Medicare Supplemental Insurance, usually called Medigap, helps pay for expenses not covered under Medicare. This includes co-payments and deductibles, and some other health care costs. Private insurance companies sell Medigap policies, but the government directs the rules. There are 12 standard Medigap policies available, identified as A through L. The policies really are standard--a Medigap Plan G from Insurer X offers the exact coverage as that from Insurer Y. The only difference is cost.
To qualify for a Medigap policy you must be covered by both Medicare Part A and Medicare Part B. Part A covers skilled services, typically in a hospital or a nursing home, and hospice care. Part B covers outpatient services, doctor's care, and physical, occupational and speech services. Remember, policies are individual--both you and your spouse will need a Medigap policy.
What to Look for
First and foremost, look for the plan that best meets your needs. This may or may not be the cheapest plan. Plans offer a variety of benefits, but each plan combines them into a different package. Some of the benefits include paying: Medicare Part A hospital coinsurance; Part B coinsurance; ospice care coinsurance; Part A and Part B deductibles; oreign travel emergency costs; and t-home recovery coinsurance.
Yes, it can get a bit confusing. The good news is that there are resources to help you work your way through the process. The U.S. Department of Health and Human Services provides a terrific explanation of Mmedicare.gov. Here you'll find a 56-page overview of Medicare and Medigap. Pay special attention to the chart that details the differences in coverage between Plans A through L.
Before you make your final choice, look at how the insurance company sets premium costs. There are 3 methods insurers use, and they can make a significant difference in cost. Community-Rated premiums are based on factors other than age, and all participants pay the same premium. The premiums may be increased occasionally for inflation. Issue-Age-Rated premiums are based on your age when you buy the policy. The younger you are when you buy the policy, the lower premium you pay. Premiums do not increase as you age, but may be adjusted for inflation. Attained-Age-Rated premiums are based on your current age. So, as you age you pay higher premiums. These policies are often the least expensive initially, but can become very expensive as the years roll by.
Common Pitfalls
Buy your policy during your "open enrollment period." This is the first 6 months after you are both at least 65 years old and enrolled in Medicare Part B. Buying during this period guarantees that an insurer cannot reject you due to a health issue, or charge you more than anyone else it covers.
Shop till you drop. As mentioned above, the only difference between plans from different insurers is the cost. Use the Internet, the newspaper, ask friends. A little homework will really pay off.
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