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Because Original Medicare covers a significant portion of its recipients' health care expenses, eligibility for Medicare is a welcome milestone. But for all that Medicare covers, its enrollees learn quickly that Original Medicare doesn't pick up the tab for everything.
And that's just the beginning. The list of expenses Medicare won't cover includes medical expenses incurred during travel outside the United States and its territories.
To cover those expenses, millions purchase Medicare supplement insurance – or Medigap.
Medigap policies are available in any state, and all Medigap insurers must abide by strict state and federal laws. In most states, carriers are obliged by law to offer a standardized Medigap policy that is identified by the letters "A" through "N." (Medigap policies in Wisconsin, Minnesota, and Massachusetts are standardized in a slightly different way.)
In some states, not all types of Medigap coverage will be available. In other states, you may be able to purchase Medicare SELECT – a Medigap policy that requires plan holders to use specific hospitals and, in some cases, specific doctors.
It's important to note that insurance companies offering Medigap policies are not required to offer every Medigap policy. However, if a carrier offers any Medigap policy, it is required to also offer at least Medigap Plan A, Plan C or Plan F. In addition, each carrier's Medigap policy must offer the same basic benefits as any policy with the same letter offered by another carrier.
Yes. The list of expenses that Medigap policies don't cover includes long-term care in a nursing home, vision and dental care, hearing aids, eyeglasses, and private-duty nursing care.
Also, Medigap policies aren't compatible with the following types of coverage: employer or union plans; veterans' benefits; Indian health services; Medicare Advantage plans; Medicare prescription drug plans; and Medicaid. Finally, Medigap policies are for individuals only – not for couples or families.
The cost of a Medigap policy can vary with each insurance company. There are three ways in which insurers set Medigap rates:
Take the time to find Medigap policies that offer discounts. Some insurers offer discounts for women, non-smokers, married people, and for paying annually. Many states also offer a health insurance assistance program, providing up-to-date Medigap insurance information and a list of qualified private insurers. If your state does not have an assistance program, click here.
The best window of time in which to buy a Medigap policy begins on the first day of the month in which both the purchaser and his/her spouse have reached the age of 65 and both have enrolled in Medicare Part B. The Medigap enrollment period lasts for six months. Some states do offer enrollment periods for those under 65, so it pays to research your state's health care regulations.
The timing is pivotal for the purchaser of a Medigap policy, because buying a policy after your enrollment period gives your carrier the option of denying the application based on the company's underwriting requirements.
An insurer can't make you wait for your coverage to start, but it can make you wait for coverage of a pre-existing condition – and may also refuse to cover your out-of-pocket costs for that pre-existing condition for up to six months during a pre-existing condition waiting period." That said, if you recently had "credible coverage" – or if you have guaranteed issue "Medigap protection" – you may be able to shorten or avoid entirely the waiting period.
For more information about Medigap, read Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare.
Also called "traditional" Medicare, it's the fee-for-service program in which the government pays your health care costs. The coverage includes Medicare Part A and Medicare Part B and allows you to see any doctor anywhere (who accepts Medicare patients).
Medicare Part A helps cover inpatient hospital visit expenses, including a semi-private room, medical tests and doctors' fees. It may pay a portion of skilled nursing expenses and home health services, if ordered by a physician, and often 100 percent of hospice care.
Medicare Advantage plans replace your government coverage with private insurance. These plans cost more but offer more benefits than traditional medicare.
Medicare Part D is prescription drug coverage available only through private companies, but any individual who receives Medicare health insurance is eligible. Part D covers both brand name and generic drugs with a short list of exceptions.
Medigap plans offer supplemental benefits sold by private companies to extend traditional medicare. Fourteen plans offer varying combinations of benefits, covering copayments and deductibles and foreign travel emergency expenses, at-home care and preventive care.