Skip to Main Content

Supplemental Insurance 101: What Medicare Doesn’t Cover

Friday, November 19, 2021
Natalie Terchek
Supplemental Insurance 101: What Medicare Doesn’t Cover

Supplemental insurance plans, often called Medigap policies, can help cover costs that original Medicare doesn’t cover.

Original Medicare covers medically necessary benefits and typically medications administered in a medical setting or by a medical professional. Medicare Part A (commonly referred to as hospital insurance) and Part B (which covers outpatient services) covers 80 percent of eligible charges. The Medicare beneficiary is responsible for the remaining 20 percent and a deductible on Part A and a deductible on Part B. A supplemental plan sold by a private insurance company can help defray those costs, making the plans a potentially attractive option for Medicare beneficiaries.

“A Medicare beneficiary should speak with a Medicare agent to determine what coverage they should add to their Original Medicare Part A and Part B to ensure they have adequate coverage,” said Ann Herbert, a senior marketing specialist at The Horton Group, which sells supplemental plans to Medicare beneficiaries. “It’s important to note that having only Original Medicare Part A and Part B without a Supplement or Medicare Advantage plan could be financially catastrophic should they incur large claims.”

Enrolling In a Supplemental Plan

To be eligible for a supplemental insurance plan, a beneficiary must be enrolled in Part A and Part B of Original Medicare and must reside in the state in which they are applying for coverage. The Medicare Supplement open enrollment period is tied to the first six months in which an individual is enrolled in Medicare Part B. An individual can enroll in Part B during their Initial Enrollment Period, which is tied to their 65th birthday, or they can enroll in Part B after that period. Enrollment in Part B triggers a six-month open enrollment period for supplemental plans. There is no annual open enrollment period for Medicare Supplements.

Eligible individuals may apply for Medicare Part A and /or Medicare Part B through Social Security at or by calling their local Social Security office. Medicare agents are not permitted to participate in the application process for Medicare Part A or Medicare Part B. If an individual is required to enroll in Medicare Part A and Medicare Part B to avoid a Late Enrollment Penalty, it is best to do so at the beginning of their Initial Enrollment Period.

Applying for a plan during that window guarantees acceptance from an insurer, regardless of any pre-existing conditions. Suppose the beneficiary waits longer than their six-month open enrollment window to apply for a supplemental plan. In that case, they may be required to answer health-related questions from insurers that can lead to higher premiums or denial of coverage.

What Medigap Policies Do and Do Not Cover

Medigap policies are standardized regardless of carrier. Here are a few things to know about them.

  • Medigap policies help cover the costs associated with Original Medicare, such as copayments, coinsurance and deductibles.
  • Medicare supplement plans do not cover prescription medication obtained through a retail pharmacy or mail order service.  A separate, stand-alone plan should be added if prescription drug coverage is needed.  Some beneficiaries have creditable Rx coverage from the VA or through a retiree program.  Those individuals can take a supplement plan and not enroll in a stand-alone Part D plan.  They may also enroll in a Medicare Advantage plan that does include a prescription drug benefit.
  • A Medigap policy is only for one person, so spouses will each need their own plan.

Evaluating Medigap Policies

Whether or not a Medigap policy picks up an entire Part A or Part B deductible is plan-dependent, as is the amount of co-insurance a plan picks up.

About a decade ago, the Federal Government standardized Medicare supplement plans, creating 10 options— A, B, C, D, F, G, K, L, M and N. A few of those options have since been unavailable to new Medicare beneficiaries.

“A Medicare agent will work with the individual and complete a needs assessment to determine which plan type best fits the person’s needs,” Herbert said. “Medicare beneficiaries can review their options each year during the Annual Enrollment Period, from October 15 to December 7, for plans beginning January 1.”

Learn more about the essentials of Medicare here.

Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.