Medigap policies - or Medicare Supplemental Insurance - are private insurance policies purchased by individuals to fill the "gaps" in traditional Medicare plan benefits.  Medigap helps you lower your out-of-pocket costs for such services as hospital and physician services, as well as Medicare co-payments and deductibles.  It also helps millions of seniors to better manage their healthcare expenses with predictable monthly premiums instead of cost-sharing responsibilities that can vary significantly from month-to-month. 

Almost 90 percent of Medicare beneficiaries have some form of supplemental coverage.  Of those, about 20% have individually purchased Medigap policies.  Other sources of supplemental coverage include Medicaid and employer retiree plans.

Standard Plans

There are now 11 standard Medigap plans:  A, B, C, D, F, F with a high deductible, G, K, L, M and N.  Plan A consists of the core benefits alone; plans B through N contain additional benefits such as coverage of at-home help and physician charges in excess of Medicare's approved amounts; and plans K, L, M and N provide fewer benefits at lower premiums than Medigap plans A through J. 

Insurers may offer some or all of these Medigap plans; but they are not allowed to vary the benefit configurations within each plan. There are three states - Massachusetts, Minnesota and Wisconsin - where this requirement has been waived.

Guaranteed Access

Federal law requires that seniors are given a six-month open enrollment period to purchase any Medigap policy when they first enroll in Medicare Part B.  During this period, Medigap insurers may not deny coverage to applicants or adjust premiums based on health status.  Insurers are also required to guarantee that they will issue policies to first-time Medicare Advantage enrollees who disenroll within 12 months and to those beneficiaries who lose coverage (under specified circumstances).

Consumer Protections

Medigap insurers must meet federal and state requirements.  States are responsible for assuring that Medigap policies comply with these rules, and the U.S. Department of Health and Human Services has the authority to review state enforcement policies.  Federal and state Medigap laws apply only to individually sold Medigap policies; employer-sponsored policies are not subject to these rules.

Premiums

Medigap premiums vary by insurer, area of the country and benefit package selected.  Medigap premiums may increase each year for several reasons, including the steady rise in Medicare and health care expenses.  Most Medigap packages cover Medicare Part A deductibles, and all packages cover at least some of the 20 percent Medicare Part B coinsurance amounts.