Is Medicare Supplement Primary or Secondary?

Medicare Supplement (Medigap) plans often lead to questions about how they coordinate with Original Medicare. Understanding whether Medigap pays before or after Original Medicare is important for beneficiaries to manage their healthcare costs. This article clarifies the roles of Original Medicare and Medigap plans, detailing their coordination and what beneficiaries can expect.

Understanding Original Medicare and Medigap

Original Medicare forms the foundation of health insurance for millions of Americans, structured into two primary parts: Part A and Part B. Medicare Part A primarily addresses inpatient hospital care, which includes stays in hospitals, skilled nursing facilities, hospice care, and some home health services. While Part A covers a significant portion of these costs, beneficiaries are responsible for a deductible per benefit period. Additionally, for hospital stays extending beyond 60 days in a benefit period, daily coinsurance amounts apply.

Medicare Part B covers a broad range of outpatient medical services, including doctor visits, preventive care, diagnostic tests, medical supplies, and outpatient therapy. Similar to Part A, Part B also has cost-sharing requirements. Beneficiaries must meet an annual deductible. After the deductible is met, Medicare Part B generally pays 80% of the Medicare-approved amount for most covered services, leaving the beneficiary responsible for the remaining 20% coinsurance. These deductibles, copayments, and coinsurance amounts represent the out-of-pocket costs that individuals would typically pay under Original Medicare.

Medicare Supplement, or Medigap, plans are private health insurance policies specifically designed to help cover some of these out-of-pocket costs associated with Original Medicare. These plans work in conjunction with Original Medicare, meaning they do not replace it but rather enhance its coverage by paying for certain expenses that Original Medicare does not fully cover. Medigap plans are intended to reduce a beneficiary’s financial responsibility for deductibles, copayments, and coinsurance. They provide an additional layer of financial protection against unexpected medical bills, making healthcare costs more predictable.

How Medigap Coordinates with Original Medicare

When an individual has both Original Medicare and a Medigap policy, the payment hierarchy is clearly defined. Original Medicare consistently functions as the primary payer, meaning it processes and pays its share of the approved medical costs first. Only after Original Medicare has paid its portion does the Medigap plan then step in as the secondary payer. The Medigap policy then covers its designated share of the remaining Medicare-approved expenses, such as deductibles, coinsurance, or copayments, based on the specific plan chosen.

The claims process operates smoothly when a beneficiary has both coverages. Healthcare providers typically submit claims directly to Original Medicare for services rendered. Once Original Medicare reviews the claim and pays its approved amount, it automatically forwards the claim information to the beneficiary’s Medigap plan. This electronic forwarding streamlines the process, ensuring that the Medigap insurer receives the necessary details without requiring the beneficiary to submit claims manually for the supplemental coverage.

After receiving the claim information from Medicare, the Medigap plan then processes the claim according to its policy terms. For example, if a Medicare Part B-approved service has a 20% coinsurance, and Original Medicare pays 80%, the Medigap plan would then pay the remaining 20% coinsurance, assuming the plan covers this cost. In another scenario, for an inpatient hospital stay, after Original Medicare pays its share, the Medigap plan would cover the Part A deductible or daily coinsurance amounts, depending on the plan’s benefits. This coordinated payment mechanism helps to minimize the out-of-pocket burden for the beneficiary.

Consider a routine doctor’s visit: after the annual Medicare Part B deductible is met, Medicare pays 80% of the approved amount. If the approved charge is $100, Medicare pays $80. The Medigap plan would then typically pay the remaining $20 coinsurance. For a longer hospital stay, where Original Medicare requires a daily coinsurance payment after 60 days, the Medigap plan would cover that daily amount, effectively reducing the beneficiary’s direct cost to zero for that specific charge.

Standardized Medigap Plan Coverage

Medigap plans are standardized across most states, which means that plans identified by the same letter (e.g., Plan G or Plan F) offer identical basic benefits, regardless of the private insurance company selling them. This standardization simplifies the comparison process for consumers, as the core coverage remains consistent from one insurer to another. While the benefits are uniform for a given plan letter, the premiums charged by different insurance companies for the same standardized plan can vary.

These standardized plans are designed to help cover a range of cost-sharing elements left by Original Medicare. Common areas of coverage include the Medicare Part A deductible, which helps with initial hospital costs. Many plans also cover the Part A coinsurance for extended hospital stays, ensuring beneficiaries do not face significant daily charges for prolonged inpatient care. The Part B coinsurance, typically 20% of the Medicare-approved amount, is another primary focus of Medigap coverage.

Some Medigap plans also provide coverage for Medicare Part B excess charges, which occur when a doctor who does not accept Medicare assignment charges more than the Medicare-approved amount for a service. These excess charges can be up to 15% above the Medicare-approved amount. Additionally, certain Medigap plans offer benefits for foreign travel emergency care, providing coverage for medical emergencies that occur outside the United States, typically up to a lifetime limit after a deductible. The specific benefits included vary by plan letter, but all are designed to fill gaps in Original Medicare coverage.

Important Medigap Considerations

Understanding the Medigap Open Enrollment Period is important for individuals enrolling in Medicare. This crucial 6-month period begins the month a person turns 65 and is enrolled in Medicare Part B. During this specific timeframe, insurance companies cannot deny an applicant a Medigap policy or charge higher premiums due to pre-existing health conditions. This guaranteed issue right ensures access to supplemental coverage regardless of health status, making it the most advantageous time to purchase a Medigap policy.

It is also important to distinguish Medigap policies from Medicare Advantage (Part C) plans, as they serve different purposes within the Medicare system. Medigap plans work strictly in conjunction with Original Medicare, covering some of its remaining out-of-pocket costs. In contrast, Medicare Advantage plans are an alternative way to receive Medicare benefits, offered by private insurance companies approved by Medicare. These plans typically combine Part A and Part B coverage, and often Part D (prescription drug) coverage, into a single plan, frequently with managed care features. Individuals cannot have both a Medigap policy and a Medicare Advantage plan at the same time.

While Medigap plans offer substantial financial protection, they do not cover every type of healthcare expense. These policies generally do not cover prescription drugs, which are typically addressed through a separate Medicare Part D plan. Additionally, Medigap policies do not provide coverage for long-term care, such as nursing home care or assisted living. Vision care, dental care, hearing aids, and private-duty nursing are also typically excluded from Medigap coverage, requiring beneficiaries to seek separate insurance or pay out-of-pocket for these services.