Who Needs Medigap Insurance?

If you are covered by Medicare you may be wondering if you need a Medicare Supplement Insurancepolicy, also known as Medigap. Read on to see what a Medigap plan is and how it works.

What Is Medigap?

Medigap is a supplement to Medicare coverage and policies are designed to provide additional coverage for routine services Medicare covers and, in some cases, all or part of the expenses Medicare does not cover, such as long-term care, vision, or dental coverage.

A Medigap plan helps individuals get reimbursed for the costs they pay directly out of their pocket. These plans are offered by private insurance companies, so it is necessary to compare plans that fit your needs and financial situation.

What Medicare Covers

Medicare consists of Parts A and B along with Medicare prescription drug coverage found in optional Part D. Even routine services come with co-payments and deductibles. Prescription drugs can also deplete your budget if you need expensive medications.

Under the Affordable Care Act (ACA), the prescription price donut hole has been closing each year. At a certain level, $5,030 in 2024, you entered the notorious donut hole in coverage that requires you to pay up to 25% of covered brand-name and generic drug costs. When costs went above $8,000, you pass through the donut hole and owe only 5% of the cost of drugs.

What Medicare Doesn’t Cover

Medigap will help pay for costs that Medicare does not cover. If you are admitted to the hospital, you have 100% hospitalization coverage after the $1,676 annual deductible under Original Medicare Part A in 2025. However, you may owe up to 20% of some other costs, such as anesthesiologist fees.

If you are in the hospital for more than 60 days, you have to pay $419 per day in 2025. There are similar co-payments for long stays in nursing facilities and hospices. Regular doctor visits and outpatient medical care may cost you, too. Your deductible for 2025 is $257, but after that, you’ll pay up to 20% of the Medicare-approved amount for most doctor services. There is no upper limit.

If you do not have coverage for dental expenses, you may want to look into a standalone dental insurance plan. Many plans provide coverage for the types of dental procedures that Medicare recipients may need, including crowns, root canals, dentures, and tooth replacements.

Types of Medigap Plans

Medicare Parts A and B comprise basic coverage, while Part D is an optional prescription drug plan you can buy from a private provider and attach to your Medicare. If you opt for Original Medicare (A and B), plus Part D, and want a Medigap plan for more complete coverage, the most popular choices are Medigap Plan F and Medicare Plan G.

Medigap Plan F: As of January 1, 2020, Plan F is no longer available to those newly eligible for Medicare. People who already have Plan F will be able to keep it, and people who were eligible for Medicare before 2020 but didn’t have a Medigap plan may still be allowed to choose Plan F.

Medigap Plan G: This plan has almost the same coverage as Plan F except for reimbursement of the Part B deductible. The average Plan G may be cheaper than Plan F. However, costs vary widely according to an applicant’s zip code, gender, and tobacco use, and increase with age.

Medigap Plan K: This plan provides less coverage than F or G and includes an out-of-pocket expense of $7,220 for 2025.

Medigap Plan L: This plan provides less coverage than F or G and includes an out-of-pocket expense of $3,610 for 2025.

Medigap Plan M: This plan offers similar coverage to F and G with some limitations.

Medigap Plan N: This plan offers similar coverage to F and G with some limitations.

Medigap vs. Plan C Medicare Advantage

A Medigap policy is a supplement to Parts A and B coverage and pays expenses that Original Medicare doesn’t. A Medicare Advantage Plan (Medicare Part C) is a private replacement for the public Medicare program.

Most of these plans are set up as health maintenance organizations ((HMOs) that replace all of the services of Original Medicare and add additional services, such as preventive health care, within a preselected network of doctors and hospitals.

A Medigap plan, however, gives you more freedom of choice than Medicare Advantage, provided your physician or facility accepts Medicare. As long as you pay your premiums, your policy is renewable for the rest of your life and will only be dropped if you stop paying premiums, you falsify your application, or the insurance company files for bankruptcy.

The Bottom Line

Medicare Parts A and B comprise basic coverage, while Part D is an optional prescription drug plan. A Medigap policy will supplement this coverage and help pay additional expenses or deductibles. Individuals who choose Medicare Part C, also known as Medicare Advantage do not need a Medigap Plan.