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Can I Pay My Medigap Policy Out of My Disability Benefits?

If you're disabled, you may qualify for Social Security Disability Insurance, also known as SSDI. Once you've had SSDI for two years, you qualify for Medicare Parts A and B. Medicare, though helpful, has significant out-of-pocket costs, so you should consider supplementary coverage, such as a Medigap plan. You can pay for this coverage from your SSDI benefits, but some options can be quite expensive. The right health coverage for you, though, is a sound investment, as long as you can meet your other bills and expenses.

  1. SSDI

    • SSDI provides a monthly benefit if you meet Social Security's definition of disability. You can spend this benefit as you see fit, including coverage to supplement Medicare. Social Security defines disability as being unable to do your previous work or train for new work. Your condition must be expected to last at least one year, or be terminal. You also need to have worked and paid into Social Security for a certain length of time. The minimum number of quarters needed depends on your age. Those who were disabled before age 24, for example, need to have worked at least six quarters to qualify, while those who are age 46 need 24 quarters. You can apply for SSDI online or at your local Social Security office.

    Medicare

    • You are eligible for Medicare once you've received SSDI for two years. Part A covers hospitalization and is usually premium-free. Part B covers other medical care and has a monthly premium. Part D is Medicare's prescription benefit, which has a monthly premium and is available exclusively through private companies approved by Medicare. Each part of Medicare has significant out-of-pocket expenses. Part A has a deductible of more than $1,000 per hospitalization, Part B has a deductible of $90 or more and you're responsible for 20 percent of all costs after that. Part D may have co-pays, coinsurance or a deductible.

    Medigap Plans

    • Medigap policies are health insurance policies that are secondary to Medicare, and are regulated by the federal government. There are 10 plans available, and the benefits are the same no matter where you purchase your plan. Most states require companies to offer Medigap plans to those on Medicare due to a disability, but you may have to pay more than those 65 or older, and may not be able to choose the plan you want. You can get information on plans available in your state from your state insurance department.

    Medicare Advantage Plans

    • Medicare Advantage, or MA, plans are also known as Part C of Medicare. Like Part D, MA plans are offered through private companies approved by Medicare. MA plans take the place of Medicare, although you retain all the rights you have through Medicare. These plans also include prescription coverage and may include additional benefits like vision care or dental coverage. These plans have a significantly lower premium than Medigap plans, and may have deductibles, co-pays or coinsurance. Overall, though, the out-of-pocket costs are lower than with Medicare alone. Disabled persons are charged the same as those 65 and older.

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