Glossary
Medigap plan, defined
One of the lettered, standardised supplement policies sold by private carriers to fill the cost-sharing gaps in Original Medicare. The letter fixes the benefits; the carrier sets the premium and the service.
In practice
The letters differ in what they leave the policyholder to pay: some cover nearly every gap, some leave the Part B deductible or small office and emergency copays, and high-deductible versions trade a large annual deductible for a low premium. People who became eligible for Medicare after a certain date cannot buy the letters that pay the Part B deductible, so the choice is narrower for new enrollees than for people who bought years ago. A few states standardise differently, and some carriers add extras such as gym memberships that are not part of the standard benefit. Switching letters or carriers later usually means underwriting, so the first choice tends to be the lasting one. Whether a given letter is offered varies by state and carrier.
A worked example
Suppose two carriers each offer the same letter to a sixty-six-year-old in the same county: one at $140 a month and one at $175 a month. The benefits are identical, so the analysis is the pricing method, the carrier's rate history and its service, not the coverage. Over ten years the difference is roughly $4,200 before any rate changes. Hypothetical figures.
Applies to: Medicare