About Medigap Policies

A Medigap policy is a health insurance policy, sold by private insurers, that is available to people age 65 or older on Medicare. The purpose of a Medigap policy is to supplement Medicare or to fill in the gaps in coverage of Medicare Parts A and B. Medicare Parts A and B cover only about 80 percent of your health costs, and a Medigap policy will pay the other 20 percent.

Medigap Policies

• There are currently 12 types of Medigap policies available in most states, Plans A through L, and a series of benefits are offered by each plan. Plan A offers only basic benefits, while Plan J offers the most comprehensive benefits. Plans K and L differ from the others in that customers pay out-of-pocket for some portion of their costs until they reach the out-of-pocket limit.

Benefits

• All policies provide basic coverage that includes Part A co-insurance for inpatient hospital care, the cost of 365 extra days of inpatient hospital care, Part B co-insurance or co-payment, and the first three pints of blood each year. Additional benefits include skilled nursing care, Part A and Part B deductible, Part B excess, foreign travel emergency, at-home recovery and preventive care. At-home recovery and preventive care benefits are being discontinued in June 2010, and hospice care is being added. Some plans are being added and others eliminated at that time, as well.

When to Purchase

• The best time to buy a Medigap policy is during your open-enrollment period when you turn 65. Your open-enrollment period lasts for six months and begins on the first day that you turn 65 and have Medicare Part B. You must have Medicare A and B in order to purchase a Medigap policy. During your initial enrollment period, you can purchase any of the policies available in your state.

Creditable Coverage

• If you do not purchase a Medigap policy during your open-enrollment period and wish to purchase one later, the insurance companies may take your health status into account and may deny you coverage or increase your cost. If you are over 65 but you have had other coverage that is considered "creditable," meaning as good as or better than Medicare, you cannot be refused a Medigap policy based on a pre-existing condition.

Cost

• The cost of Medigap policies are set by the insurances companies that provide them and can vary greatly depending on where you live. Coverage is standardized, however, so all Plan F policies, for example, must offer identical services, regardless of cost. Policies have a monthly premium, but for most of them there are no additional costs. Some policies cost the same for all customers, regardless of age, and some are based on your age at purchase but do not increase as you get older, while others have an initially low premium that automatically increases annually.