Medigap was born out of a need to help Medicare eligible individuals with financial struggles cover the extra costs that Medicare often does not cover. The policies that help cover those extra costs are called Medicare Supplemental Insurance, but are often referred to as Medigap plans because they cover the “gaps” in Medicare coverage.
Medigap’s purpose is to help Medicare beneficiaries pay the extra out of pocket costs for health services that are not covered under Medicare. These extra costs include Medicare Part A and Part B deductibles, Part B premiums, co-insurance costs for stays in the hospital, hospice, or skilled nursing facility, and other co-payments. While Medigap exists to help with these extra costs, its coverage comes with a monthly premium for the service.
Even though Medicare is widely available to senior citizens 65 years of age or older, individuals with End Stage Renal Disease, and those suffering from Lou Gehrig’s disease (known as ALS) are also eligible. However, Medigap coverage is not available to all individuals who have Medicare coverage. Individuals who fall into the following categories are not eligible for Medigap policies:
- Individuals with a Medicare Advantage Plan (also known as Medicare Part C)
- Individuals with Original Medicare and an employer group health plan or union coverage
- Individuals with Original Medicare and a Medicare SELECT plan
Individuals in the information above are not permanently prevented from having Medigap coverage. Those with a Medicare Advantage plan who decide to switch to Original Medicare after less than one year have a guaranteed right to a Medigap plan. After the one year period, Medigap providers may deny those individuals with coverage. Beneficiaries using Original Medicare who have an employer group health plan or union coverage that covers Medicare’s gaps can only purchase Medigap coverage if they no longer have their employer group health plan or union coverage. Lastly, Original Medicare users with a Medicare SELECT plan may only purchase a Medigap plan if they move out of the designated area where their SELECT plan offers coverage.
Medigap coverage can be purchased by eligible individuals during their open enrollment period which is defined as the first 6 months after an individual turns 65 years old. The period begins on the first day of the month in which a beneficiary turns 65. Additionally, individuals who are over 65 and wish to enroll for Medigap coverage must also be enrolled in Medicare Part B in order to have a Medigap program. During this open enrollment period Medigap providers can’t use medical underwriting procedures to deny an application for coverage. This means that providers can’t do any of the following:
- Refuse to sell their Medigap policies to eligible individuals
- Force individuals to wait for their Medigap coverage to begin
- Make an individual pay more for a Medigap policy based upon health problems
Although individuals who apply during their open enrollment period will generally face no problems in attaining Medigap coverage, those with pre-existing health problems could face a coverage delay for their particular problem. Their Medigap coverage will begin on time, but coverage of the pre-existing condition may be delayed up to six months, after which point Medigap will cover everything for the individual.
It is in the best interest of Medigap eligible individuals to apply for coverage during their open enrollment period because of the protection it offers individuals from being denied coverage. If individuals apply for Medigap coverage after their open enrollment there is no guarantee that plan providers will allow them to purchase a policy.
Medigap plans have proven beneficial in helping millions cover the out of pocket costs associated with Medicare coverage. However, Medigap plans have proven beneficial in helping millions cover the out of pocket costs associated with Medicare coverage. However, since not everyone is eligible for Medigap coverage it is important to learn about the details of Medigap eligibility and the coverage it offers to determine if purchasing the extra coverage is necessary.