MEDIGAP OR MEDICARE SUPPLEMENT PLANS
Medigap policies (also known as Medicare Supplement policies) are health
insurance plans sold by private insurance companies to fill gaps in Original
Medicare coverage. One very positive
aspect built into Medigap coverage is that the plans themselves were
“standardized” with specific benefits so that it could be easy to compare. These standardized plans ranged from
Plan A to Plan L, with the most popular being a Plan F.
Because the plans were standardized, a Plan F with one company has to have
EXACTLY the same benefits as a Plan F with any other company. Medicare also established standards
for claims payments so that the service from any one company should be
comparable to the experience with all other companies.
Since the benefits are standardized and the claims service is monitored by
Medicare itself, the key differences a consumer would need to pay attention to
- The financial stability of the private insurance company, and
- The monthly premium.
As a general rule, the first factor above can significantly affect the second,
either positively or negatively.
Companies in financial trouble may raise rates more often and in higher amounts
or could even go out of business.
Fortunately, if that last happens, Medicare provides a Guaranteed Issue option
to purchase any other company’s plan as long as application is made within the
63 days after the other coverage ends (see our articles relating to Guaranteed
Issue for more details).
In many respects, the purchase of Medigap policies compares to the purchase of
automobile insurance. You pick the
benefits you want, get quotes from 5 companies, and you will find 5 different
rates, sometimes covering a great range of prices for the same benefits. In the same way, there can be 100s of
dollars a month difference for the same Plan F Medicare Supplement, depending on
what each company charges. It
literally pays to compare rates.