Medigap
Medigap is another name for Medicare Supplement insurance, referring to private insurance policies that help fill the 'gaps' in Original Medicare coverage. These standardized policies help pay for out-of-pocket costs like deductibles, copayments, and coinsurance that Medicare Parts A and B don't cover. Medigap policies are regulated by federal and state law and must be clearly identified as Medicare Supplement insurance.
Example
“David's Medigap policy helped him avoid a $5,000 medical bill by covering the coinsurance that his Original Medicare didn't pay.”
Memory Tip
Remember 'Medigap fills the gap' - it covers the financial gaps that Medicare leaves between what it pays and what you owe.
Why It Matters
Medigap insurance provides crucial financial protection against potentially unlimited out-of-pocket costs under Original Medicare, which has no annual maximum limit on beneficiary expenses. This protection is especially important for people with chronic conditions or those who require frequent medical care.
Common Misconception
People often think Medigap policies include prescription drug coverage, but they don't - you need separate Medicare Part D coverage for medications. Another misconception is that you can enroll in Medigap anytime, when in reality, the best time to buy is during your six-month open enrollment period when you can't be denied coverage.
In Practice
Eleanor pays $140 monthly for her Medigap Plan F policy. During the year, she incurs $15,000 in medical expenses covered by Medicare Part B. Original Medicare pays 80% ($12,000), leaving her with 20% coinsurance of $3,000. Her Medigap Plan F pays this entire $3,000, plus her Part A and B deductibles totaling $1,687. She pays $1,680 annually in premiums but saves $4,687 in out-of-pocket medical costs.
Etymology
A portmanteau of 'Medicare' and 'gap,' coined to describe insurance that fills the coverage gaps left by Original Medicare, emphasizing its supplemental nature.
Common Misspellings
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