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Comparison of Medicare and Medigap

Medicare covers people over 65 and people with certain disabilities. There are four parts to Medicare (Parts A-D) that cover different areas of health care. Medigap is a supplemental insurance sold by private companies to address gaps in Medicare coverage.

  1. Medicare

    • Congress established Medicare by passing the Social Security Act of 1965. Medicare is funded by payroll taxes, patient co-pays and premiums, interest on Medicare trust funds and general revenue. Under the 2010 health care bill, Medicare will start a program where payments are based on quality of services, rather than quantity, and raise payroll taxes on those making over $200,000 in 2013. In 2014, Medicare will expand to include people making 133 percent of the poverty level or less.

    Parts

    • Medicare benefits are split into four parts. Part A covers hospitalization and other in-patient care, while Part B covers services and treatment such as doctor visits. Part C is an advantage plan, which includes Part A and Part B as well as extra benefits. Part D helps with prescription drug costs. Beneficiaries choose either original Medicare (A and B) or the advantage plan, and can then elect to add Part D. If the beneficiary needs services not covered by these plans, they can select a Medigap plan.

    Medigap

    • Medigap policies are sold by private companies, but the benefits of the plan are set out and regulated by Medicare (in Massachusetts, Wisconsin and Minnesota, plans are standardized differently). There are 14 Medigap plans, labeled A through N.

    Benefits

    • Different Medigap plans offer different benefits. Medicare standardizes the benefits, so the difference between plans is cost. The benefits covered by Medigap plans include hospice, skilled nursing care, blood transfusions, coverage for costs past Plan A and Plan B excess charges, emergency travel and at-home recovery. Please see the table on page 13 of the Medicare publication "Choosing a Medigap Policy" for a full explanation of which plans cover what.

    Medigap and Healthcare Reform

    • One of the provisions of the 2010 health care bill is that Medigap recipients will receive a $250 rebate on their Medigap plan expenses, effective immediately. By 2011, Medigap recipients will receive a 50 percent discount on select drugs.

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