Medigap plans

    When people first enroll In Part A and Part B of Medicare, they have a one-time opportunity to purchase a Medigap policy without having to disclose pre-existing conditions. But this opportunity goes away after six months.

    There are only four states where the six- month rule does not apply — Connecticut, Maine, Massachusetts, and New York. In the other 46 states, when people have health problems, even minor ones, they may be charged higher premiums if they try to get a Medigap policy after their first six months of enrollment in Part A and Part B. And if they have serious health issues, they will be denied coverage.

    That’s why people in poor health who do not have employer retiree coverage will almost always get Medigap policies when they first enroll in Medicare – it may be their only chance. Those in good health, on the other hand, may enroll in Advantage plans to save money. And in so doing, they accept the risk — probably small — that they will not be able to get a Medigap policy later.

    Except for their high costs, Medigap policies are the optimal coverage for older retirees who do not have employer plans. The most attractive feature of Medigap policies is that they do not have networks and are accepted by all Medicare providers. As people age, the flexibility in the choice of doctors and other providers can become increasingly important, with older retirees more likely to see several specialists.

    In contrast to Medigap policies, Advantage plans have provider networks. And as people age and use more medical services, there may not be a plan network that includes all their doctors or that includes an advanced treatment center. But if people with Medigap policies develop serious illnesses and want to go to the Mayo Clinic, Johns Hopkins or other large state-of-the-art clinic, they will be covered.

    While it’s true that Advantage PPO plans include some coverage for out-of-network services, patients’ costs may rise sharply when they go outside the network. Most Advantage PPO plans charge between 30% and 50% of the cost of out-of-network office visits and treatments. On top of that, many Advantage PPO have out-of-pocket limits as high as $10,000 when out-of-network services are included.

    Another selling point for Medigap policies is that insurance companies do not make the coverage decisions. Instead Medicare, which has been compared to an overly permissive grandparent, determines whether a treatment or procedure will be covered. And if Medicare covers it, the Medigap policy is required to cover it, up to the policy limits.

    With Advantage plans, though, insurance companies do make many coverage decisions. Although they are required to cover the same services as traditional Medicare, Advantage plans are more likely to restrict coverage in various ways, especially for expensive treatments.

    The dilemma for many new retirees, then, is whether to get a high-priced Medigap policy or to enroll in an Advantage plan and assume the slight risk of not being able to switch to a Medigap policy later when they may need it.

    A middle path for someone in good health is to get a less expensive, less comprehensive Medigap plan that nevertheless has good benefits. Of the ten Medigap plans, there are three that have substantially lower premiums and that cover all of Medicare’s services except for the Part A and Part B deductibles. The tradeoff is that these plans all have higher out-of-pocket risks than the comprehensive plans.

    When comparing Medigap plans, it’s helpful to remember that Medicare is the first or primary payer and covers most of the costs. The Medigap policy is secondary or supplemental coverage, and depending on the plan, it pays some, all, or none of the remaining balance. As an example, Medicare pays 80% of the cost for most medical treatments, and a Medigap plan will pay for some or all of the 20% balance. Since Medicare picks up most of the tab, the risk in the less comprehensive plans is smaller than people may initially realize.

    In the chart below, these three plans are compared with the standard Plan F, which is the most expensive Medigap plan.

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