13.2 Medicare Supplement (Medigap) Policies

Purpose of Medigap

Medicare Supplement (Medigap) insurance is private coverage that fills the 'gaps' in Original Medicare — the deductibles, coinsurance, and copayments that Parts A and B leave to the beneficiary. Because Original Medicare has no out-of-pocket maximum, a single serious illness can expose a beneficiary to unlimited 20% Part B coinsurance, which is the core problem Medigap solves.

Medigap works only with Original Medicare. A person cannot use a Medigap policy to supplement a Medicare Advantage (Part C) plan — it is illegal to sell one to someone enrolled in MA. Medigap also covers only the insured; spouses need separate policies.

Standardization

Federal law standardizes Medigap into lettered plans (A, B, C, D, F, G, K, L, M, N). Because the benefits in each lettered plan are identical across companies, a Plan G from one insurer covers exactly the same items as a Plan G from another — they differ only in price and service. This lets consumers compare on premium alone.

Key rules to memorize:

• Plan A is the core benefit package every insurer offering Medigap must make available.
• Plans C and F (which cover the Part B deductible) are not available to people newly eligible for Medicare on or after January 1, 2020. Those already enrolled may keep them.
• Plans K and L are cost-sharing plans with their own annual out-of-pocket limits.

Open Enrollment and Guaranteed Issue

The Medigap Open Enrollment Period is a 6-month window that begins the first month a person is age 65 or older AND enrolled in Part B. During this window the insurer must sell any plan it offers on a guaranteed-issue basis — no medical underwriting, no denial, and no premium surcharge for health conditions. This is the single most-tested Medigap fact.

Outside this window (and outside specific guaranteed-issue events such as losing employer or MA coverage), insurers may medically underwrite and decline or rate the applicant. Counsel clients to enroll during the 6-month window.

Consumer Protections

Medigap carries strong federal protections that frequently appear on exams:

Traps: It is illegal to sell a beneficiary a second Medigap policy (duplicate coverage) or to sell Medigap to someone on Medicaid or Medicare Advantage. The 30-day free look is longer than the typical life-policy 10-day look — do not confuse them.

Pricing Methods

Medigap premiums are set three ways, and the difference matters for long-term affordability:

• Community-rated (no-age-rated): everyone pays the same premium regardless of age.
• Issue-age-rated: premium based on age at purchase; does not rise simply because the insured ages.
• Attained-age-rated: premium based on current age and rises as the insured gets older — cheapest early, most expensive later.

An attained-age policy can look like the best deal at 65 but become the costliest at 80.

Medicare SELECT and Plan Mechanics

Medicare SELECT is a type of Medigap that costs less in exchange for requiring the insured to use network hospitals (and sometimes network doctors) for full benefits, except in emergencies. It is still a standardized lettered plan; the only difference is the network restriction. If a SELECT insured uses a non-network hospital for non-emergency care, the plan may pay little or nothing of the supplemental benefit.

A SELECT policyholder has the right to switch to a standard (non-network) Medigap plan of equal or lesser benefits without new underwriting — a guaranteed-issue protection agents should disclose. Apart from the network feature, SELECT plans follow all the standard Medigap rules: standardization, the 6-month open enrollment window, and guaranteed renewability.

Replacement and Free-Look Mechanics

When a beneficiary replaces one Medigap policy with another, the agent must follow the replacement rules: complete a replacement notice, ensure no lapse in coverage, and never leave the client paying for two overlapping policies. The new insurer must waive any time already satisfied toward a pre-existing condition waiting period under the old policy, so the insured does not restart the clock.

The free-look (right to return) period for Medigap is at least 30 days — longer than the typical life-insurance free look. If the insured returns the policy within that window, the insurer must refund all premium paid. Producers should hand-deliver the policy when possible and document the delivery date, because the free-look clock and the contestability and pre-existing-condition periods are all measured from defined dates that a regulator may later examine.

Marketing, Suitability, and Prohibited Practices

Medigap sales are tightly regulated to protect seniors, and producers must follow strict conduct rules that appear repeatedly on exams.

• No duplicate coverage: selling a second Medigap policy is prohibited; the applicant signs a statement that the new policy replaces existing coverage.
• Suitability and disclosure: the agent must deliver the official 'Guide to Health Insurance for People with Medicare' at or before application.
• No misrepresentation: implying a plan is 'government-approved' or part of Medicare itself is an unfair trade practice.
• No sales to Medicaid enrollees (except limited cases), since Medicaid already covers the cost-sharing Medigap would pay.

High-pressure tactics, twisting (inducing a replacement through misrepresentation), and cold-lead advertising that disguises a sales purpose are all prohibited. Violations can bring fines, license suspension, and rescission of the sale. Many states also impose a separate annual continuing-education requirement on agents who market Medicare products, reflecting how vulnerable the senior market is considered.