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What's Medigap coverage?

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If you're shopping for a Medicare plan for the first time or thinking of changing your current plan, this explains one of your options: Medicare supplement insurance, also called Medigap.

Medigap plans have been around almost as long as Medicare. They're sold by health insurance companies like us. They help people pay for their share of the costs for health care services covered by Medicare. Those costs include:

  • A set amount called a deductible you pay before Medicare starts paying. Medicare has two deductibles: one for Part A hospital services, and one for Part B medical services.
  • After you meet your Part A deductible, Medicare pays your expenses for the first 60 days you're in the hospital. Then you start paying $304 per day (in 2014). That amount increases the longer you're in the hospital.
  • After you meet your Part B deductible, Medicare pays 80 percent of your costs for most services. You pay the other 20 percent.

So your costs can really add up. That's where a Medigap plan can help. It'll pay your 20 percent coinsurance. It'll pay for your hospital expenses. Some Medigap plans pay one or both of your deductibles. Some will pay for emergency care you need outside of the U.S.

How it works

Generally, before you can buy a Medigap plan, you have to be at least 65 and enrolled in Original Medicare Part A and Part B.

You apply for a Medigap plan offered by a health insurance company. Medigap plans only cover one person, so if you and your spouse both want Medigap coverage, you'll each need a plan. It doesn't have to be the same plan.

Budget basics

You'll have up to three monthly payments:

  • Your Medicare Part B premium. Most people have this taken out of their Social Security check.
  • Your Medigap plan premium you pay to your health insurance company.
  • Medigap plans sold after 2006 don't include Part D prescription drug coverage. If you don't have drug coverage from another source that meets certain standards, you'll need a Part D plan. You'll likely have a premium for that too.

When you need care

With most Medigap plans, you can go to any doctor or hospital that accepts Medicare. You'll give them your Medicare card and your Medigap plan ID card.

Original Medicare will pay its share. Your Medigap plan will pay your share of the costs, depending on what the plan covers. It may also coordinate payment with Medicare and your health care providers. That means you won't have to bother with claim filing or paperwork.

Your Medigap choices

The government decides which Medigap plans health insurance companies can offer. There are 10 different plans: A, B, C, D, F, G, K, L, M and N. Each one pays the same amount for the same services, no matter which health insurance company is selling it. There are two main differences:

  • Which plans a company offers. But all companies that sell Medigap plans have to offer Plan A.
  • What the company charges for their Medigap plans.

You can learn more about Medigap plans and how they compare to each other using this chart. You can also read this Medigap buyer's guide (PDF).

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