Medicare Supplemental Insurance (also called Medigap Insurance) are health insurance policies sold by private insurance carriers.  Supplements are designed to do exactly what the name says. Supplement, or fill in the gaps in Original Medicare.  It is great that the government offers Medicare A (Hospital Insurance) and Medicare Part B (Medical Insurance) but it does leave a lot in out of pocket expense for the Medicare beneficiary. Such as deductibles, co-pays and coinsurances.  This is where Supplements or Medigap Insurance comes in. Supplements can come in and pay all or some of the cost sharing Medicare leaves behind, depending on which plan you pick.  If you have Medicare Part A and Medicare Part B with Supplement coverage, Medicare will pay part of the amount approved by the insurance company and then your Supplement Insurance will pay its share.

Medicare Supplement beneficiaries can buy a Supplemental policy to cover all or some of the cost sharing listed above. Supplemental polices available are lettered A-N.  An overview can be show below.  Plan F is the most comprehensive of the Supplement policies because is pays all of the cost sharing listed above.

Supplements Standardization

It is important to know that all Supplements must follow standardized federal and state regulations.  “Each standardized Medigap policy must offer the same basic benefits, no matter which insurance company sells it. Cost is usually the only difference between Medigap policies with the same letter sold by different insurance companies.” (2012 Choosing a Medigap Policy, Center for Medicare & Medicaid Services).

This means that every carrier that offers a Medicare Supplement Plan F in your area must have the same basic benefits. Even if insurance carriers charge different premiums. Supplements are similar to a commodity.  It’s like trying to buy gasoline.  When you run low on gas are you going to stop at the station on the right charging $4 a gallon or the station on the left charging $4.50 a gallon?

What is Medigap? - Important Facts

If you haven’t acquired or have been planning to get a Medigap insurance policy, there are a few things you need to know in order to avoid problems in the future when making a claim. This information will help you understand what to expect and not to expect regarding your Medigap policy.

  • A Medigap Insurance policy requires you to have Medicare A and B
  • You and your spouse need separate policies because it only covers one person
  • You don’t need Medigap Insurance if you have a Medicare Medical Savings Account or MSA Plan
  • You cannot have a Medigap Insurance policy and a Medicare Advantage Plan together
  • Your Medigap Insurance premium is different from your Medicare premium
  • Your Medigap Insurance policy is renewable and can’t be cancelled by the insurance company as long as you’re paying the premiums
  • Your Medigap Insurance doesn’t cover prescription drugs, long-term care, private-duty nursing, hearing aids, and dental and eye care
  • You, not your agent, can cancel your Medigap policy by calling your insurance provider

Aside from the difference between Medicare and Medigap, there is still some confusion regarding Medigap and other types of insurance. The plans listed below are NOT Medigap plans.

  • Medicaid
  • Medicare Prescription Drug Plans
  • Medicare Advantage Plans, such as HMO and PPO
  • Employer and union plans
  • Federal Employees Health Benefits Program
  • TRICARE
  • Veteran’s Benefits
  • Indian health Service and similar policies
  • Long-term Insurance policies

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