Medicare Supplements, also known as Medigap Policies, work alongside original Medicare and can help absorb an assortment of costs and fees that you would otherwise be responsible for out-of-pocket. These amounts can include co-payments, coinsurance, and deductibles. Since Original Medicare has no out-of-pocket maximum for participants, a significant health event can lead to costs that are catastrophic, and Medicare Supplement Plans can shield you from incurring these charges.
Some Medigap policies also cover services that Original Medicare does not cover at all, such as travel outside of the United States. If you have Original Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for covered health care costs. Then your Medigap policy pays its share.
Medicare Supplement policies can be extremely beneficial, but they work according to a very specific set of rules. They are not, for example, able to cover dental, vision care, long-term care, hearing aids, eyeglasses, or private-duty nurses. Here are several more of important factors to be aware of regarding Medigap Policies:
1. You must have Medicare Part A and Part B.
2. If you have a Medicare Advantage Plan, you can apply for a Medigap policy, but make sure you can leave the Medicare Advantage Plan before your Medigap policy begins.
3. You pay the private insurance company a monthly premium for your Medigap policy in addition to the monthly Part B premium that you pay to Medicare.
4. A Medigap policy only covers one person. If you and your spouse both want Medigap coverage, you'll each have to buy separate policies.
5. You can buy a Medigap policy from any insurance company that's licensed in your state to sell one.
6. 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.
7. 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).
Medicare Supplement plans that pay the Medicare Part B deductible will no longer be sold to those newly eligible. This change is part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).