Medigap Policies for Seniors on Medicare

Medicare is a welcome benefit for seniors 65 and over. It is a classic example of affordable health care. However, many of the factors making Medicare affordable translate to "holes" or "gaps" in coverage. Medigap insurance fills these gaps for those with Medicare. Unlike Medicare, provided by the U.S. government, private insurance companies offer Medigap coverage. Medigap offers you various coverage plans in contrast to Medicare, which uses a one-size-fits-all structure.

Basic Medicare Coverage

• Medicare offers two primary and complementary plans -- Part A and Part B. Part A coverage is free to U.S. citizens reaching age 65. Part B expands coverage for around $100 per month. Seniors collecting Social Security monthly benefits have the Part B premium deducted from their monthly payment for convenience. Private insurers offer Medicare Part C, which improves on Parts A and B. Prescription drug coverage is Part D. Parts C and D are optional and come with monthly premium payment requirements.

Medigap Eligibility

• You must have Medicare Parts A and Part B to be eligible for Medigap insurance. Since Medigap fills the coverage holes of both Medicare primary plans, you need both A and B to get full benefits. The U.S. government mandates that you have Parts A and B to avoid overlapping insurance, allowing each program to pay its claims easily.

Medigap Options

• All private insurance companies selling Medigap must offer standardized coverage. By offering identical specific benefits, you can more easily compare coverage and costs, as premium expenses can vary from company to company. However, you may choose various levels of standardized coverage, depending on your budget and the number of plans individual companies offer. Once you understand the Medigap coverage levels, you can then compare costs knowing that the levels offer identical coverage.

Medigap Coverage Basics

• Medigap helps pay your portion of Medicare deductibles, co-payments and co-insurance. Many services covered by original Medicare require co-insurance, which can become expensive. Most co-insurance follows the classic "80-20" rule. For example, if you have a covered service costing $1,000, Medicare Parts A and B pays $800, but you must pay the remaining $200. Medigap will pay part or all of this out-of-pocket cost, depending on the plan level you've chosen. Some Medigap policies cover some services that Medicare does not, improving their value. Always remember, like Medicare, all Medigap plans are for individuals only. There is no spousal coverage option, unlike most private health insurance policies. Medicare-eligible spouses must secure their own Medigap policies.

Changes in Medigap Options

• Historically, Medigap offered up to 12 plan choices, titled A through L. As of 2010, Medigap added two more plans -- titled M and N -- which offer additional options. However, after May 2010, plans titled E, H, I, and J, were no longer available to new customers. If you purchased one of these programs before May 2010, you can keep your plan if you wish.