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Introduction to Medicare Supplements

Like Medicare Advantage Plans, Medicare supplements—also called Medigap plans—are policies sold by private insurance companies. Unlike Medicare Advantage Plans, which create an alternative way to get Medicare coverage such as Part A, Part B and Part D, Medigap policies pay for some of the financial responsibilities left open by Medicare rather than providing Medicare coverage itself. The expenses a Medigap policy covers can include copayments, coinsurance and deductibles that seniors are generally expected to pay. Often, Medicare supplements offer the best overall value, covering potentially 100 percent of qualified expenses with just a monthly premium.

Why You Need to Consider Medigap

The Medicare system is a great way for seniors who don’t have coverage through employers or unions to gain health insurance benefits. After paying into the system throughout their working lives, seniors are able to enjoy PartAwithout a premium and Part B with an affordable premium. However, there are still other out-of-pocket expenses they must consider. These include:

  • Copayments: Copayments are fixed amounts that one must pay when visiting a medical practitioner or healthcare facility. These are usually small amounts that are listed in the policy.
  • Deductibles: A deductible is a baseline out-of-pocket amount that must be spent by the insured before Medicare or a Medicare Advantage Plan begins paying for medical expenses. Deductibles can be per incident or per year depending on the plan and situation.
  • Coinsurance: After the deductible has been met, some Medicare recipients will find that they must share the burden of medical expenses with Medicare or their Medicare Advantage Plan. This sharing of financial responsibility is called coinsurance and is broken down into percentages. For example, the senior may be responsible for 20 percent of the Medicare-approved expenses and Medicare may be responsible for the remaining 80 percent.

Seniors, already concerned about their retirement savings providing a sufficient income throughout their retirement, can struggle to meet some of these financial requirements. For a small premium, a Medicare supplement or Medigap policy can help ease that burden.

FiveThings You Should Know about Medigap

  1. Medigap doesn’t just cover deductibles, copayments and coinsurance. It may also provide coverage for medical care needed when you travel outside the States. Original Medicare does not provide that coverage except in limited circumstances.
  2. Medigap policies themselves may have their own deductible, which must be met before benefits are paid out.
  3. Medigap policies do not cover multiple people, so each spouse needs to have his or her own policy.
  4. You cannot have both a Medicare policy and a Medicare Advantage Plan.
  5. Unlike with a Medicare Advantage Plan, with a Medicare supplement, you always know where you stand because they are required to adhere to certain federal and state laws.

Choosing a Medicare Supplement

There are many different Medicare supplements to choose from. Each one has its own combination of benefits, deductibles and expenses that you should evaluate to see which fits best into your life. Some of the plans offer limited underwriting so that even those in poor health can get coverage, while others have strict medical underwriting that provides cheaper premiums and fewer annual increases for its healthy set of policyholders. Still other plans allow for a higher deductible in order to reduce the monthly premium.

It’s well worth evaluating the differences among each of the Medicare supplement plans available as well as the benefits of a Medicare Advantage Plan to see which will best suit your life and your medical needs. Plans can be switched at any time(provided you qualify after medical underwriting),so if you select a plan and end up needing something different, you aren’t locked in. For more information about Medicare, please see our Introduction to Medicare A and B.

About Dennis M. Postema

Dennis M. Postema, RFC, is a successful entrepreneur, best-selling author, coach, speaker and registered financial consultant. He is the founder of MotivationandSuccess.com, StoriesofPerseverance.org, FinancingYourLife.com and TheRetirementInstitute.org.


  1. This is an excellent post for explaining what Medigap is and you nailed the right way of comparing Medicare Advantage and Medigap (medicare supplement insurance) plans.

    When it comes about choosing Medigap plans, one can become confused as there are a wide array of choices to make. Medigap plans are categorized by letters A through N (but not necessarily all letters).

    The states of Wisconsin, Massachusetts and Minnesota do have a different type of Medigap policies.

    The Best way to learn about the best plan for your current situation is to consult a licensed insurance agent. That way, one can avoid confusions and wasted choices to save time and expenses.

  2. That is a great tip especially to those fresh to the blogosphere.
    Brief but very accurate info… Many thanks for sharing this one.
    A must read article!

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