13.2 Medicare Supplement (Medigap) Policies

Why Medigap Exists

Original Medicare (Parts A and B) leaves beneficiaries exposed to deductibles, the 20% Part B coinsurance, and hospital coinsurance with no out-of-pocket maximum. Medicare Supplement insurance, commonly called Medigap, is sold by private insurers to fill those "gaps." A Medigap policy pays after Medicare pays, covering some or all of the cost-sharing left by Original Medicare. Medigap works only with Original Medicare; it is illegal to sell a Medigap policy to someone enrolled in a Medicare Advantage plan.

Core distinction: Medigap supplements Original Medicare. Medicare Advantage (Part C) replaces Original Medicare. A consumer cannot legally hold both at the same time.

Standardization

Medigap plans are standardized by federal law, labeled with letters (A, B, C, D, F, G, K, L, M, N). Within a given state, every Plan G must offer the identical benefits regardless of which company sells it, so consumers compare on price and service, not coverage. (Three states - Massachusetts, Minnesota, Wisconsin - use their own standardization systems.)

Exam trap: Plans C and F (which pay the Part B deductible) are no longer available to people who first became Medicare-eligible on or after January 1, 2020. Someone eligible before that date may keep or still buy them.

What Medigap Does NOT Do

• It does not cover prescription drugs (that is Part D). Newer plans cannot include drug coverage.
• It does not cover long-term custodial care, dental, vision, hearing aids, or private-duty nursing.
• It does not work with Medicare Advantage.
• Each Medigap policy covers one person only - spouses need separate policies.

The Medigap Open Enrollment Period (most tested)

The Medigap Open Enrollment Period is a one-time, 6-month window that begins the first month a person is both age 65 or older AND enrolled in Part B. During this window the insurer must use guaranteed issue: it cannot deny coverage, cannot charge more, and cannot impose a waiting period based on health (a pre-existing condition limit may apply only if the applicant lacked prior creditable coverage).

Critical timing point: Outside this 6-month window (and absent a guaranteed-issue situation like losing employer coverage), the insurer may medically underwrite - it can decline the applicant or charge a higher rate. This is why agents stress enrolling during open enrollment.

Worked scenario: pre-existing conditions

A 66-year-old enrolls in Medigap during her open enrollment period but had a 70-day gap in prior creditable coverage. The insurer may impose a pre-existing condition waiting period of up to 6 months. Had she enrolled with 6+ months of continuous prior creditable coverage, the look-back would have been reduced or eliminated.

Pricing Methods

Exam point: Attained-age policies look cheapest at age 65 but become the most expensive over time. Issue-age and community-rated policies are usually better long-term value.

Replacement Rules

When replacing one Medigap policy with another, agents must deliver a Notice Regarding Replacement and observe the 30-day free-look period required on Medigap policies. The applicant signs a statement that the new policy replaces existing coverage, and the replacing company is responsible for the suitability of the transaction. Churning a senior into a new policy merely to earn commission is an unfair trade practice.

Standardized Plans and the Open-Enrollment Guarantee

Medicare Supplement (Medigap) policies fill the gaps in Original Medicare (Parts A and B) - the deductibles, coinsurance, and copays. They are sold by private insurers but standardized by federal law into lettered plans (A through N), so Plan G from one carrier offers the identical benefits as Plan G from another; only price and service differ. Medigap pays only alongside Original Medicare - it does not work with a Medicare Advantage (Part C) plan, and it covers a single individual (no spousal coverage on one policy).

The Open-Enrollment Window and Guaranteed Issue

The crucial consumer protection is the 6-month Medigap open-enrollment period that begins when the applicant is both 65 and enrolled in Part B. During this window the insurer must issue any plan it offers on a guaranteed-issue basis, cannot decline for health reasons, and cannot charge more for pre-existing conditions. Outside that window, an insurer may medically underwrite and decline. A free-look period (typically 30 days) lets the buyer return a Medigap policy for a full refund. New enrollees since 2020 cannot buy plans that cover the Part B deductible (former Plans C and F).