Key Takeaways

  • Medicare Supplement plans, also known as Medigap, help cover out-of-pocket costs in Original Medicare but do not include prescription drug coverage or other benefits like vision or dental.

  • As a USPS retiree or employee, your health coverage options may already provide substantial benefits, making Medicare Supplement plans an unnecessary expense for some.

Understanding Medicare Supplement Plans

Medicare Supplement plans, or Medigap, are policies designed to fill the gaps in Original Medicare (Parts A and B). These gaps include deductibles, copayments, and coinsurance, which can add up over time. While this might sound appealing, Medigap isn’t always the best choice for everyone—especially for USPS retirees and employees who have access to other health coverage options.

How Do Medicare Supplement Plans Work?

Medigap policies work alongside Original Medicare, covering certain out-of-pocket costs that Medicare doesn’t pay. Here’s a breakdown of what they typically include:

  • Medicare Part A Coinsurance & Hospital Costs: Covers costs beyond Medicare’s coverage limits for inpatient hospital stays.

  • Medicare Part B Coinsurance or Copayments: Reduces or eliminates out-of-pocket costs for doctor visits and outpatient care.

  • Blood (First Three Pints): Covers the cost of the first three pints of blood if needed for a medical procedure.

  • Hospice Care Coinsurance or Copayments: Helps with hospice-related costs under Medicare Part A.

  • Skilled Nursing Facility Coinsurance: Assists with expenses beyond what Medicare covers for skilled nursing care.

  • Medicare Part A & B Deductibles: Some Medigap plans cover part or all of these annual deductibles.

  • Foreign Travel Emergency Care: Provides some coverage for medical emergencies outside the U.S.

What Medigap Doesn’t Cover

Despite its benefits, Medigap has notable limitations:

  • Prescription Drugs: Medigap does not include drug coverage. You would need to enroll in a separate Medicare Part D plan.

  • Dental, Vision, and Hearing Services: Unlike some Medicare Advantage plans, Medigap does not offer routine dental, vision, or hearing benefits.

  • Long-Term Care: Nursing home care or in-home personal care services are not covered.

  • Private Duty Nursing: Services beyond Medicare’s home health coverage are not included.

  • Wellness and Fitness Programs: Many Medicare Advantage plans offer wellness benefits that Medigap does not.

Why Medicare Supplement Plans May Not Be the Best Choice for USPS Retirees

USPS retirees have unique healthcare considerations, particularly with the transition to the Postal Service Health Benefits (PSHB) Program in 2025. Here’s why you might not need a Medigap plan:

1. You May Already Have Comprehensive Coverage

With the PSHB program replacing FEHB for postal retirees, many plans are designed to work seamlessly with Medicare. These plans often include:

  • Lower cost-sharing when paired with Medicare Part B

  • Prescription drug coverage without needing a separate Part D plan

  • Vision, dental, and hearing benefits

  • Lower out-of-pocket expenses compared to standalone Medigap policies

  • Additional wellness benefits such as gym memberships, routine check-ups, and preventive screenings

If your USPS-provided plan already offers robust coverage, paying for a separate Medigap policy might be redundant.

2. Medigap Premiums Can Be Expensive

Unlike Medicare Advantage plans, which often have lower monthly costs, Medigap premiums can be significantly higher. This can be a financial burden, especially if you’re already enrolled in the PSHB program, which provides similar cost-sharing protections.

Additionally, Medigap premiums tend to increase with age, making them more costly in the long run. Over the years, what seemed like an affordable plan at age 65 could become a major financial strain in your late 70s or 80s.

3. No Coverage for Prescription Drugs

Since Medigap doesn’t include prescription drug coverage, you would need to enroll in a Medicare Part D plan separately. USPS retirees often have drug coverage included in their PSHB plan, eliminating the need for a separate Part D policy. By staying within the PSHB system, you avoid unnecessary extra costs.

4. Limited Enrollment Opportunities

Medicare Supplement plans are not guaranteed issue forever. Your best chance to enroll is during the Medigap Open Enrollment Period, which lasts for six months after you turn 65 and enroll in Medicare Part B. After this period, you may face medical underwriting, meaning you could be denied coverage or charged higher premiums due to pre-existing conditions.

This restriction makes it difficult to switch to Medigap later in life if you initially choose another type of coverage. Once you miss your guaranteed issue period, you might have to go through a complex approval process, increasing your chances of being denied.

5. Medicare Advantage Could Be a More Cost-Effective Option

If you’re looking for an alternative to Original Medicare, a Medicare Advantage (Part C) plan might be more cost-effective. These plans often include:

  • Lower monthly premiums compared to Medigap

  • Prescription drug coverage

  • Additional benefits like dental, vision, and hearing

  • A cap on out-of-pocket expenses

  • Coverage for wellness programs and fitness benefits

  • Simplified enrollment without requiring multiple plans

While Medicare Advantage plans are not the best fit for everyone, they may be more practical than Medigap, especially for those who don’t want to pay high monthly premiums.

Choosing the Right Coverage for Your Needs

Ask Yourself These Questions Before Deciding on Medigap:

  1. Do I need extra coverage beyond my USPS-provided plan?

    • If your PSHB plan already covers most costs, Medigap might be unnecessary.

  2. Can I afford Medigap premiums?

    • These plans can be expensive, and the cost increases with age.

  3. Do I need prescription drug coverage?

    • If yes, remember that Medigap does not include drug coverage.

  4. Am I comfortable with a Medicare Advantage plan instead?

    • This may offer similar benefits to Medigap at a lower cost.

  5. Do I plan to travel internationally?

    • Medigap offers limited foreign travel coverage, but so do some PSHB plans.

  6. Will I need additional benefits like dental and vision?

    • If so, Medigap may not be the best fit, as it lacks these services.

Making an Informed Decision

When it comes to choosing Medicare coverage, there is no one-size-fits-all solution. USPS retirees should carefully compare their available options to determine whether a Medigap plan is worth the cost.

  • If your PSHB plan already reduces out-of-pocket expenses, Medigap might not be necessary.

  • If you need prescription drug coverage, remember that Medigap does not provide it.

  • If you prefer predictable costs and a wide provider network, Medigap might still be an option worth considering.

  • If you want additional benefits like wellness programs, dental, and vision coverage, Medicare Advantage or PSHB plans may be a better choice.

Before making a final decision, consider reaching out to a licensed agent listed on this website who can review your specific situation and provide personalized guidance.