Medigap, also known as Medicare Supplemental Insurance, was designed to provide beneficiaries with coverage of expenses that are only partially, or not at all, covered under Medicare Part A and Part B coverage. Medigap plans exist to help individuals with Original Medicare coverage pay for premiums associated with Medicare Part B as well as copayments, coinsurance costs, and some deductibles and premiums.
The Medigap program was initially designed with 12 plans ranging not only in the monthly premium costs but the amount of coverage provided. Medigap policies are not offered or administered by Medicare. Instead the plans offered through Medigap are provided by private insurance companies contracted through the Medicare program. The original Medigap plans were labeled as follows:
- Plan A
- Plan B
- Plan C
- Plan D
- Plan E
- Plan F
- Plan G
- Plan H
- Plan I
- Plan J
- Plan K
- Plan L
Generally speaking, these plans began with Plan A as the most basic or “core” plan that offered minimal extra benefits but came with a very reasonable, low monthly premium. Plan L on the other hand offered the most benefits but also had the highest monthly premium. Each Medigap plan, moving from Plan A to Plan L, provided more benefits than the plan before it but fewer benefits than the plan after it on the ladder.
Medigap has undergone some changes since it was started. Originally, some Medigap plans that were sold before January 1, 2006 included assistance with prescription drug costs. However, at the start of 2006 the Medicare program added Part D which provided recipients the option of enrolling in a prescription drug coverage program provided through Medicare. Individuals who purchased a standalone Medicare Part D plan and had a Medigap plan with prescription drug coverage could switch to a different Medigap plan provided they enrolled in Part D before May 15, 2006. Those who enrolled in Part D after that date were left at the mercy of the private insurance company offering their Medigap plan and were not guaranteed the right to switch policies.
As of June 1, 2010 Medigap made some other sweeping changes to the program, cancelling some plans, modifying others, and offering two new plans. Some of the most significant changes are the cancellation of some plans and addition of new ones. Individuals will no longer be able to purchase Medigap Plans E, H, I, and J. However, those who purchased those plans before May 31, 2010 may keep their plan. The program has now added Plans M and N to Medigap.
Other changes to the program include altered benefits for Plans D and G. Medigap Plans D and G purchased before June 1, 2010 will not contain the same benefits as plans purchased after that date. Plans K, L, and N will now pay only a portion of Medicare Part B coinsurance and copayments, but will come with a lower premium. Some of Medigap’s most advanced plans will now help patients pay for coinsurance costs at a Hospice, with Plan K covering 50% of costs and Plan L covering 75% of costs.
Medigap continues to become increasingly popular among individuals using Medicare as their primary health insurance. For many beneficiaries, Medigap plans can cover 100% of the extra costs not covered by their Original Medicare program at the expense of just a monthly premium to pay for Medigap coverage. As of 2006 roughly 18% of individuals using Medicare required a Medigap plan to help them cover the extra costs involved with their health care. Medigap was designed to help those with lower incomes close the “gap” in Medicare coverage and as of 2006, nearly one-third of all Medigap policy holders were citizens of rural areas. Some two-thirds of those individuals, reported incomes below $30,000, proving that Medigap is critical in assisting lower income individuals with extra costs.