Supplemental insurance is designed to fill the gaps in health insurance coverage a person's primary policy fails to cover. For seniors, this means that supplemental insurance, or Medigap, provides coverage for costs and services not covered by Medicare.
Medicare
Medicare has four parts.
Part A, or hospital Insurance, covers inpatient care, skilled nursing care, hospice, and some home health care.
Part B, or Medical care, covers doctor's visits, outpatient care, and some preventive services. Part B requires payment of a premium.
Part C, or Medicaid Advantage, provides an HMO or PPO option to getting services provided is Parts A, B, and D.
Part D, or prescription drug coverage, covers prescription drugs. It requires payment of a premium.
Together, Parts A, B, and C are often referred to as Original Medicare. Part C plans generally cover what Original Medicare covers plus limits co-payments and deductibles and pays for additional services as well.
Supplemental Insurance
Medigap helps to pay health care costs and covers services not covered by Original Medicare. For example, depending on the Medigap policy, the out-of-pocket limits may be reduced for co-payments and deductibles. It also may cover, or significantly reduce, copayments for preventive services, dental care or eyeglasses not covered by Medicare.
Federal Regulation
Federal law requires that all Medigap policies be clearly labeled as Medicare Supplemental Insurance. Insurance companies may sell only "standardized" policies. There are different standardized packages--A through N--each of which must be identical across Medigap policies offered by different insurers. That is, all A's or all D's offer the same basic packages of coverage, varying only in price. However, packages A through N vary by the mix of basic and extra benefits. Standardizing the Medigap policies simplifies comparison shopping.
State Variations
States also license and regulate Medigap insurance, often in the timing of open enrollment periods and other consumer protections. Insurance companies may vary what types of policies they offer by state.
A few states offer a Medigap option known as Medicare Select that requires using hospitals and, in some cases, doctors within its network to be eligible for full insurance benefits--except in an emergency.
Enrollment
You must have Medicare Part A and Part B to be eligible for a Medigap policy. The best time to purchase it is during your state's six-month open enrollment period because then insurers cannot:
Refuse to sell you any Medigap policy it sells .
Make you wait for coverage to start--with some exceptions-
Charge you more for a Medigap policy because of your health problems
If you meet certain criteria, however, you are guaranteed the right to purchase it at other times as well.
Costs
You should compare Medigap policies because costs vary. Note each Medigap policy covers only one person. Your spouse must purchase his own.
Renewability
Standardized Medigap policies are guaranteed renewable even if you have health problems. Your Medigap policy cannot be canceled as long as you pay the premium.
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