Because Original Medicare does not cover all common medical fees and services, private insurers provide coverage to help fill these gaps in the government program with health insurance policies called Medicare supplement policies. Also called Medigap policies, they are available only to those who are actively covered by Medicare Part A and Part B. These policies supplement Original Medicare with more comprehensive health insurance coverage and help lower out-of-pocket expenses for care.

Insurers may offer some or all of the government-mandated standardized Medigap plans (in all states except Massachusetts, Minnesota and Wisconsin, these 12 plans are currently labeled A through L).^*

^* Medigap plans H, I and J are no longer allowed to be sold as new policies effective January 1, 2006.

All Medigap policies must cover “core” benefits such as Medicare Part A and Part B coinsurance fees and co-payments, additional coverage for care in a hospital and other costs. Beyond core benefits, however, each Medigap plan offers a different set of benefits which cannot be changed unless the federal government approves the change and each state government implements such changes.

Overview Of Medigap Policies

Advantages

Medigap policies help fill gaps in Original Medicare with coverage for Medicare’s increasing deductibles, co-payments and coinsurance, as well as for additional services not covered by Medicare — thus reducing beneficiaries’ out-of-pocket expenses and easing the claim payment process when health-care services are provided.
A choice of standardized Medigap plans offers a wide range of benefits to fit most individuals’ needs.
Medigap policies generally allow participants a wide choice of health-care providers — with Medigap and Original Medicare coverage, you can go to any hospital and see any physician, including specialists, anywhere in the country at any time.

Note: Medicare “SELECT” supplements are unique Medigap plans which restrict your choice of health-care providers to a preapproved, geographically limited network of hospitals, physicians, etc., in order for the supplement to pay claims. These policies can charge lower premiums than traditional (non-SELECT) standardized Medigap plans, because they do limit your freedom to choose any health-care provider.
Coverage is guaranteed renewable as long as you pay premiums — once your Medigap policy is issued, only you can terminate its coverage.
Medigap plan benefits and coverages cannot be changed unless the federal government approves the change.
Regardless of your health you may buy a Medigap policy during your initial open enrollment period — the 6-month period that begins on the day you are at least 65 years old and are first enrolled in Medicare Part B. The 6-month open enrollment into Medigap happens automatically and only once starting on your Medicare Part B enrollment date. Once this open enrollment begins, it cannot be changed or restarted.
If you delay Part B enrollment, your open enrollment period for Medigap will start at the time your Part B coverage first begins.

Disadvantages

The financial stability and commitment to quality of sponsoring Medigap insurers varies from company to company and may negatively affect claim payments and other service issues.
Premiums may vary by each insurer and can increase over time.
If you do not enroll during your initial Medigap open enrollment period, insurers can use medical underwriting to determine if you qualify for the policy you choose and how much it will cost you.

Original Medicare And Other Supplemental Coverage

There are other health-care plans or programs that supplement many of the coverage gaps in Original Medicare. These plans can also reduce out-of-pocket expenses and offer you valuable benefits alongside Medicare Part A and Part B. You can take advantage of these options only if you meet specific criteria, such as employment, military service or income.

Employer- or union-sponsored health plans protect employees, retirees and eligible dependents.
Veterans Administration and TRICARE provide health coverage for eligible military servicemembers.
Medicaid and similar programs offer health-care coverage for those with low income.
Prescription Drug Assistance Programs such as PACE (Programs of All-Inclusive Care for the Elderly), provide discounts or free medication for those meeting eligibility requirements.

Overview Of Other Supplemental Coverage

Advantages

These plans or programs supplement many of the coverage gaps in Original Medicare and can reduce out-of-pocket expenses, as well as ease the claim payment process when health-care services are provided.
Benefits and coverages beyond Original Medicare are usually provided.
Many are subsidized or are part of a group policy; consequently, they can be less expensive than other supplemental insurance alternatives.
Enrollment is easy and can be automatic, if you meet requirements.

Disadvantages

You must meet specific employment, military service or income requirements to be eligible to obtain and keep such coverage — eligibility requirements can change.
Coverage is not guaranteed-renewable and can be terminated by the plan provider or sponsor.
Premiums can increase and benefits can be changed or eliminated at the discretion of the plan provider or sponsor with little notice to you.
If you have employer- or union-sponsored coverage and decide to terminate your coverage, generally you cannot reactivate it.

Next: Medicare Advantage

Updated Thursday, March 06, 2008

HELPFUL FORMS & LISTS

Weighing The Options