Medigap insurance

By Jakob Jelling
www.cashbazar.com

Medicare is not a comprehensive healthcare program. It doesn’t cover for all aspects of age old ill health and disability (for example long-term nursing home care). Here, in order to receive further benefits, customers have three choices to look into; they can opt for Medigap, enroll oneself in a HMO (a Medicare based health maintenance organization) or self insuring oneself against what ever pay had been incurred as hospital or nursing care charges. Let us see how the first choice – Medigap Insurance - works for a potential customer.

Medigap Insurance – the shortened name of ‘Medicare supplemental insurance’ – is an insurance type specifically designed to compensate some of the ‘gaps’ in coverage left by Medicare (Medicare A and B). Medigap, as it exists today, covers deductibles, co-payments, and some of the other services left untouched by Medicare. Medigap Insurance is offered by private players and government has no involvement in its sales.

Medicare eligible people – by means of old age or disability - are qualified for Medigap insurance as well. A Medicare holder of the above mentioned category can opt for a Medigap insurance policy within six months since the B plan has taken effect. This six month period is called ‘Open Enrollment’. During this tine frame, no insurance companies can refuse coverage on the grounds of the customer’s current old age or existing or previous medical conditions. That is, as mandated by State laws (which can vary from state to state), insurance companies need to sell at least one of five Medigap policies irrespective of customer’s current health conditions and age.

Federal law empowers insurance companies to offer all of the ten standardized Medigap policies to the potent customers. The plans are labeled from ‘A’ to ‘J’, which need to be followed uniformly through out the states, and the decision as to which all policies are to be marketed rests exclusively with the insurance company.

People with less than 65 years of age and are eligible for Medicare owing to disability does not have the same rights for Medigap insurance as with people aged 65 or older. Below-65 age group people with Medicare (except those suffering from end-stage renal disease) can only apply for A, B, C or F and any of those with prescription drugs. But not all companies sell a policy with prescription drugs. Also for below-65 age group, premiums will be higher than for those falls in the above-65 age group.

Now, how to decide on a Medigap insurance plan that suits one’s budget and financial status.

• Ideally, the customer should be considering the premium. The premiums can vary widely with plans and hence need a bit of research before deciding on the right one. It will be a better idea to compare various policies before making the final selection.
  
  
• Certain insurance company’s rules empower them to increase premiums with age. Make sure that the customer takes note of a company’s ability to do so.
  
  
• Also study in detail the various benefit limits offered and the overall financial strength of the insurance company. The latter is an indication of how well and reliable the company is in terms of its ability to pay the insurance claim at a later date.

But, as per the current rules, when Medicare part D took effect on January 1 2006, the insurance companies are stripped off their rights to sell policies with prescription drugs. Already policy holders are given a choice to stick with the existing one or shift to a new one while new policies issued are strictly according to the new law. The details and effects of the newly imposed change are yet to emerge and hence are beyond the scope of any comment in the present time.

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