Medigap Insurance is a type of insurance coverage that supplements Medicare, the government health insurance plan for people over 65. A common kind of supplemental coverage is Medigap Rx, which covers Medicare Part D prescription drug costs.
The most basic type of Medigap policy will cover the 20% of Medicare copayments and deductibles that beneficiaries are responsible for paying out of pocket. These policies may include additional benefits, such as coinsurance coverage for hospital stays, doctor or emergency evaluations, or Medicare Part B premium payments.
Although Medigap plans are standardized, they do vary state by state. Each plan is available throughout the country, including in the District of Columbia. Still, state insurance departments have the final authority to reject these plans if they don't meet their individual standards.
Medigap policies are made by private insurance companies licensed to do business in each state. The number of plans available varies from state to state, but all significant insurers offer at least one Medigap policy. Most states require insurance companies to compete for business in a competitive bidding process before awarding contracts. Individual states set rules for how competitive bidding takes place.
As with Medicare, Medigap supplemental insurance plans may provide coverage for a physician's services when the beneficiary is in an in-network hospital setting. This can reduce the overall cost of care while also ensuring that the beneficiary receives quality health care in its entirety. Many participants with Medigap plans use these benefits to avoid out-of-network charges when hospitalized or treated by noncertified providers.
However, Medigap policies do not offer protection against out-of-pocket costs for non-Medicare supplemental health plans, which are often exempt from state regulations that apply to insurance companies. States have different rules about the minimum secondary coverage required on a Medigap policy. While most states require that all Medigap plans offer benefits at least equal to those required by Medicare itself, some states place stricter requirements on carriers. For example, the minimum standard of help and protection offered by any Medigap policies sold at or below a certain level must be no less than the minimum benefits provided by Medicare.
In many states, Medigap plans cannot exclude coverage for primary medical conditions (such as cancer) or immediate needs (such as emergency room visits). If policyholders require hospitalization for such reasons, they will not have to pay anything out of pocket. However, it is essential to note that this requirement can change over time.