13.2 Medicare Supplement (Medigap) Policies

Purpose of Medigap

Medicare Supplement insurance — universally called Medigap — is private coverage that pays the deductibles, coinsurance, and copayments left behind by Original Medicare (Parts A and B). Because Part B has no out-of-pocket maximum, a beneficiary's 20% share of a large medical bill is unlimited; Medigap closes that exposure.

Critical Pairing Rules

Exam writers love the structural rules:

• Medigap works only with Original Medicare — you cannot have a Medigap policy and a Medicare Advantage (Part C) plan at the same time. It is illegal for an insurer to sell Medigap to an MA enrollee.
• Each policy covers one person; spouses each need their own policy.
• Modern Medigap does not include prescription drug coverage — beneficiaries buy a separate Part D plan.
• Medigap does not cover long-term custodial care, vision, dental, hearing aids, or private-duty nursing.

Standardized Plans

Federal law requires Medigap policies to be standardized by plan letter (A through N). Plan G from one insurer offers the identical benefits as Plan G from any other insurer — only the price differs. This is the single most-tested Medigap concept: same letter = same benefits, so shop on price and company stability.

Plan Highlights

Trap: Plans C and F cover the Part B deductible, which is exactly why they were closed to new beneficiaries by the MACRA "first eligible" rule of January 1, 2020. Someone who became eligible in 2019 can still buy or keep F.

The Medigap Open Enrollment Period

The single most important consumer protection is the 6-month Medigap Open Enrollment Period (OEP). It begins the first month the beneficiary is both age 65 or older AND enrolled in Part B, and it cannot be repeated. During the OEP the insurer must sell any plan it offers on a guaranteed-issue basis — no medical underwriting, no health questions, and no rate increase or denial based on health.

After the OEP — Underwriting Returns

Apply after the 6-month window closes and the insurer may medically underwrite: deny coverage, charge more, or impose a pre-existing condition waiting period (up to 6 months, reduced by prior creditable coverage). This is why advisors stress enrolling during the OEP.

Guaranteed-Issue Situations

Certain events trigger guaranteed-issue rights outside the OEP — for example, an MA plan leaving the service area, or a beneficiary who tried Medicare Advantage for the first time and uses the 12-month trial-right to return to Original Medicare and buy a Medigap policy.

Free Look and Replacement

Medigap policies carry a 30-day free look — the buyer may return the policy within 30 days for a full premium refund. When replacing one Medigap policy with another, the producer must deliver a replacement notice, and the applicant should not cancel the old policy until the new one is in force.

Rating Methods

Medigap premiums are priced one of three ways, a frequently tested distinction:

• Issue-age rated: Premium based on age at purchase; does not rise simply because you age.
• Attained-age rated: Premium rises as the insured grows older — cheapest at 65, most expensive long term.
• Community rated (no-age-rated): Everyone pays the same premium regardless of age.

Medigap Standardization and the Core Benefits

Medicare Supplement (Medigap) policies are sold by private insurers to fill Original Medicare's gaps (deductibles, the Part B 20% coinsurance, excess charges). They are standardized into lettered plans (A, B, C, D, F, G, K, L, M, N) — every insurer's "Plan G" offers identical benefits, so consumers compare on price and service only. Plans C and F (which covered the Part B deductible) are no longer available to those newly eligible on or after Jan 1, 2020; Plan G is now the most comprehensive option for new enrollees.

The Open Enrollment Guarantee

The Medigap Open Enrollment Period is a 6-month window beginning when the beneficiary is 65 and enrolled in Part B. During it, the insured has a guaranteed-issue right — the insurer cannot medically underwrite, decline, or charge more for health. Outside this window (and absent a guaranteed-issue trigger), insurers may underwrite and decline applicants. Missing this window is a costly, frequently tested mistake.

Key Rules and Worked Distinction

• Medigap only works with Original Medicare — you cannot have both a Medigap policy and a Medicare Advantage (Part C) plan; selling Medigap to someone in an MA plan is a prohibited practice.
• Medigap does not include prescription drug coverage (buy a separate Part D plan); pre-2006 plans H, I, J that had drug coverage are closed.
• A 30-day free-look applies; replacement triggers disclosure rules.

Worked Example — Why Plan G

A new 65-year-old enrolls in Part B and buys Plan G during open enrollment. Plan G pays the Part A deductible, the Part B 20% coinsurance, Part B excess charges, and skilled-nursing coinsurance — leaving the beneficiary responsible only for the annual Part B deductible before full coverage. Because the purchase occurred in the 6-month open-enrollment window, the insurer could not ask health questions — illustrating why timing the Medigap purchase to the open-enrollment guarantee is the central planning point the exam rewards.