13.2 Medicare Supplement (Medigap) Policies

Medicare Supplement insurance (Medigap) is private coverage sold by insurers to fill the "gaps" in Original Medicare — chiefly the Part A and Part B deductibles, coinsurance, and copayments. Because Original Medicare has no out-of-pocket maximum, Medigap protects beneficiaries from open-ended 20% coinsurance exposure. Medigap is standardized by the federal government, which makes plan comparison straightforward and is a favorite exam topic.

Standardization

Since 1992, Medigap plans are sold as lettered plans (A, B, C, D, F, G, K, L, M, N). Every Plan G, for example, offers identical benefits regardless of which company sells it — companies compete only on price and service. Three states (Massachusetts, Minnesota, Wisconsin) use their own standardized formats.

What Medigap Does NOT Cover

Medigap is supplemental only — it pays after Medicare. It does not cover:

• Prescription drugs (need a separate Part D plan)
• Long-term/custodial care
• Dental, vision, hearing aids
• Private-duty nursing

Trap: A Medigap policy covers only one person. Spouses each need their own policy. And you cannot legally have both Medigap and a Medicare Advantage plan.

The Open Enrollment Period (most tested rule)

The Medigap Open Enrollment Period is a 6-month window beginning the first month the individual is age 65 AND enrolled in Part B. During this period the applicant has guaranteed issue rights — the insurer cannot deny coverage, charge more, or impose a waiting period based on health, even with pre-existing conditions.

Pre-Existing Conditions and the "Look-Back"

Outside guaranteed-issue situations, an insurer may impose a pre-existing condition waiting period of up to 6 months. A condition is generally one treated or diagnosed within the 6 months before the policy effective date (the "look-back"). If the applicant had at least 6 months of prior creditable coverage, the waiting period is generally waived, so agents should always document the applicant's prior coverage history.

Guaranteed-Issue Trigger Events

Beyond the initial 6-month window, certain life events restore guaranteed-issue rights without medical underwriting. These include losing employer or union retiree coverage, a Medicare Advantage plan leaving the service area or terminating its contract, moving out of a plan's network, or exercising a trial right to try Medicare Advantage and return to Original Medicare within 12 months. Knowing these triggers lets the agent place a client into a Medigap policy even when they are well past 65 and would otherwise face underwriting.

Required Consumer Protections

Federal and state rules build numerous protections into Medigap sales — expect several exam questions on these:

• Free-look period: the insured may return the policy within 30 days for a full refund (longer than the typical 10-day life free-look).
• Outline of coverage must be delivered at or before application.
• Replacement requires a comparison notice; no duplication of coverage is permitted — agents who knowingly sell duplicate Medigap commit a prohibited practice.
• Suitability: high-pressure sales, twisting, and selling more than one Medigap to the same person are prohibited unfair trade practices.

How Medigap Pays — A Worked Example

Suppose a beneficiary incurs $2,000 of Medicare-approved Part B charges after meeting the Part B deductible. Medicare pays 80% = $1,600. The remaining $400 (20% coinsurance) is the gap. A Plan G policy pays that $400, leaving the beneficiary with $0 of coinsurance for that claim. Multiply that across a serious illness and the value of capping the 20% exposure becomes clear.

Premium Rating Methods

Medigap premiums are not all priced the same way, and the rating method strongly affects long-term cost — a frequent exam point. Issue-age rated premiums are based on the insured's age when the policy is purchased and do not rise simply because the insured grows older.

Attained-age rated premiums start lower but increase as the insured ages, often becoming the most expensive over time. Community rated (no-age-rated) premiums charge everyone the same regardless of age. Agents should disclose the rating method so clients understand why a cheaper attained-age policy today may cost far more later.

Standardized Plans, Guaranteed Issue, and the Open Enrollment Window

Medigap plans are sold as standardized letter plans (A, B, C, D, F, G, K, L, M, N), so a Plan G from any insurer covers identical benefits; insurers compete only on price and service. The pivotal consumer protection is the six-month Medigap Open Enrollment Period beginning the month a beneficiary is 65 or older AND enrolled in Part B: during it, the beneficiary has guaranteed issue with no medical underwriting and no pre-existing exclusion beyond a limited look-back. Applying later can subject the beneficiary to underwriting.

What Medigap Does Not Do

Medigap covers gaps in Original Medicare only; it does not work with a Medicare Advantage (Part C) plan, does not include prescription drug coverage (that is Part D), and does not pay for long-term custodial care. Selling a Medigap policy to someone enrolled in Medicare Advantage is an unfair practice.

Worked Coverage-Gap Example

A beneficiary faces Original Medicare's Part A hospital deductible per benefit period plus 20% coinsurance on Part B services with no out-of-pocket cap. A Plan G Medigap covers the Part A deductible, the Part B 20% coinsurance, and the Part A coinsurance, leaving the beneficiary to pay only the annual Part B deductible before Plan G begins. This transforms open-ended exposure into a predictable small deductible.

Additional Exam Traps

• Medigap supplements Original Medicare, never Medicare Advantage.
• Plans C and F (which cover the Part B deductible) are closed to those first eligible on/after 1/1/2020.
• Open enrollment guarantees issue for six months from age 65 plus Part B.