Medigap is a private insurance policy. This supplemental health insurance helps cover the costs that Medicare does not cover. A Medigap policy helps to pay a person’s share of cost on coinsurance, copayments, and/or deductibles.
According to a 2001 study done in five states, medical debt contributed to 62% of all personal bankruptcies. Most insurance policies, including Medicare, do not pay everything leaving out of pocket expenses for healthcare needs. A medicare recipient should have a good supplemental health insurance policy in order to help eliminate some of those costs.
In order to buy a Medigap policy a person must have Medicare Part A and Part B. Through a private insurance company, a monthly premium must be paid while still paying the monthly Part B premium paid to Medicare.
Most Medigap insurance companies sell a standardized policy, which has specific benefits for comparison. These companies may not offer every policy offered by Medigap, but they must offer Medigap Plan A if they offer other policies. It is important to shop around with different providers of Medigap and ask questions to ensure you get the best premium possible.
Medigap insurance only covers one person. If another person in the household receiving Medicare wants to purchase a policy they will have to buy a separate policy. Keep in mind that if any person has Medicare Part A then a Medigap policy A-N will cover 100% of other costs.
Each supplemental health insurance company may set the premium differently. How the price is set determines how much a person pays. Medigap supplemental health insurance is priced in one of three ways, community- or no-age-rated (generally the premium is the same to everyone, regardless of age), Issue- or entry-age-rated (premium based on age when purchasing the policy), and Attained-age rated (premium based on current age and goes up as a person gets older).