DEFINITION of 'Medigap'

Also called Medicare Supplement Insurance, Medigap is health insurance coverage provided by private companies designed to cover excess costs not covered by original Medicare.

 

BREAKING DOWN 'Medigap'

Original Medicare, defined as parts A, B, and D, will not cover all expenses associated with an illness. Under original Medicare you would pay 20% of the cost of doctor visits and medical procedures regardless of the amount, a significant portion of your prescription medications, and at least $1,200 if admitted to a hospital. See Medicare 101: Do You Need All 4 Parts?

Medigap covers all or a portion of those extra charges depending on the coverage type. Although private insurance companies offer the coverage, the federal government requires companies to offer standardized policies. Your choices are Plans A, B, C, D, F, G, K, L, M and N.

What Medigap Covers

According to Medicare.gov, "You pay the private insurance company a monthly premium for your Medigap policy. You pay this monthly premium in addition to the monthly Part B premium that you pay to Medicare. A Medigap policy only covers one person. If you and your spouse both want Medigap coverage, you'll each have to buy separate policies. You can buy a Medigap policy from any insurance company that's licensed in your state to sell one. Any standardized Medigap policy is guaranteed renewable even if you have health problems. This means the insurance company can't cancel your Medigap policy as long as you pay the premium.

Some Medigap policies sold in the past cover prescription drugs. But, Medigap policies sold after January 1, 2006 aren't allowed to include prescription drug coverage. If you want prescription drug coverage, you can join a Medicare Prescription Drug Plan (Part D)."

Medigap policies generally don't cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing.

"The best time to buy a Medigap policy is during your 6-month Medigap open enrollment period. During that time you can buy any Medigap policy sold in your state, even if you have health problems. This period automatically starts the month you're 65 and enrolled in Medicare Part B (Medical Insurance). After this enrollment period, you may not be able to buy a Medigap policy. If you're able to buy one, it may cost more," According to Medicare.gov.

Shopping for Medigap coverage is easier because you only have to compare price and the suitability of the company. For more information, see Medigap Vs. Medicare Advantage: Which Is Better?

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