Medigap policies - or Medicare Supplemental Insurance - are private insurance policies that fill the "gaps" in Original Medicare Plan benefits. Medigap helps you lower your out-of-pocket costs for such services as hospital and skilled nursing facility stays, as well as Medicare co-payments and deductibles.

Almost 90% of Medicare beneficiaries in the traditional fee-for-service program have supplemental coverage. About 68% of beneficiaries have private coverage and 18% have Medicaid. Of those with private coverage, about one-half have individually purchased Medigap policies, and the other half receives these benefits as part of their employer retiree plans.

Standard Plans

With the passage of the Medicare Modernization Act of 2003 (MMA), there are now twelve standard Medigap plans labeled A through K. Plan A consists of the core benefits alone; plans B through J contain additional benefits such as coverage of at-home help and physician charges in excess of Medicare's approved amounts; and plans K and L (newly created under MMA) provide fewer benefits at lower premiums than Medigap plans A through J. There are also high deductible options for plans F and J. For a more detailed review of benefits covered under each standard plan, click here.

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 6-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. Under Medicare Modernization Act of 2003 (MMA), insurers are also required to guarantee that they will issue policies to 1st-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.

In addition to the standard benefit packages and 6-month open enrollment period that Medigap insurers are required to offer, insurers must comply with the following federal rules:

• Marketing - No Duplication
  Insurers cannot sell a Medigap policy to someone who already owns one.
  
  
• Guaranteed Renewable
  Your Medigap coverage must continue year after year as long as you pay your premium. However, in some states, insurance companies may refuse to renew a Medigap policy bought before 1990.
  
  
• Preexisting Conditions
  Waiting periods are limited to 6-months; however if a continuously insured Medigap subscriber switches policies, new waiting periods may not be imposed (beneficiaries cannot be dropped).

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