Medigap Vs. Medicare Supplement

Medigap and Medicare Supplement insurance are private health insurance plans sold to senior citizens designed to "fill in the gaps" in Medicare coverage. Medicare plans are standardized across the industry. Insurance companies can only sell from a menu of pre-authorized plans, approved by the Department of Medicare. The terms "Medigap" and "Medicare supplement" are equivalent and interchangeable.

Overview of Medicaid

• Medicare is the federal program to provide basic health insurance to U.S. residents over age 65. It consists of four basic parts: Part A, which provides hospitalization services; Part B which covers physician charges and lab fees; Part C, or Medicare Advantage, which allows Medicare beneficiaries to access their benefits through a managed care network such as a health maintenance organization or preferred provider organization; and Part D, which covers prescription drugs. Part A is free; there is a premium for Part B, C and D.

Medicaid Deductibles

• To understand what Medigap policies cover, you must first understand the Medicare deductible and coinsurance system. As of 2011, if you are enrolled in Medicare with no other coverage, and you have a hospital stay, you will pay $1,132 out of pocket for the first 60 days in the hospital. You will pay $283 per day out of pocket when you stay longer than 61 days, and $566 per day for days 91 through $150. If you need skilled nursing care, you will pay $141.50 per day for days 21 through 100 for each qualifying benefit period. For services covered under Part B, you pay 20 percent out of pocket, once you have met the $162 deductible.

Medicare Advantage

• While Medicare supplement insurance and Medigap are the same thing, Medicare Advantage is different. While insurance companies must stick with the standard Medigap plans, companies are free to innovate, provided their coverage still meets minimum Medicare standards. Different Medicare Advantage plans may include broader access to preventive care services than those available with Medicare Part A and B or Medigap. Or they may provide more focused care for specific medical conditions. Some Medicare Advantage plans come bundled with prescription drug plans, and some don't. Premiums vary by your location and the type of plan. You must be enrolled in Medicare Part A and Part B in order to enroll in Medicare Advantage. Do not buy Medigap insurance if you have Medicare Part C, or Medicare Advantage. It will not work with Medicare Advantage.

Medigap Coverage

• Generally, Medigap helps cover your insurance deductibles and copays under Medicare. You can enroll in one of several different plans, designated A through N, each with a different mix of benefits and a different premium. Neither Medicare nor Medigap covers long-term custodial care, long-term visits in nursing homes, dental care, dentures, hearing aids or eyeglasses. For a more complete listing of Medigap plans and what they cover, download the guide "Choosing a Medigap Policy: A Guide for People with Medicare" (see Resources).