Insurance

What Is "Medigap" Insurance and How Does it Work?

Dave Grant, CFP®

For those who are 65 and older or living with certain disabilities, Medicare is a federal health insurance program designed to cover certain expenses such as hospital stays, doctor’s appointments and prescriptions.1 For what each individual or couple has coverage, depends on the different Medicare parts and options - such as Part A, Part B and Part D. A combination of the three is called Part C or Medicare Advantage. For those who wish to gain additional coverage or cover medical expenses that these Medicare options don’t, Medigap insurance can be a viable option. Below I’ll discuss what Medigap is (and isn’t) and how it works. 

What Is Medigap?

Medigap is a supplemental insurance policy designed to help cover the costs of certain medical expenses that Medicare doesn’t cover, such as:

  • Copayments
  • Coinsurance
  • Deductibles
  • Medical care when traveling abroad2

Unlike Medicare, Medigap policies are offered by private insurance companies, and their availability and coverage options can vary state by state. Just like most other insurance policies, you pay the company a monthly premium for the coverage, in addition to any Medicare premium you may be required to pay. 

When using a Medigap policy, users are not limited to visiting certain doctors within a network. Instead, Medigap allows the policyholder to visit any doctor, regardless of whether or not they accept Medicare assignments. 

How Does Medigap Insurance Work?

Medigap is designed to pick up where Medicare leaves off. If you have Medigap coverage, Medicare will pay its share of any approved amounts for covered costs, and then your Medigap policy will pay its share. In order to be eligible for Medigap, you must already have Medicare Part A and Part B.2

Medigap policies are only designed to provide coverage for one person, meaning you and your spouse will each need to select your own policies. In addition, Medigap policies have guaranteed renewal. The insurance company providing the policy can’t drop you as long as you continue to make your monthly payments.2 

What Is Not Covered By Medigap?

There are certain services and medical costs that a Medigap policy will not cover. According to Medicare.gov, these typically include:

  • Long-term care
  • Vision or dental care
  • Hearing aids
  • Eyeglasses
  • Private-duty nursing

Medigap vs. Medicare Advantage

Medicare Advantage (or Part C) is a type of healthcare plan offered by private companies contracted through Medicare. It’s designed to combine Part A (hospital insurance) and Part B (medical insurance) as well as, in some instances, offer a prescription drug plan or other additional coverage.3 Medicare Advantage is an alternative to original Medicare offerings, whereas Medigap is considered supplemental. 

Whether you’re nearing the enrollment period for Medicare or considering switching your policy, it’s important to understand your options when it comes to supplemental coverage and alternatives. As you decide what’s the right choice for you, compare plans across different providers and discuss this decision with your trusted financial professional.

  1. https://www.medicare.gov/what-medicare-covers/your-medicare-coverage-choices/whats-medicare
  2. https://www.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap
  3. https://www.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap/medigap-medicare-advantage-plans#


By Dave Grant, CFP®
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