Medicare began about 45 years ago; when it was first conceived of, the system was never planned for the kind of complete health care coverage it has come to mean today. And yet today, Medicare takes care of just barely half of all healthcare costs that elderly people need help with. What is it that they’re supposed to do for the shortfall? That’s where Medigap insurance comes in. As the name would suggest, Medigap is supposed to fill the gap in medical coverage that elderly people suffer at this time. Whatever you have to pay on your own that Medicare A and Medicare B don’t take care of – the 20% co-payments for visits to a physician, or the deductible for hospitalization for instance Medigap steps in.
Medigap was first launched in 1992. The policies that Medigap provides, are actually issued through and and administered by private insurance companies. This isn’t a standardized healthcare system though – the policies each company issues cost different kinds of premiums even though your benefits are always the same. So if you have a parent whose medical needs are not adequately covered by Medicare A, Medicare B, what do you do? You either get Medicare Advantage, or Medigap insurance.
The government has rules for what each Medigap insurance policy absolutely has to cover. There are about 12 of them – named from plan A through Plan L. No matter which company you get it through, each plan is always the same everywhere. There may be certain minor administrative differences though – like for a policy on how to raise premiums over time. Here are the areas you need to think about before you make your choice.
If your parent travels overseas sometimes, Medicare is no use outside the country. Medigap insurance comes in here; plans C through J can easily cover for medical expenses while overseas. If your parent has a serious and expensive health condition, plans K & L are really good ideas. They only pay up to 75% of the health expenses involved; but that’s only as long as your expenses are under $4600 a year; once you hit that mark, no matter what your your health care needs, Medigap will pay all of it.
If you want coverage for doctor’s fees (Medicare plays only 85%), Medigap will do the job for you. But sometimes, considerate doctors will accept the 85% as their full fee if you don’t happen to have Medigap. There are some Medigap policies called Medicare Select. They work like regular health insurance: they’ll accept responsibility for full costs if you go to a network hospital, and a reduced amount if you go outside. Since these plans give you your coverage with constraints, you pay less. If you have a parent who has a regular doctor who is network-affiliated, this could be a great choice.
Medigap insurance plans come with a pre-existing illness exclusion. There is a way around this though – higher premiums. You just need to find out what Medigap plans are available in your state, and get your parents enrolled as soon as possible. In some cases, if you wait too long, they could be denied certain kinds of coverage.