Medicare (search)
is a national health insurance program for people 65 years of age and older,
certain younger disabled people, and people with permanent kidney failure. The
Health Care Financing Administration runs Medicare. It is helped out by the
Social Security Administration (search), which enrols people and collects Medicare premiums.
Although Medicare covers many health care costs, you still have to pay Medicare's
co-insurance and deductibles. There are also many medical services that
Medicare will not cover. Medicare supplemental insurance, also known as
a Medigap (search) policy, provides reimbursement for the out of pocket costs that are not covered by Medicare and which are the responsibility of the beneficiary.
Before you start shopping, decide if you really need to buy a Medigap policy.
If your income is low enough, you may qualify for Medicaid (search) or some other local program that will plug the gaps that aren't covered by Medicare. Check with your local welfare or public assistance office.
Also, find out if you're entitled to coverage through your former employer. Retirees may qualify for group health insurance coverage that supplements Medicare. Always check the cost and coverage provided.
If you decide you want and need a Medigap policy, decide which plan is right for you before you visit with an insurance agent. For example, if “Plan A” meets your needs, don't let the salesperson talk you into a more expensive plan. As with any insurance policy, it pays to shop around for the best price. There are many online services that will provide a comparison of prices for Medicare supplemental insurance policies and you will find the prices vary a great deal. Your state insurance department or your state's department of aging may also be able to provide price comparisons for the policies available. Each state also has a federally funded program that lets Medicare recipients know their options about health care and Medigap insurance.
Medigap insurance is specifically designed to supplement Medicare’s benefits and it is regulated by federal and state law. It must be clearly identified as Medicare Supplement insurance and it must provide specific benefits that help fill in the gaps in Medicare coverage.
Medigap Premiums: Although the benefits are identical for all Medigap plans of the same type, the premiums may vary greatly from one company to another and from area to area. Insurance companies use three different methods to calculate premiums: issue age, attained age and no age rating.
Guaranteed Renewable: All standard Medigap policies are guaranteed renewable. This means that the insurance company cannot refuse to renew your policy unless you do not pay the premiums or you made material misrepresentations on the application.
Older Medigap Policies: Many federal requirements do not apply to Medigap policies sold before 1992, which is when Medigap was standardized. There is generally no requirement that you switch to one of the standard plans if you have an older policy. However, you may be required to switch if your older plan was not guaranteed renewable and the company discontinues the type of policy you have. Check with your state insurance department if you have questions about the state-specific requirements in force.
