Medicare Supplement Insurance
A comprehensive guide to how Medigap policies work, why they are standardized, and how to choose the right Medicare Supplement Insurance for your healthcare needs and budget.
What Is Medicare Supplement Insurance?
Medicare Supplement Insurance, commonly known as Medigap, is a type of private health insurance designed to work alongside Original Medicare (Parts A and B). While Original Medicare covers a significant portion of your healthcare costs, it does not pay for everything. Medigap policies help fill the "gaps" in Original Medicare by covering costs like deductibles, copayments, and coinsurance that you would otherwise pay out of pocket.
When you have a Medigap policy, Medicare pays its share of the Medicare-approved amount for covered health care costs, and then your Medigap policy pays its share. Depending on the plan you choose, your Medigap policy may cover 100% of remaining costs or a defined percentage.
Medigap policies are sold by private insurance companies licensed in your state. In Florida, multiple carriers offer Medigap plans, which gives you the ability to shop for the best rate on the same standardized benefits.
How Medicare Supplement Insurance Works
You Keep Original Medicare
A Medigap policy works only with Original Medicare (Parts A and B). You must be enrolled in both Part A and Part B to purchase a Medigap plan. You cannot use Medigap with a Medicare Advantage plan.
Medicare Pays First
When you receive healthcare services, Original Medicare processes your claim and pays its portion first. Your provider then bills your Medigap insurance for the remaining covered costs, such as coinsurance or deductibles.
Medigap Covers the Rest
Your Medigap policy then pays its share of the remaining costs based on the plan you selected. With comprehensive plans like Plan G, you may owe nothing beyond your monthly premium and the Part B annual deductible.
Medigap Standardization: What It Means for You
One of the most important things to understand about Medicare Supplement Insurance is that Medigap plans are standardized by the federal government. This means that the benefits of each lettered plan (A, B, C, D, F, G, K, L, M, N) are identical no matter which insurance company sells the policy.
For example, Medigap Plan G from Aetna covers the exact same benefits as Plan G from Mutual of Omaha, United American, or any other carrier. The government mandates what each plan letter must cover, so you never have to worry about hidden differences in benefits between companies.
What does differ between carriers is:
- Monthly premium cost — this is the biggest differentiator and varies significantly between companies
- Premium pricing method — carriers use attained-age, issue-age, or community-rated pricing, which affects how your premium changes over time
- Customer service and claims processing quality
- Financial strength and stability ratings (A.M. Best, S&P, etc.)
- Household or non-smoker discounts that some carriers offer
Because benefits are standardized, you can confidently choose the most affordable carrier for any given plan letter, knowing your coverage will be the same.
Medigap vs. Medicare Advantage
Medicare Supplement (Medigap)
- Works with Original Medicare
- No network restrictions — any Medicare-accepting provider
- No referrals needed for specialists
- Monthly premium in addition to Part B premium
- Predictable, low out-of-pocket costs
- Does NOT include prescription drug coverage
- Coverage works nationwide
- Guaranteed renewable for life
Medicare Advantage (Part C)
- Replaces Original Medicare
- Network-based — HMO, PPO, or PFFS
- May require referrals depending on plan type
- Often $0 or low monthly premium
- Out-of-pocket costs can be less predictable
- Usually includes prescription drug coverage
- May include dental, vision, and hearing
- Plans change annually; benefits can be reduced
Neither option is universally better. The right choice depends on your health needs, budget, preferred doctors, and how much flexibility you want. Our agents can help you weigh both options.
How to Choose the Right Medigap Policy
Selecting the right Medicare Supplement policy involves evaluating your healthcare usage, financial situation, and personal preferences. Here is a step-by-step approach:
Step 1: Assess Your Healthcare Needs
Consider how often you visit the doctor, whether you see specialists, and if you have any upcoming procedures. If you are generally healthy and only visit the doctor a few times a year, a lower-premium plan like Plan N may suit you. If you have chronic conditions or anticipate frequent care, a comprehensive plan like Plan G provides more predictable costs.
Step 2: Compare Premium Pricing Methods
Insurance companies use three pricing methods for Medigap premiums. Attained-age pricing starts lower but increases as you age. Issue-age pricing is based on your age when you buy the policy and does not increase due to age (though it may increase with inflation). Community-rated pricing charges everyone the same premium regardless of age. Understanding the pricing method helps you project long-term costs.
Step 3: Shop Multiple Carriers
Because benefits are standardized, you should compare rates from several insurance companies. Premiums for the same plan letter can vary by hundreds of dollars per year between carriers. Working with an independent agent like MAC Insurance gives you access to rates from many carriers at once, saving you time and money.
Step 4: Enroll During Your Best Window
The best time to buy a Medigap policy is during your Medigap Open Enrollment Period, which begins the month you turn 65 and are enrolled in Medicare Part B. During this 6-month window, insurance companies cannot deny you coverage or charge you more because of pre-existing health conditions. Outside this period, you may face medical underwriting.
Key Things to Know About Medigap Policies
- A Medigap policy covers only one person. If you and your spouse both want Medigap coverage, you each need your own policy.
- You must have Medicare Part A and Part B to buy a Medigap policy.
- You cannot have a Medigap policy and a Medicare Advantage plan at the same time.
- Medigap policies do not cover prescription drugs. You will need a separate Medicare Part D plan for drug coverage.
- Medigap policies are guaranteed renewable. The insurance company cannot cancel your policy as long as you pay your premiums.
- Premiums are paid in addition to your Medicare Part B premium.
- You can use your Medigap policy with any doctor or hospital that accepts Medicare, anywhere in the United States.
Get Expert Medicare Supplement Guidance
Understanding Medigap can be overwhelming. Let our licensed agents walk you through your options and find the best policy and rate for your needs. Our service is completely free.