Different Medigap Policies

The Medigap program began with 12 policies offered to eligible individuals who were receiving Medicare benefits. The program was designed to cover the “gaps” in Medicare’s health care coverage to millions of senior citizens and individuals with disabilities. While Medicare goes a long way in paying for hospital expenses, medical visits, and other expenses; there were gaps in the program including deductibles, co-payments, and coinsurance costs.

Medigap’s original 12 policies were labeled simply Medigap Plans A through L. Each policy is designed to provide an individual with a certain amount of benefits, with Plan A generally considered the most basic plan and Plan L the most beneficial. Each policy offered more benefits than the plan before it but fewer benefits than the plan following it and premium costs increased with greater benefits.

The Medigap program recently underwent some changes that affected the benefits offered and the number of policies offered. As of June 1, 2010 the following changes were made to certain Medigap policies:

• Plans E, H, I, and J are no longer available after May 31, 2010.
• Benefits for Plans D and G will be different on plans purchased after June 1, 2010 compared to plans purchased before June 1, 2010
• Medigap added Plans M and N

There are 10 basic benefits Medigap policies will cover. Few plans will offer 100% coverage for all 10 benefits, but there are certain benefits that are covered by every plan from the most basic to the most complicated. The benefits covered by Medigap include:

1. Medicare Part A coinsurance hospital costs for an additional 365 days after coverage ends
2. Medicare Part B Coinsurance or Co-payment
3. First three pints of blood during transfusion
4. Part A Hospice Coinsurance or Co-payment
5. Skilled Nursing Facility Coinsurance
6. Medicare Part A Deductible
7. Medicare Part B Deductible
8. Medicare Part B Excess Charges
9. Foreign Travel Emergency
10. Medicare Preventive Care Part B Coinsurance

The first four benefits listed above, as well as Medicare Preventive Care Part B coinsurance, is covered to some extent by all Medigap policies currently offered by providers. Only the first benefit and last benefit listed above are covered 100% by all Medigap policies. Certain policies such as Plan K and Plan L only cover 50% or 75% (respectively) of the costs associated with some of the above benefits. Other policies cover only some of the benefits while offering no coverage for others. Plan F is the only Medigap policy available for purchase that offers 100% coverage of all the above listed benefits. Plan F comes in two version, one of which is a “high deductible” policy that features a lower premium at the expense of a higher deductible, which is $2,000 as of 2010.

Medigap policies are not the perfect answer to the problems of Original Medicare coverage. Medigap policies do not cover long term care, vision, dental, hearing aids, eyeglasses, or private nursing services. Since Medicare Advantage Plans (Medicare Part C) often offer these services, that is one of a few reasons Medigap policies are not available to those with Medicare Advantage Plans.

Individuals who have Medicare Part C have no need to purchase Medigap policies. Also, individuals with Original Medicare and another plan such as employer, union, or the Federal Employees Health Benefits Program do not need a Medigap policy as their current policies generally cover the “gaps” in Medicare that a Medigap policy would be designed to cover.

Medigap policies are not administered by the Medicare program, but instead are provided by private health insurance companies contracted through Medicare. These providers are free to pick and choose which policies to offer and these can sometimes vary based upon geographic location and other factors. Medigap policies are governed by federal and state laws to protect individuals they cover, and for the most part Medigap policies are standardized. However, individuals living in Massachusetts, Minnesota, and Wisconsin will see different benefits under some of the Medigap policies because their states have different standards for Medigap policy benefits.

Medigap policies all come with varying premium rates and different companies will determine their premiums using different rating systems. The best way to figure out the cost of a Medigap program is to contact state health insurance departments to gain more information and compare the policies of several companies before deciding upon a Medigap plan.