Filling in the Gaps with Medigap


Deena Flinchum

Editor’s note: A version of this column first appeared in August 2013.

In an earlier column, I outlined what Medicare Part A and Part B cover. Part A covers mostly hospitalization. Part B covers medical costs other than drugs, such as visits to the doctor, lab work, durable medical equipment, etc.

Unfortunately, Medicare does not cover 100 percent of these costs. Each hospitalization can have a deductible of $1,316, and Medicare pays only 80 percent of Part B charges.

So how does a beneficiary cover the rest of these costs other than paying for them himself? He purchases a Medicare Supplement policy, also known as a Medigap.

Medigap policies are sold by private insurance companies and have ten basic types. I will discuss three of the most common below. It is important to remember that once you have Part B AND are at least 65 years old, you have a magic six-month period starting that first month in which an insurance company cannot deny you coverage or charge you more because of prior health conditions.

After that six-month period passes, a company can charge you more because of your health or can refuse to sell you a policy at all. For this reason, if you turn 65 and are covered by insurance from a company that you or your spouse currently works for, you should consider refusing Part B until you lose that insurance.

The three most common types of Medigap policies in the New River Valley are Plans F, G, and N. Plan F is the Cadillac of Medigap policies – it covers 100 percent of the Medicare approved charges that Parts A and B do not pay all of as long as they are Medicare approved charges from health providers that accept Medicare.

Medigap will only pay the remainder of charges that Medicare will cover.

For example, it will not cover dental care, which is not part of the Medicare benefit.

Plan G will cover all that Plan F covers except for the Medicare Part B deductible, which in 2017 is $183 and is paid once at the beginning of the calendar year when Part B is first used.

Plan N covers what Plan G covers except for excess charges – charges that you can incur when using a provider who accepts Medicare but does not accept assignment to Medicare – and some set fees. Even though excess charges are limited, they can be rather expensive for some expensive services such as ambulance transportation. With Plan N, you can be charged fees of $20 for an office visit to a healthcare provider and $50 for an emergency room visit.

Premiums for Plan F are higher than premiums for Plans G and N. Other than premium costs, these plans will not vary based upon which company you buy them from. A Plan F from Company X will cover what a Plan F from company Y does, but its cost may vary.

Plan G is becoming more popular now because by law Plan F will no longer be sold after 2020. Although it is likely that those who have Plan F at that time will be ‘grandfathered’ in, there will be no newer, younger policy holders added.

As this group ages and becomes less well, the costs for premiums on Plans F will increase more rapidly. On the other hand, Plan G will remain available to new Medicare beneficiaries, keeping costs more in check.

Generally speaking, a beneficiary can now save more on the difference between annual premiums on a Plan G and a Plan F than he would pay for the Medicare Part B deductible, making Plan G the more economical plan.

If you are about to turn 65, you might want to consider contacting the New River Valley Agency on Aging to have both Medigap and Part D drug policies explained to you before you sign up for either with an insurance company. The Agency can actually sign you up for a drug plan, but you must purchase your Medigap policy from an insurance company through a designated professional.

My next column will deal with the Part D drug plans.

Anyone who has questions about Medicare can receive personalized assistance from the New River Valley Agency on Aging’s VICAP program by calling 980-7720.

Deena Flinchum is a retired IT professional who has lived in the New River Valley since 2002. She serves on the board of the NRV Agency on Aging and as an RSVP volunteer. She also serves the Agency on Aging as an insurance counselor.