Medicare is estimated to cover less than 50 percent of beneficiaries' total health care costs. These "gaps" in coverage combined with high cost-sharing requirements resulted in seniors spending an estimated 22% of their income on health care services and premiums in 2003. (AARP, 2004).

Based on these figures, it makes sense that nine out of ten Medicare beneficiaries rely on supplemental coverage to fill in these gaps and protect themselves from these substantial costs. Some 10 million beneficiaries have done so through the purchase of Medicare supplemental insurance policies and Making the Medigap Choice.

Why Choose Medigap?

If you are an Original Medicare beneficiary experiencing these gaps in coverage, a Medigap policy can help you lower your out-of-pocket costs and increase your health insurance coverage. Some Medigap policies also cover other extra benefits not covered under Medicare, such as routine yearly check-ups, Medicare Part B excess charges (the difference between your doctor's charge and the Medicare-approved amount) and foreign travel emergency health care expenditures. Medigap policies sold before January 1, 2006, may also include prescription drug coverage. For a more detailed review of benefits covered under each Medigap plan, click here.

Understanding Medigap and Medicare Part D

The passage of the Medicare Modernization Act of 2003 (MMA) brought many changes to the Medicare program, most notably the addition of Medicare Part D. Part D refers to the outpatient prescription drug benefit that Medicare began offering in January 2006.

MMA also made changes that affect Medigap policies that include prescription drug coverage:

• As of January 1, 2006, you will no longer be able to purchase a new Medigap policy that covers prescription drugs. You must enroll in Medicare Part D or use other supplemental insurance or benefits to cover the cost of prescription drugs.

• If your current Medigap policy covers prescription drugs, you have a choice to make. You should read the information provided by your Medigap insurer that tells you how your Medigap policy's prescription drug coverage compares to Medicare prescription drug coverage. You need to decide by May 15, 2006 which drug option meets your needs, or you may be subject to a late enrollment penalty if you decide to enroll in Medicare Part D.

Tell Your Friends About Making the Medigap Choice

You can help spread the word about the changes in Medigap plans that may benefit your friends and family. Tell them how they can learn more about their Medicare options.