Medicare Supplement (Medigap) Policies

Medicare Supplement (Medigap) Policies

Medicare Supplement insurance — commonly called Medigap — is private coverage sold to fill the "gaps" in Original Medicare: deductibles, coinsurance, and copayments. A Medigap policy works only alongside Original Medicare (Parts A and B). It is not compatible with a Medicare Advantage (Part C) plan; it is illegal for an insurer to knowingly sell Medigap to someone enrolled in Medicare Advantage.

Standardization

Since 1992, Medigap plans have been federally standardized and identified by letters: Plans A, B, C, D, F, G, K, L, M, and N (C and F are closed to those newly eligible on or after January 1, 2020, because they covered the Part B deductible). Standardization is the key consumer-protection concept: a Plan G is the same set of benefits no matter which company sells it — companies compete only on price and service, not benefit design.

Open Enrollment and Guaranteed Issue

The single most-tested provision is the Medigap Open Enrollment Period: a 6-month window that begins on the first day of the month in which the applicant is both age 65 or older AND enrolled in Part B. During this window the insurer must use guaranteed issue — it cannot deny coverage, charge more, or impose extra waiting periods based on health. Outside this window the applicant can be medically underwritten and declined.

Pre-existing conditions: During open enrollment, an insurer may impose at most a 6-month waiting period on conditions treated or diagnosed in the 6 months before coverage started. This look-back can be reduced or eliminated by prior creditable coverage.

Required consumer protections

• Free-look period: at least 30 days to return the policy for a full refund.
• Outline of coverage must be delivered at or before application.
• Replacement requires a notice comparing old and new coverage; stacking duplicate Medigap policies is prohibited — agents may not sell a second policy that duplicates coverage.
• The NAIC "Guide to Health Insurance for People with Medicare" must be provided.

Worked coordination example

A Medigap Plan G holder incurs the 20% Part B coinsurance on a $1,500 approved service. Medicare pays $1,200 (80%); the Medigap policy pays the $300 coinsurance, so the insured owes $0 for that coinsurance (Plan G still leaves the insured to pay the Part B annual deductible first). This is coordination of benefits: Medicare is primary, Medigap is the supplemental secondary payer.

Trap: Medigap does not cover long-term custodial care, dental, vision, hearing aids, or private-duty nursing — those gaps are NOT "Medicare gaps" the policy is designed to fill.

What Each Standardized Plan Covers

Medigap plans are lettered (A, B, C, D, F, G, K, L, M, N) and standardized so that, for example, Plan G is identical across all insurers — only price and service differ. All plans cover the Part A coinsurance and 365 extra lifetime hospital days. Plans C and F (closed to those newly eligible on or after Jan 1, 2020) cover the Part B deductible; Plan G is now the richest plan available to new enrollees and covers everything F did except that deductible.

Enrollment, Replacement, and Suitability

The Medigap Open Enrollment Period is a one-time 6-month window starting when the applicant is 65+ and enrolled in Part B; during it, guaranteed issue applies and the insurer cannot decline or rate up for health. Outside it, medical underwriting may apply unless a guaranteed-issue right (e.g., loss of group coverage) is triggered. Replacement requires a 30-day free look and a signed replacement notice.

Trap: Medigap covers one person — spouses each need their own policy — and it does not cover long-term custodial care, dental, vision, or hearing aids. Selling a second Medigap to someone who already has adequate coverage is an unfair practice.

Marketing Rules and Prohibited Practices

Federal and state law tightly regulate Medigap sales to protect seniors. A producer may not sell a Medigap policy that duplicates existing coverage, may not use high-pressure tactics, and must leave the applicant a properly filled outline of coverage and the official Medicare guide. Twisting an existing Medigap into a new one without benefit, or selling Medigap to someone enrolled in Medicare Advantage, are prohibited unfair practices.

Premium Rating Methods

Medigap premiums are priced one of three ways, and the method matters over a retiree's lifetime:

• Issue-age rated — premium based on age at purchase; does not rise just because the insured ages
• Attained-age rated — premium rises each year as the insured grows older (cheapest early, costliest late)
• Community (no-age) rated — same premium for everyone regardless of age

Trap: attained-age plans look cheapest at 65 but climb steeply; the exam expects you to identify which method shields against age-based increases (issue-age and community-rated).