Understanding the Key Terms and Concepts
Before we dive into the different Medigap plans, let’s make sure we’re all on the same page with a few key terms. Don’t worry, we’ll keep it simple.
What is Original Medicare?
When most people talk about Medicare, they mean “Original Medicare.” This is the federal health insurance program for people 65 or older and for some younger people with disabilities. It’s made up of two main parts:
Part A (Hospital Insurance): This helps cover costs if you are admitted to a hospital or a skilled nursing facility. It also helps with hospice care and some home health care.
Part B (Medical Insurance): This helps cover things like doctor visits, outpatient care, medical supplies, and preventive services. This is the part that covers your regular check-ups and specialist appointments.
What Are the “Gaps” in Medicare?
Original Medicare is a great foundation, but it was never designed to pay for 100% of your healthcare costs. The amounts it doesn’t cover are what we call “gaps.” Here are the most common ones:
Deductible: This is the amount of money you have to pay out-of-pocket for your healthcare before Medicare starts to pay its share. For example, with Part B, you have to pay an annual deductible before your coverage for doctor visits kicks in.
Coinsurance: This is your share of the cost for a covered healthcare service. It’s usually a percentage. For Part B, after you’ve met your deductible, you typically pay 20% of the Medicare-approved amount for most services. That 20% can add up very fast if you need expensive treatments.
Copayment: This is a fixed amount you pay for a service. While less common in Original Medicare, you might see it for things like hospital outpatient services.
What is Medigap (Medicare Supplement)?
A Medigap policy is extra insurance you can buy from a private company to help pay your share of the costs in Original Medicare. In other words, it helps pay for those deductibles, coinsurance, and copayments we just talked about.
It’s important to know that Medigap is not the same as a Medicare Advantage Plan (also called Part C). A Medigap policy supplements your Original Medicare benefits. A Medicare Advantage Plan is a different way to get your Medicare benefits, often through an HMO or PPO with a specific network of doctors. With Original Medicare and a Medigap plan, you can go to any doctor or hospital in the United States that accepts Medicare.
Standardized Medigap Plans
Here’s some good news: Medigap plans are standardized by the federal government. This makes them much easier to compare. Each plan is identified by a letter: A, B, C, D, F, G, K, L, M, or N.
This means that a Medigap Plan G from one company has the exact same basic health benefits as a Plan G from another company. The only differences will be the monthly premium you pay and the company’s customer service. This standardization is a huge help because it allows you to shop based on price and company reputation, knowing the coverage is identical.
Note: Plans C and F are no longer available to people who became eligible for Medicare on or after January 1, 2020. If you already had one of these plans, you can usually keep it. For everyone new to Medicare, Plan G is now the most comprehensive option.
For the most accurate and up-to-date information on Medicare benefits, you can always visit the official government site at Medicare.gov.
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