Forex Articles

If you're at least 65 years old and on Medicare, you're eligible to purchase a Medigap plan, also known as a Medicare supplement plan, to cover what Original Medicare won't. These gaps in Original Medicare can be substantial, leaving you with significant out-of-pocket liabilities. (For more, see Medigap Insurance: Who Needs It?)

However, Medigap plans aren't free. To participate in one of these private insurance plans, you'll pay a premium on top of what you pay for Medicare, and that means you'll want to think carefully about if and when you'll need a Medigap plan.

Medigap plans are standardized and regulated by both state and federal law and identified by letters (A, B, C, D, F, G, K, L, M and N). All plans with the same letters offer the same basic benefits, although some plans offer additional benefits. Plans A through G have one set of basic benefits, and plans K through N have a different set.

In Massachusetts, Minnesota and Wisconsin, the plans are standardized in a different way, and some states offer another type of Medigap policy called a Medicare Select plan. Medicare Select plans work like health maintenance organizations (HMOs) and tend to cost less, but require participants to use certain networks or forfeit coverage.

A Medigap plan isn't the only way to reduce your out-of-pocket medical expenses. Medicare Advantage plans are another popular option.

Medicare Advantage plans (sometimes referred to as Medicare Part C plans) are Medicare-approved, private insurance plans that provide the same level of benefits as Medicare Parts A and B. They usually include prescription drug coverage, as in Medicare Part D, as well.

Depending on your use of the healthcare system, as well as other factors, a Medicare Advantage plan could cost you less than a Medicare/Medigap pairing, making it an attractive alternative. However, Medigap plans are generally more flexible, offering wider networks as well as the out-of-network benefits that a Medicare Advantage plan may not. (For more, see Medigap Vs. Medicare Advantage: Which Is Better? )

Despite the gaps in Original Medicare, not everyone on Medicare needs a Medigap plan. Here are five reasons you might:

1. You are unemployed or retired. It's not uncommon for Medicare-eligible workers to elect Medicare Part A as a supplement to their employer-provided plan. If you don't have an employer-sponsored plan, this isn't an option.

2. You're being treated for a medical condition. If you're seeing a healthcare provider regularly and/or on any maintenance medication, a Medigap plan can offer needed protection for your budget.

3. You're not rich. Even the rich generally choose to isolate their income from unexpected medical expenses by purchasing supplemental insurance, so the rest of us should definitely think about it, too.

4. You don't qualify for Medicaid. Medicaid is a government program that helps low-income individuals pay for medical expenses. If you lack this assistance, a Medigap policy may be your best bet for help with copayments, deductibles, and other out-of-pocket medical expenses. (For more, see What's The Difference Between Medicare And Medicaid?)

5. A Medicare Advantage plan won't provide the coverage you need.

And here's something else to think about: if you don't enroll in a Medigap plan when you're first eligible – during your 6-month Medigap open enrollment period – and unless you qualify for a special enrollment period (SEP), you'll have to meet underwriting requirements to qualify for a plan. If you do, there's no guarantee that you won't pay a higher premium. In other words, it may make sense to enroll in a Medigap plan because you can and are likely to need it, especially since you'll probably pay more and have to jump through extra hoops to get it later.

Nothing about choosing an insurance plan is inherently intuitive. If you need personalized assistance, don't hesitate to contact your local State Health Insurance Assistance Program (SHIP). You can also engage a qualified, licensed benefits broker; contact the National Association of Health Underwriters [NAHU] to find an agent in your state.

If you're on Medicare and unable or unwilling to spend a significant amount of your income on medical expenses, it's likely you'll need some type of supplemental insurance to pick up where Original Medicare leaves off. A Medicare Advantage Plan is one way to go, but many find that a Medigap plan, which provides more choice in terms of network size and out-of-network benefits, is better suited to their needs.