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Do You Need Medigap Coverage?


If You Have Medicare (Original, Fee-For Service Medicare)

If Original Fee-for-Service Medicare is going to be your only health insurance coverage, you should seriously consider purchasing a Medigap policy as well as coverage for drugs (Medicare Part D). As you can see from the list of things that Medicare does not cover at Medicare -- Schedule of Benefits, there are many medical charges that can slip through the cracks of regular Medicare and leave you with some considerable medical bills you must pay out of your own pocket. 

As important as Medigap coverage can be, there are some people who are better off without a Medigap policy. For instance:

  • You have a Medicare Advantage Plan
  • You receive Medicaid
  • You qualify for a Medicare Buy-In Program that also pays deductibles and coinsurance
  • You are covered under employer based health insurance

If You Have Medicare Advantage

If you trade your Original Fee-for-Service Medicare coverage for a Medicare HMO or other Medicare Advantage plan, you not only don't need Medigap coverage, it is usually worthless if you have it. (Note: there is a special exception for getting a Medigap policy back if you dropped it to try a Medicare Advantage plan. 

If You Receive Medicaid

If you have Medicaid, you do not need a Medigap policy because, in a very real sense, Medicaid will serve the same purposes as a Medigap policy. In fact, this is so much the case that insurance agents are prohibited from selling you a Medigap Policy if you have Medicaid.

If you have both Medicaid and Medicare, you'll receive coverage from the first dollar for many things that are subject to a deductible with Medicare. In addition, Medicaid covers prescription drugs. 

If You Qualify for a Medicare Buy -- In Program That Also Pays Deductibles and Co-Insurance

There are also several affiliated programs that will pay Medicare premiums, deductibles and co-insurance even if you don't qualify for Medicaid itself. See Medicare Eligibility, Costs, for information on the Medicare Financial Assistance programs.

If You Are Covered Under An Employer Based Health Insurance Policy

If you are covered under an employer's group health insurance plan (1) you may not need a Medigap plan, and (2) you may wish to decline Part B to protect your right to Medigap at a later date. If the drug coverage is at least as good as Medicare's (Creditable), you wont' be subjected to a penalty if you later decide to take Medicare drug coverage.

The above applies whether you are covered under your current employer's plan, as a retiree or disabled retiree under your former employer's plan, or as a dependent under your spouse's or domestic partner's employer plan.

In deciding whether or not to take Part B and drug coverage, you should first determine:

  • How does your plan integrate/coordinate with Medicare? A few group policies will make payment based on Parts A and B of Medicare whether or not you are enrolled in both parts. Make sure what your plan says about coordination of benefits with Medicare before declining Part B.  
  • Will you have a later need for Part B? Some employers continue health plans for disabled employees for as long as they are disabled. Some are more limited. If your employer provides coverage for life as long as you are disabled, your need for a later guaranteed right to a Medigap policy may not be so strong. You may still want to protect your right to a later open enrollment because an employer can always change its policy about continuing health coverage as long as it's done "across the board." 

By not buying a Medigap policy now and waiting until you need one, you're also saving premium dollars you don't to spend.  

If you're covered under your spouse's plan, this may be a reason to preserve your right to an open enrollment Medigap plan. Your spouse's plan may terminate, or your spouse may change jobs to one without health insurance.  

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