Medicare Part B pays only 80% of covered expense for doctors, outpatient services and durable medical equipment; beneficiaries are responsible for the other 20%. Medigap plans pay that 20%, and can also step in and cover lots of other things. The details depend on which plan you buy.
There are 10 different “letter” plans for Medigap. Under federal rules, all insurers selling a particular plan (A, B, C, etc.) must cover the same things. Coverage requirements of the plans are explained on page 11 of Medicare’s guide to Medigap policies.
The major difference among the plans, therefore, is their premium expense. And there are, indeed, major differences in premiums. Medicare provides a useful online guide to see how premiums differ in your ZIP code.
Medigap plans are regulated by state insurance departments. Once you’ve narrowed your policy search, you should touch base with your state insurance department to see if it has assembled any consumer-complaint data that would help you make an informed decision.
As an alternative to basic Medicare and Medigap, many people choose a Medicare Advantage plan from a private insurer. These policies combine Medicare Parts A, B and, usually, D, into a single plan. They also provide annual ceilings on out-of-pocket expenses and work somewhat like Medigap policies. In fact, you can’t have a Medicare Advantage plan and a Medigap policy.