Medigap

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Medigap refers to various private supplemental health insurance plans sold in the United States to help pay for medical expenses not covered (or only partially covered) by Medicare. Medigap's name is derived from the notion that it exists to cover the difference or "gap" between the expenses reimbursed by Medicare and the total amount charged. There is no requirement for a person to have Medigap insurance, although a person must normally first be covered by Medicare in order to purchase Medigap insurance. Medigap insurance is normally not necessary if a person participates in an enhanced type of Medicare, such as a Medicare Advantage plan.

Medigap offerings have been standardized by the Centers for Medicare and Medicaid Services (CMS) into twelve different plans sold and administered by private companies. Each Medigap plan offers a different combination of benefit. The coverage provided is normally proportionate to the premium paid. Since Medigap is private insurance and not government sponsored, the rules governing the sale and offerings of a Medigap insurance policy can vary from state to state. Some states such as Massachusetts, Minnesota, and Wisconsin require Medigap insurance to provide additional coverage than what is defined in the standardized Medigap plans.

Some employers may provide Medigap coverage as a benefit to their retirees.

[edit] Drug coverage

Some Medigap policies sold before January 1, 2006 may include prescription drug coverage, but after that date no new Medigap policies could be sold with drug coverage. This time frame coincides with the introduction of the Medicare Part D benefit.

Medicare beneficiaries that enroll in a Medicare Part D plan may not also retain a Medigap policy with drug coverage. People with Medigap polices with drug coverage that enrolled in Medicare Part D by May 15, 2006 had a guaranteed a right to switch to another Medigap policy that has no prescription drug coverage, but beneficiaries that retained a Medigap policy with drug coverage after that date have no such right; in that case the opportunity to switch to an Medigap policy without drug coverage is solely at the discretion of the private insurance company issuing the replacement policy.

Medicare beneficiaries that hold a Medigap policy with drug coverage, who then enroll in a Medicare Part D Plan after May 15, 2006 will have to pay a late enrollment penalty. The only exception is for the few beneficiaries holding a Medigap policy that, on average, pays out at least as much as standard Medicare prescription drug coverage. A Medigap policy with prescription drug coverage bought before mid-1992 may pay out as much as or more than a Medicare Part D plan. Medigap policies sold in Massachusetts, Minnesota, and Wisconsin with prescription coverage may also pay out as much as or more than Part D.

[edit] External links

Medigap Policy Basics from Medicare.gov (The Official U.S. Government Site for People with Medicare)
Choosing A Medigap Policy page found on Medicare.gov
AARP article about Medigap