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What is Medigap and how does it work?

What are MediGap Plans?

Medigap Plans, also known as Supplemental Plans, are type of health coverage for retirees enrolled in Original Medicare that specifically fills in the gaps of Medicare Part A and Part B.

These Plans are provided by private health insurers who are regulated by the Centers of Medicare and Medicaid Services (CMS).

They are designed to cover the bulk of the costs associated to Medicare Parts A and B while also extending certain types of services too.

There is a chart below highlighting in detail what types of coverages and services Medigap Plans provide.

How does Medigap Work?

Medigap Plans are broken into different types of brackets (A thru N) with each type of bracket providing different coverage.

From the chart below it can be seen that a Medigap Plan A policy will provide less coverage than a Medigap Plan G policy, which happens to be the most robust plan available in 2023.

Please note that Plans C and F are not available to new Medicare enrollees.

Please note that Plans C and F are not available to new Medicare enrollees.

MediGap Benefits Plan A Plan B Plan C Plan D Plan F Plan G Plan K Plan L Plan M Plan N
Par A Hospt’l Stay 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Part B Co-Pay 100% 100% 100% 100% 100% 100% 50% 75% 100% 100%
Blood 100% 100% 100% 100% 100% 100% 50% 75% 100% 100%
Part A Hospice Co-Pay 100% 100% 100% 100% 100% 100% 50% 75% 100% 100%
Part A Skilled Nursing Co-Pay X X 100% 100% 100% 100% 50% 75% 100% 100%
Part A Deductible X 100% 100% 100% 100% 100% 50% 75% 100% 100%
Part B Deductible X X 100% X 100% X X X X X
Part B Excess Charge X X X x 100% 100% X X X X
Foreign Travel Emergency X X 80% 80% 80% 80% X X 80% 80%
Out of Pocket $5.56 $2.76

A great aspect of any Medigap Plan is that, regardless of the bracket the Plan is in (A thru N) the coverage associated to that bracket must be exactly the same no matter which health insurance company is providing it.

This means, for example, that every Medigap Plan M policy will provide the exact same coverage almost anywhere in the United States no matter which company is providing it.

The health insurance companies can not, by law, provide additional benefits nor restrict any of the benefits of any Plan.

The only differences between the Plans are the premiums each company is charging per year for coverage and at what rate of inflation the premiums will increase going forward.

The key, if choosing a Medigap Plan, is to find a health insurance provider that has been consistent with how they have charged for premiums in the past.

Please note that in certain states like Massachusetts and Wisconsin there can be additional benefits added to Medigap Plans, but again it is only for certain states.

Medicare Advantage Plan verse Medigap

Medicare Advantage Plans, known as Part C, are an alternative or competitor to Original Medicare.

They, like Medigap Plans, are provided by private health insurance companies who are regulated by the Centers for Medicare and Medicaid Services (CMS).

These Plans must provide the exact same coverage as Original Medicare (Part A and Part B) and can provided other benefits as well.

Some of the other benefits that may be provided by Medicare Advantage Plans that Original Medicare does not provide are:

  • Dental coverage
  • Transportation
  • Podiatry coverage
  • Hearing coverage

Medicare Advantage Plans may or may not also provide prescription drug coverage and for those Plans that do it provides the ability for the retiree to have just 1 bill for their health coverage in retirement.

With Original Medicare there will be at least 3 separate bills on a monthly basis as there will be a premium to be paid for Part B, Part D and possibly that Medigap Plan.

Keep in mind that Medicare Advantage Plans are also commonly referred to as the Network Plans as most of them work with specific healthcare providers in a certain location within a State or County.

Unfortunately, these types of Plan often do not cross state lines and once is care provided outside of the network coverage may not be available.

As you will see in the Why choose a Medigap Plan section this is the polar opposite of any Medigap Plan as there are no networks and those Plans can cross state lines.

Knowing that Medicare Advantage Plans can provide more coverage than Original Medicare and that there is one bill, but that they tend to not be able to cross state lines while a Medigap Plan, it would make sense to own both, right?

The problem is that by law, created by Congress, a Medicare beneficiary can NOT own a Medicare Advantage Plan and Medigap policy at the same time. In fact, it is illegal for anyone to sell a person both types of coverage,

If a person does happen to enroll into or own both types of Plans at the same time there is a distinct possibility that both Plans will be voided and no coverage will be provided at the time care is needed.

In retirement, when it comes to your healthcare, there is a bigger decision to be made other than how your money will last and that is how will you maintain your health.

What is a Supplemental Plan

Many people new to Medicare often get confused with the large variety of letters for coverage as well as all the different names for the same types of coverage like Supplemental and Medigap, Until you are knee deep in it, it never really gets that easy and even then there is always something new that is being added.

To highlight this confusion a great example is the difference between Supplemental and Medigap Plans.

As you dig a little deeper you will find out that they are actually one in the same.

Originally, when the coverage was created it was to be a “supplement” to both Medicare Part A and Part B as they were designed to pay for the majority of costs of those two types of coverage. Thus, the term “Supplemental Plans” was coined.

Over time the nickname Medigap was labelled to these types of Plans as it was believed to be a more concise way to define exactly what a person was purchasing in terms of health coverage in retirement.

“Medi” being short for Medicare Part A and B and “gap” defining the types of coverage the Plan was providing led to this nickname.

So, in a nutshell a Supplemental Plan is a Medigap Plan and to make things even more confusing, today these plans are now even being referred to as “Gap” plans – just one more name for the same type of coverage to make things even more confusing.

Why choose a Medigap Plan

With a proper Medigap Plan, the most robust one being a Plan G policy, along with being enrolled into Original Medicare coupled with a stand-alone Part D prescription drug plan the ability to plan for health costs in retirement can be achieved.

The absolute best reason to be choose a Medigap Plan is their ability to provide coverage for the majority of expenses within Original Medicare while also expanding certain types of coverage, like hospital stays.

Those with a Plan G Medigap policy who are admitted to a Medicare recognized healthcare facility as an inpatient for a medical need will have no costs for that incident, with the exception of the Part B Deductible.

No matter how long a person stays in a hospital, not matter how many different procedures are done to maintain a person's health, the only costs they will incur, in terms of hospitalization, are the premiums for coverage and that Part B Deductible.

When it comes to planning for your health costs, as long as you know the premiums for Part B, Part D and your Gap Plan as well as what the projected rate of inflation for those types of coverage you can plan for the cost of healthcare throughout anyone’s retirement, not just your own.

The other fantastic part of a Medigap Plan is that there are no networks to deal with when it comes to receiving care.

As long as the healthcare facility and provider (doctor) you choose accept Medicare, regardless of the Medigap Plan owned in terms of the health insurer providing it, care can be received as well as covered.

And when it comes to actually receiving care, according to the Kaiser Family Foundation, over 98% of physicians in each state are enrolled in the Medicare program.

This means with certain Medigap Plans, like a Plan G policy, you will have access to almost every single physician in the country and the greatest aspect, the bulk of the costs are covered.

What is

Healthcare Retirement Planner (HRP) is a comprehensive solution that helps identify potential problem areas in a retirement plan and design options to minimize the problem.

On an ongoing basis, HRP conducts research and aggregates all data to be used in its analysis algorithm. Pulling from areas such as The Congressional Budget Office, Centers for Medicare and Medicaid, polling individual insurance carriers across the United States along with private research firms, and positions HRP as having the most accurate information and calculations available.

Within the calculation process there are many variables that need to be considered, as the solutions are customized to each individual’s retirement plan. Variables that are required to analyze financial situations include, but are not limited to: age, gender, location, overall retirement income, types of retirement income, inflation and COLA. HRP has simplified this process.

The process of using HRP is straight forward. Simply by answering a few simple demographic questions, entering retirement asset information and income, along with assorted growth rates, you are supplied with a detailed year by year analysis that projects out 20+ years as to how the investors’ current financial plan will be impacted by their Medicare costs and the impact on their Social Security benefit.

Who is

We are comprised of Financial Professionals, Medicare Specialists, Technology Experts and the foremost authorities on how this one cost will affect your bottom line especially when your health is on the line.

There are many financial institutions that do tremendous work when it comes to asset building, planning for college or creating stock/bond/mutual fund portfolios, but addressing concerns of affording health care costs…well for that, there is us.

Healthcare Retirement Planner was created with one purpose in mind: to provide data, education and tools necessary to help the financial industry create better financial futures and to plan for one of the biggest expenses in not only retirement, but life – their health.

In a time where health costs dominate the media, the political landscape and your bottom line, retirement planning with all of the facts have never been more important.

Origin of Our Data for Healthcare Cost in Retirement

On an ongoing basis, HRP conducts research and aggregates all Healthcare data to be used in its analysis algorithm. Pulling from areas such as The Congressional Budget Office, Centers for Medicare and Medicaid, polling individual insurance carriers across the United States along with private research firms, and positions HRP as having the most accurate Retirement information and calculations available.

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