Medicare health policies cover a wide range of medical condition, but unfortunately not all of them. Thus, Medicare will not pay the full cost of the medical services. In other words there are gaps in Medicare coverage. This is where Medigap insurance comes in; it is a health policy that covers the gaps in the original Medicare program.
Medigap insurance policies are all set by the government and are there before standardized, regardless of the state you live in. The only exceptions are those of Massachusetts, Minnesota and Wisconsin which are standardized in a slightly different way. There are 10 types of plans available, named from A to J. Plan A is the most basic and with each additional plan there are extra coverage options. You therefore select the plan that best fits your situation and budget. As of June 1st, 2010, plans E, H, I and J are no longer available, and two new plans, M and N, have been added. Furthermore, the benefits in plans A – G have undergone some changes.
The various Medigap insurance plans have the same benefits regardless of which provider sold it to you or in which state (with the exception of Massachusetts, Minnesota and Wisconsin). The only difference is the cost. Each insurance company decides how to price its promotions. The company usually uses medical underwriting (health status information that determines your suitability for health coverage) to decide if they'll accept your application and at what price.
Although the policies are set by the state, this is not a government funded program. Consumer associations and private insurance companies can be licensed to sell this insurance. You can obtain a list of the licensed providers by contacting your state insurance office. As soon as you are enrolled, you will pay for both this policy and Medicare premiums each month.
Once enrolled, your policy is automatically renewed and the provider can not cancel it even if there are health problems. An additional benefit is that as long as you're reasonably healthy, you can change plans according to your situation and preferred benefits. However a provider can not sell you more than one policy at a time.
There are some key elements to Medigap insurance that you must be aware of, one of which is the enrollment period. There is typically a 6 month open enrollment period that begins the day you turn 65 years or older. It is advisable that you enroll during the open enrollment period because the provider is obliged to sell you any policy even if you have health problems, and at the same cost as that of a healthy person. If you enroll after the 6 month open enrollment, the provider may not sell you a policy even if you're eligible as per to the medical underwriting – unless you are qualified according to certain limited situations.
Another important point to understand is that the policy does not allow spouses to apply jointly. Each person must apply individually.
You may also want take note that certain coverage is not included in Medigap insurance. These include: Medicare Advantage Plans; long-term care insurance policies; Veterans' benefits; TRICARE; Medicaid; Employer or union plans, including Federal Employees Health Benefits Program (FEHBP); Indian Health Service, Tribal, and Urban Indian Health plans; and Medicare Prescription Drug Plans.