Learn How AARP Medigap Plans and Coverage Work

Understanding AARP Medigap Plans: What They Are and How They Work

Medigap, also called Medicare Supplement Insurance, is private insurance designed to work alongside Original Medicare (Parts A and B). These plans help cover costs that Original Medicare doesn't pay, such as copayments, coinsurance, and deductibles. AARP, through partnerships with insurance companies, offers Medigap plans to people who have Original Medicare.

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Original Medicare covers hospital stays, doctor visits, and other medical services, but it doesn't cover everything. For example, Medicare Part A has a deductible of $1,676 for hospital stays in 2024. After you've used your hospital benefits, you pay coinsurance. For skilled nursing facility care, you pay $418 per day for days 21-100. These costs can add up quickly. A Medigap plan steps in to cover some or all of these out-of-pocket expenses.

It's important to understand that Medigap plans are different from Medicare Advantage (Part C) plans. Medicare Advantage is an alternative to Original Medicare offered by private insurance companies. Medigap plans, by contrast, work only with Original Medicare. If you have a Medigap plan, you use your Medicare card to access services covered by Parts A and B, and your Medigap plan covers the costs Medicare doesn't pay.

The federal government has standardized 10 different Medigap plans, labeled A through N. Each plan covers a set group of benefits. Plan A offers basic coverage, while other plans offer broader protection. For instance, Plan G covers the Part B deductible, whereas Plan A does not. AARP partners with multiple insurance companies to offer several of these standardized plans. The coverage is the same regardless of which insurance company you choose for a particular plan type, but premiums vary by company and location.

Practical Takeaway: Medigap plans are supplemental insurance that pair with Original Medicare to reduce your out-of-pocket costs. Understanding the difference between Medigap and Medicare Advantage helps you make informed decisions about which approach fits your healthcare needs and budget.

The 10 Standardized Medigap Plans: Coverage Comparison

The Centers for Medicare and Medicaid Services (CMS) has established 10 standardized Medigap plans. Each plan covers different services and costs. Learning what each plan covers helps you understand what expenses you would manage yourself versus what the plan would cover.

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Plan A is the most basic option. It covers the Part A deductible, Part A coinsurance, the first three pints of blood, Part B coinsurance, and hospice care coinsurance. It does not cover the Part B deductible, preventive care, or excess charges. In 2024, the Plan A average monthly premium ranges from approximately $100 to $200, depending on the insurance company and your location.

Plan G is one of the most popular Medigap plans. It covers the Part A deductible, Part A coinsurance, the Part B deductible, Part B coinsurance, the first three pints of blood, and hospice care coinsurance. Plan G does not cover the excess charges that some providers may bill. Average monthly premiums for Plan G in 2024 range from approximately $150 to $300.

Plan N offers coverage similar to Plan G but at a lower cost. Plan N covers the Part A deductible, Part A coinsurance, the Part B deductible, Part B coinsurance, and the first three pints of blood. With Plan N, you pay a copayment (usually $20) for office visits and a copayment (usually $50 to $100) for emergency room visits. This cost-sharing reduces premiums. Average monthly premiums for Plan N range from approximately $100 to $200.

Other popular plans include Plan F, Plan C, Plan D, Plan K, Plan L, Plan M, and Plan B. Each offers different combinations of coverage. Plan F was the most comprehensive plan but is no longer available to people newly turning 65 after January 1, 2020. Existing Plan F enrollees can keep their coverage.

The following benefits are covered by all Medigap plans:

• Part A hospital insurance coinsurance and copayments
• Part B medical insurance coinsurance or copayments (100% after deductible is paid)
• Blood transfusions (first three pints)
• Hospice care coinsurance or copayments

Practical Takeaway: Comparing the 10 standardized plans shows which costs you would cover versus which the plan covers. Review the coverage chart for each plan to identify which aligns with your expected healthcare needs and budget.

How Medigap Premiums Work and What Affects Your Costs

Medigap premiums vary significantly based on where you live, which insurance company you choose, and which plan you select. Unlike Original Medicare Part B premiums (which are the same nationally), Medigap premiums are set by individual insurance companies and vary by state and sometimes by county or ZIP code.

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Three main rating methods affect what you pay for Medigap. The first is "attained age" rating, where your premium increases as you age. If you enroll in a Medigap plan at age 65, your premium will be lower than if you enroll at age 75. The second is "issue age" rating, where your premium is based on your age when you first enroll, and it increases only for inflation and claims experience, not for your age. The third is "community" rating, where everyone in a geographic area pays the same premium regardless of age.

Insurance companies in your state may use one or more of these rating methods. For example, in some states, an insurance company might use attained age rating for one plan and issue age rating for another. You can contact insurance companies or review their rate tables to understand their pricing approach.

Several factors influence your monthly premium:

• Your location: Premiums vary by state and sometimes by ZIP code. A Plan G premium might be $180 in Florida but $220 in California.
• The plan type: More comprehensive plans (Plan G) cost more than basic plans (Plan A). Plan N typically costs less than Plan G due to cost-sharing features.
• The insurance company: Different companies charge different rates for the same plan. Comparing quotes from multiple insurers can save hundreds of dollars annually.
• Your age at enrollment: With attained age rating, starting Medigap at 65 is usually cheaper than waiting until 70.
• Your health status: Most Medigap plans do not use medical underwriting, meaning they do not deny you or charge more based on pre-existing conditions. However, some plans may have waiting periods during open enrollment.

Medigap premiums typically increase each year. Increases may reflect rising medical costs, inflation, company experience, or a change in your age rating. For 2024, the average increase across Medigap plans was 3-8%, though some companies raised rates by 10% or more in certain regions.

Practical Takeaway: Contact several insurance companies offering Medigap plans in your state to compare premium quotes. Premium differences among insurers for the same plan can exceed $100 per month, making comparison shopping a worthwhile investment.

Enrollment Periods and Timing for Medigap Coverage

Understanding when you can enroll in a Medigap plan is critical because missing certain enrollment windows may result in higher premiums or coverage gaps. The key enrollment period for Medigap is the "Medigap Open Enrollment Period," which runs for six months starting the first day of the month in which you are age 65 or older and enrolled in Medicare Part B.

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During this six-month window, you have what's called "guaranteed issue" rights. This means insurance companies must offer you any Medigap plan they sell in your state at their standard rates, regardless of your health status or pre-existing conditions. Companies cannot deny you coverage or charge you more based on health. This protection is significant for people with chronic conditions or recent health issues.