Medicare insurance coverage may seem like a godsend to senior citizens who are struggling to find affordable health care, but at times the program does not provide individuals with all the benefits they need. The goal of Medicare when it was developed in 1965 was to provide senior citizens and certain individuals with disabilities to have affordable health care coverage. Skyrocketing medical costs however have created gaps in the coverage Medicare provides, resulting in beneficiaries having to pay large sums out of pocket to cover their costs.
The plan devised to make up for these differences, or gaps, in coverage was called Medigap supplemental insurance. These gaps in coverage occurred when the cost of a beneficiary’s medical attention exceeded the amount that Medicare was willing to reimburse. Now, Medicare beneficiaries can purchase Medigap supplemental insurance plans in addition to their Medicare Part A and B coverage to help close the gaps that their original Medicare does not cover.
Eligibility for Medigap supplemental insurance is similar to those standards set for Medicare. The following individuals are eligible for Medigap plans:
- Senior citizens over the age of 65 who are U.S. citizens
- Legalized U.S. citizens over 65 who have lived in the country at least 10 years
- Individuals suffering from ALS or Lou Gehrig’s Disease
- Individuals suffering from End Stage Renal Disease (kidney failure)
There is one caveat to eligibility based upon these standards. Only individuals from the above groups who collect their Medicare benefits through Medicare Part A and Part B are eligible for Medigap supplemental insurance. Those individuals, who collect their Medicare benefits through a Medicare Part C plan, or Medicare Advantage Plan, are eligible for Medigap coverage.
The Centers for Medicare and Medicaid Services (CMS) regulates Medigap supplemental insurance plans and dictates what the plans must cover. However, the CMS contracts out to private insurance companies the administration of these programs. So, individuals in search of a Medigap plan need to contact private insurance companies in their state to determine what plans are available in their area. No company is required to provide all the Medigap plans that are available from the CMS.
There are currently 10 Medigap supplemental insurance plans available for purchase. The plans are labeled by letters with the current plans including Plans A through D, Plan F and G, and Plans K through N. Each of the plans have different coverage levels, with Plan A offering the least amount of extra coverage (at the lowest cost) and Plan N offering the most extra coverage (with the highest premium).
Individuals searching for a Medigap supplemental insurance plan need to consider several factors in their quest for extra coverage. These factors include:
- Pricing Strategy: Medigap providers use three pricing plans (Community Rated, Issue Age Rated, and Attained Age Rated) to set premium amounts for the various plans.
- Extra Coverage provided: All Medigap plans provide three basic benefits, but after that each plan has unique coverage amounts.
- State of Residence: Massachusetts, Minnesota, and Wisconsin have different policy set ups, providing extra benefits compared to similar plans in other states.
- Long Term Budgets: Keep future income and assets in mind when choosing a plan as you may have it for many years to come. Make sure you can afford the plan as comfortably in the future as you can in the present.
- Doctor Charges: Some doctors will charge up to 15% over Medicare covered costs, which is left to the patient to pay. Some plans cover this and others do not. Those with frequent visits may find a plan with this coverage worth the high premium to avoid higher out of pocket costs.
- Foreign Travel: Those who travel outside of the U.S. frequently need to be aware that Medicare DOES NOT cover any medical costs incurred outside the U.S. Six Medigap policies offer foreign medical expense coverage.
Medigap supplemental insurance can be a vital tool in helping senior citizens avoid paying sky-high out of pocket costs for their medical coverage. Those with chronic and/or serious conditions may find a Medigap policy particularly useful. Some of Medigap’s higher plans have out of pocket caps, meaning that once an individual reaches a certain amount; their Medigap policy pays 100% of their costs after that. Such a policy can provide great comfort to those with serious conditions that could otherwise become financially disastrous for themselves and their family.