Medigap

Medigap is a supplemental insurance policy for Medicare beneficiaries. Medigap policies are sold by private insurance companies to fill "gaps" in the Original Medicare plan coverage. Many of these policies cover such services as prescription drugs, among other things. Medigap policies must follow federal and state laws. These laws protect you. The front of the Medigap policy must clearly identify itself as "Medicare Supplement Insurance."

What type of policy is Medigap coverage?

In all states, except Massachusetts, Minnesota, and Wisconsin, a Medigap policy must be one of ten standardized policies so you can compare them easily. Each policy has a different set of benefits. Two of the standardized policies may have a high deductible option. In addition, any standardized policy may be sold as a "Medicare SELECT" policy. Medicare SELECT policies usually cost less because you must use specific hospitals and, in some cases, specific doctors to get full insurance benefits from the policy. In an emergency, you may use any doctor or hospital.

Do I need to buy a Medigap policy?

Medigap policies help pay health care costs only if you have the Original Medicare Plan (also called a fee-for-service plan). Whether you need a Medigap policy is a decision that only you can make. Depending on your health care needs and finances, you may decide that a Medigap policy is right for you. Calling around to private health insurance companies will help you to make the best decision. Be sure to find out what will be included in your Medigap policy and how much it will cost per month before you decide to purchase the coverage.

If you apply for a Medigap policy within the first six months of eligibility for Medicare coverage or within the first six months after purchasing Medicare Part B coverage, you cannot be turned down for Medigap because you have a chronic illness. If you wait longer than six months before purchasing a Medigap policy, you will have to pass medical underwriting in order to qualify. Individuals with chronic conditions may find it rather difficult to pass medical underwriting.

What if I am not enrolled in the Original Medicare plan, but in Medicare+Choice or Medicaid? Should I purchase a Medigap policy?

You do not need to buy a Medigap policy if you are in a Medicare+Choice plan or on Medicaid. A Medicare+Choice plan is, essentially, a Medicare HMO policy-enrollees are assigned a primary physician. It is illegal for anyone to sell you a Medigap policy if they know you are in a Medicare+Choice health plan. Additionally, if you have Medicaid, it is generally illegal for an insurance company to sell you a Medigap policy except in certain situations.

How will Medigap policies change over the next few years?

As of January 1, 2006, you can no longer buy Medigap policies that cover prescription drugs.  This is because Medicare is offering prescription drug coverage through the new Part D Prescription Drug Benefit. If you would like information on the new Part D Prescription Drug Benefit, please refer to our health insurance web page devoted to Medicare.

If you already have a Medigap policy that covers prescription drugs, you may be able to keep it.