Understanding Medigap

Medicare supplement (medigap) insurance isn't widely understood, and some feel that it's unnecessary or that it's too expensive. Are these criticisms fair?

Medigap, or Medicare supplement insurance fills in many of the gaps in Medicare Part A and Medicare Part B.

Medicare A covers hospital stays, some ongoing outpatient procedures (such as dialysis), and convalescent care in a nursing home. Most people are automatically enrolled as soon as they turn 65, and will pay no premium for Medicare Part A. There is an annual deductible, and also a copay (but only for extended nursing home care.)

Medicare B covers doctor's visits, lab tests, some drugs (such as immuno-suppressants), and some medical equipment. Unlike Medicare Part A, there is a premium and a copay for all covered charges.

Medigap or Medicare supplement insurance provides coverage of these gaps. There are 12 different types of medigap coverage. These plans, defined by the government, provide greater or less coverage of the co-pays and deductibles in Parts A & B.

Medigap plans do not cover the gaps in Medicare drug coverage, and you cannot have a medigap plan along with a Medicare Advantage plan.

All medigap plans cover the Part A copay and Part B expenses after meeting a small deductible.

Additional benefits, including foreign emergency medical care are included in these plans.

So, why should you consider a medigap plan?

Simple. Once you retire, you're living on a fixed income. A medigap plan gives you fixed medical expenses from year to year.

Why take the risk of running up hefty bills for doctor's visits, labs and other expenses? Unlike most health insurance plans, there is no maximum out of pocket expense for Part B or Part A stays in nursing homes.

Medigap plans provide peace of mind, the comfort of knowing how much you're going to spend on health care in a year.

More than that, some medigap plans pay for preventative health care (not covered by medicare), additional care in the home not covered by Medicare, and additional nursing home care.

Even if you've never filed a claim on your auto insurance, it makes sense to carry it because you don't know what will happen in the future. Medigap insurance is the same way. You may have been healthy for years, but it doesn't take long for even a simple straightforward health problem to rack up charges well in excess of what you'd pay in medigap premiums over a year.