2014 Medicare and Medigap Updates
Medigap coverage, or Medicare supplemental coverage, are various types of private health insurance policies issued to beneficiaries of Medicare A (hospital) and B (medical) plans. Medigap helps to cover those parts of your medical expenses that are not covered or only partly covered by Medicare, thus reducing or eliminating your out-of-pocket expenses.
The name Medigap refers to the differences or ‘gaps’ between the total amount charged and the actually expenses that are reimbursed by Medicare. For instance, Medicare has coinsurance and deductible elements that must be settled before the Medicare benefits are paid. Also, certain medical conditions have limited coverage.
To be eligible for Medigap coverage, a person must be enrolled in Medicare A and B. It’s advisable to obtain your Medigap plan during the open enrolment period beginning within 6 months after turning 65, as you are guaranteed a Medigap plan without medical screening. The same guarantee applies when enrolling for the Medicare Part B at age 65 or older. However, after this open enrollment period, you may be required by the insurance company to undergo medical screening and to produce a doctor’s statement.
There are twelve standard plans for Medigap coverage, labeled A through L. Each plan comprises different basic and additional benefits with varying monthly premiums. The plans are obtained from and administered by private insurance companies, and the benefits in each plan remain the same regardless of which insurance company sells it to you. Depending on your Medigap plan, your coverage limits are expanded or eliminated all together. This is because different plans will cover a portion or the entire amount of the Medicare deductibles and coinsurance expenses.
Medigap is not sponsored by the federal government and since it is a private insurance, the contracts and benefits may vary from state to state as well as from company to company. However, the Medigap policies must be in line with Federal and State laws that protect medical beneficiaries. In Massachusetts, Minnesota and Wisconsin, state law requires additional coverage over above the standard coverage of Medigap plans. The insurance companies are allowed to decide which Medigap plans they want to sell and the cost. It is therefore advisable to shop around first and review plans from different insurance companies before you decide on the best one for you.
Since January 1st, 2006 all new Medigap policies do not include drug coverage as this coincided with the creation of Medicare Part D that takes care of prescription drugs. In regards to premiums, once you purchase a Medigap policy you will still have to pay the Medicare Part B monthly premium and the Medigap premium. Medigap plans cannot be purchased jointly by spouses. Each person must have their own policy which doesn’t cover the spouse’s medical costs. Also, Medigap coverage cannot be matched with certain types of private Medicare coverage, for example Medicare Advantage.
As of June 2010, the federal government started mandating the Medigap plans cover some portion of hospice care costs. Also, insurance companies will now start selling two new, lower premium Medigap plans, although this means that the beneficiary must pay more for the cost of various medical services.