Medigap

When a patient enrolls in Medicare they have the option to choose either:

A Traditional Medicare plan - which is an 80/20 plan. Medicare pays 80% of the Medicare allowed amount and the patient is responsible for paying 20% of the Medicare allowed amount.

OR

A Medicare Managed Care plan - which could include a wide range of variations in plan designs. Most Medicare plans are HMO, PPO or FFS plans where reimbursement could range from being paid in full, after a copay, (like an HMO plan) to 80% or less (like a PPO plan).

Some Medicare patients (called beneficiaries) may choose not to enroll in a managed care plan in spite of the possible higher level of reimbursement and the lower out of pocket costs, for a lot of reasons:

  • Maybe the provider that they love and trust is not part of the managed care network.
  • Maybe the costs for a managed care plan are too high.
  • Maybe they refuse to surrender their right to choose the providers they want to see.

Whatever the reason, quite a few Medicare beneficiaries still choose Medicare traditional plans.

Medigap polices, also called Medicare Supplemental Plans, were designed for this group of Medicare beneficiaries as a way to prevent them from incurring financial hardship due to the 20% portion deemed to be patient responsibility. Medigap policies are a second health plan that can be purchased to help bridge that gap in coverage.

The Medigap plan will pick up 20% of what Medicare allows, leaving the patient, in most cases, with a little more than the plan deductible to pay out of pocket. Some Medigap plans will even pick up the plan deductible.

In a nutshell, Medigap is…

  • Private insurance coverage that is offered to Medicare beneficiaries who have Part A (hospital) and Part B (professional).
  • Coverage which can be purchased from any insurance carrier that is licensed in the state. 
  • Coverage with a separate premium to the insurance carrier that must be paid in addition to the Part B premium.
  • A policy that cannot be canceled as long as the premium is paid; even if the beneficiary has serious health problems.
  • A plan that will kick in after Medicare pays and may provide reimbursement for the deductible and 20% coinsurance that is not paid for by Medicare.
  • A big plus for beneficiaries that choose the traditional Medicare plans, as it will severely limit the money that seniors will have to pay out of their pocket for healthcare.
  • A plan that may not be necessary for beneficiaries that choose one of the managed care plans because managed care plans are designed to limit a patient’s out of pocket expense as long as in-network providers are used.
  • Available in 10 different plan types and are designed to provide a wide range of coverages including: basic medical, preventative, hospital or skilled nursing, to name a few. The beneficiary can pick the Medigap plan that best fits their needs.
  • Not mandatory. A Medicare beneficiary may choose to enroll in a traditional Medicare plan, forgo the Medigap plan and just pay the 20% out of pocket. It is totally up to the Medicare beneficiary to decide.

 

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