So, what exactly is Medigap?

Maryalene LaPonsie | October 27, 2010

Medicare Parts A, B, C and D, Medicare Advantage, Medigap...confused yet?

Medicare provides health insurance for seniors and certain individuals with disabilities. However, the various options can make the system difficult to navigate. To cut through the confusion, we've put together some of the essential information you should know about Medigap.

Medigap is supplemental health insurance

First, Medigap is not the same as Original Medicare or Medicare Advantage. It is supplemental health insurance sold by private companies. It is offered in standardized plans that are labeled A-N. All plans have a basic set of benefits that are designed to fill the "gaps" in Original Medicare coverage.

Some of the cost gaps covered by Medigap plans include co-payments, deductibles and co-insurance requirements. Specifically, all plans include a basic package of benefits that include payment for:
  • The first three pints of blood should you need a transfusion
  • Coinsurance or copayments for physician services after the Medicare Part B premium is met
  • Coinsurance for some hospital stays and the entire cost of hospitalization after 365 days

Other plans cover items such as your hospital deductible, Part B deductible and skilled nursing care. Once Medicare pays its portion of your health care bill, your Medigap policy covers its portion of your out-of-pocket expenses.

It is important to know that Medigap is supplemental health insurance for Original Medicare only. It will not pay for any expenses you incur through a Medicare Advantage plan, which is also known as Medicare Part C. In addition, it is illegal for any insurer to sell you a Medigap policy if you are enrolled in Medicare Advantage.

Purchasing a Medigap policy

If you want to purchase a Medigap policy, you must be enrolled in both Medicare Parts A and Part B (Original Medicare). A Medigap supplemental health insurance plan is purchased through a private health insurance company, and you must pay the policy premiums yourself. Medicare does not pay the cost of Medigap premiums.

According to the Centers for Medicare and Medicaid Services, a government office, the best time to purchase a Medigap plan is in the 6 months after you turn 65 years old and enroll in Medicare Part B. During this 6 month open enrollment period, an insurance company cannot refuse to see you a Medigap plan or charge you higher premiums based upon your health history. After the open enrollment period ends, it may become more difficult and expensive to buy a supplemental health insurance policy, especially if you have any health issues.

Shop around for coverage

Be sure to compare quotes from several health insurance companies. Medigap plans are standardized meaning that the only difference between Medigap Plan A offered by one company and Medigap Plan A offered by a different company is the price.

Finally, it is important to note that Medigap supplemental health insurance policies only cover one person. If your spouse needs a Medigap policy as well, a separate plan must be purchased.

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