Explaining Medigap Insurance

Ever since 1965, when President Lyndon Johnson signed the bill into law, American citizens over the age of 65 have been covered by the Federal health insurance program known as Medicare.

But like most forms of insurance, Medicare will not cover all the costs involved with doctor visits, hospital stays and prescription drugs. In fact, it is estimated that an average couple will need close to $250,000 for medical expenses not covered by Medicare. Where are the out-of-pocket costs going to come from?

As it turns out, 90% of Medicare recipients have some form of supplemental insurance and one form of this supplemental insurance is known as Medigap. Medigap insurance is sold by private insurance companies and is meant to fill the gaps in Original Medicare insurance. These policies can help pay a share of certain costs of Medicare covered services, such as coinsurance, co-payments or deductibles. Some Medigap policies also cover certain benefits that Medicare does not cover, such as an extra 365 days of hospital care once you’ve used your Original Medicare hospital benefits.

Navigating the world of Medigap plans can be a daunting experience, but here are a few of the basics.

•In order to buy a Medigap policy you must have Medicare Part A (Hospital Insurance) and Part B (Medical Insurance).

•Medigap policies only cover one person. If a couple wants Medigap insurance they must purchase separate policies.

•Medigap policies are strictly regulated and must follow Federal and state laws. When purchasing Medigap insurance make sure the policy is clearly identified as “Medicare Supplement Insurance”.

•Medigap policies are identified by letters A through N and insurance companies in most states can only sell you a standardized policy. What this means, for example, is that a Plan F policy will offer the same basic benefits, no matter which insurance company offers it. Therefore it pays to shop around, as cost is usually the main difference between Medigap policies sold by different insurance companies. However, when shopping around for coverage remember that the best medicare supplement for you is not just the cheapest one. You also want to factor in the reputation and service offered by the insurance carrier.

•The best time to get Medigap insurance is within six months of turning 65 and enrolling in Medicare Part B. This is known as the Medigap open enrollment period. During this period you must be accepted, regardless of your health history, and the policy must cover all pre-existing conditions.

Finally, keep in mind that Medigap policies only work with Original Medicare. If your Medicare coverage is provided through a Medicare Advantage Plan (like an HMO or PPO), you will not need a Medigap policy.

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