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Medigap Medicare Supplemental Insurance

Medigap Medicare supplemental insurance has allowed many seniors to manage their finances in a predictable and consistent manner by eliminating the dramatic financial surprises that can come with unexpected medical costs. Medigap Medicare supplemental insurance is a private policy that retirees can add to their regular Medicare policy to pay for expenses not covered under their original policy. Depending on the Medigap policy, seniors can cover their coinsurance, deductibles, skilled nursing facility care, foreign travel insurance and Part B excess charges under Medigap Medicare supplemental insurance.

Medigap Basics

To understand Medigap, it helps to first understand Medicare. Medicare is a government funded insurance policy available to every senior age 65 and older, and some people younger than 65 who receive social security because of serious health conditions. Your original Medicare policy consists of two parts, Part A and Part B. Part A covers inpatient hospital services, hospice care and long-term home health care. Part B covers regular doctors' visits, emergency room visits, outpatient hospital care and preventative care like flu shots. Medicare on its own can cover 80 percent of the Medicare-approved amount of most services you need as a senior. If you have no other form of supplemental insurance, also called Medigap, you must pay the remaining 20 percent coinsurance out-of-pocket.

Medigap Medicare supplemental insurance is available through many local insurance firms, each offering different plans at different monthly premiums. Seniors can choose from 10 standardized supplemental policies, labeled Plan A through Plan N. Since plans are standardized, benefits are identical at any price. So Plan A at one company must offer identical benefits to Plan A at any other company. This doesn't mean that Medigap Medicare supplemental insurance companies need to charge the same premiums, but it does help you realize that a higher price does not mean higher quality. Premiums can vary for a number of reasons, including company size, reputation, customer service and pricing for age. Some companies raise your premium as you age, while others offer a flat rate for everyone in the plan, regardless of age.

Choosing a Supplemental Plan

The right Medigap Medicare supplemental insurance policy for you will depend on many factors, including your medical history, lifestyle, age, family history and income. Discussing supplemental insurance plans with your regular doctor and even a financial planner can help you choose a Medigap policy that covers all your medical needs and makes the most sense given your retirement income and savings. You might find that with a smaller nest egg, a comprehensive supplemental policy is the best option for you even if the monthly premium is higher than average. The trade off is fewer financial surprises should become unexpectedly ill in or injured. This comprehensive coverage is one reason Plan F, the most comprehensive policy, is also the most popular. Plan F covers your Part A and B coinsurance and deductibles, Part B excess charges, foreign travel emergency insurance and skilled nursing facility care.

For people in excellent health with good financial reserves, a basic policy like Plan A offers enough coverage to eliminate costly coinsurance fees but is available at a much lower monthly premium. Another option for seniors in excellent health is a high-deductible policy. These policies, which include Plans K, L and a high-deductible version of Plan F, offer comprehensive coverage after a predetermined annual amount has been met. With the high-deductible Plan F, for example, you must pay $2,000 out-of-pocket before you can receive any benefits. After this deductible has been met, you receive all the benefits of regular Plan F.

Plans K and L work a little differently than the high-deductible Plan F. With these Medigap Medicare supplemental insurance plans, you receive partial coverage for certain benefits while you pay the annual deductible. As of 2012, the out-of-pocket limit for Plan K is $4,660 and for Plan L, $2,330. Before you reach your out-of-pocket limit, Plan K will cover your hospital coinsurance and 50 percent of your coinsurance for most other Medicare covered services. Before you reach your Plan L out-of-pocket limit, your supplemental policy will cover your hospital coinsurance and 75 percent of other coinsurance expenses.

Choosing the right Medigap Medicare supplemental insurance policy for you can take some research into the plans available and your local providers. Since Medigap providers do not need to offer all 10 plans, make sure you choose a company that has the plan you need. Comparing your options online, talking to your regular doctor and going over plans with your financial planner can help you choose a Medigap Medicare supplemental insurance policy that fits into your budget while covering all your medical needs. Preparing for the future can help you avoid paying more for your medical care than you need to.

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