Medigap Plans
Medigap refers to various private supplemental medical insurance plans sold to Medicare
recipients' in the USA that provide coverage for medical expenses not or only partially
covered by Medicare.
Medigap's name is derived from the notion that it exist to cover the difference or
"gap" between the expenses reimbursed by Medicare and the total amount charged. As of
2006, 18% of Medicare beneficiaries were covered by a Medigap policy
Eligibility:
A person must be enrolled in part A and B of Medicare before they can enroll in a
Medigap plan. During the open enrollment period which begins within 6 months of turning
65 or enrolling in Medicare Part B at 65 or older, a person may obtain a Medigap plan
on a guaranteed issue basis (i.e. no medical screening required). Outside of open
enrollment, the issuing insurance company may require medical screening and may obtain
an attending physician's statement if necessary. Medigap insurance is not compatible
with other forms of private Medicare coverage, such as a Medicare Advantage plan.
Products available:
Medigap offerings have been standardized by the Centers for Medicare and Medicaid
Services (CMS) into twelve different plans, labeled A through L, sold and administered
by private companies. Each Medigap plan offers a different combination of benefits. The
coverage provided is roughly proportional to the premium paid. However, many older
Medigap plans offering minimal benefits will cost more than current plans offering full
benefits. The reason behind this is that older plans have an older average age per
person enrolled in the plan, causing more claims within the group and raising the
premium for all members within the group. Since Medigap is private insurance and not
government sponsored, the rules governing the sale and offerings of a Medigap insurance
policy can vary from state to state. Some states such as Massachusetts, Minnesota, and
Wisconsin require Medigap insurance to provide additional coverage than what is defined
in the standardized Medigap plans. Some employers may provide Medigap coverage as a
benefit to their retirees.
Drug coverage:
Some Medigap policies sold before January 1, 2011 may include prescription drug
coverage, but after that date no new Medigap Plans could be sold with drug coverage.
This time frame coincides with the introduction of the Medicare.
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