Medigap Insurance: Covering What Medicare Doesn’t

If you’re 65 or older and eligible for Medicare, the federal health insurance program, you have some choices to make, such as: Enroll in Original Medicare, possibly adding Medigap insurance, or choose a Medicare Advantage (MA) plan.

What is Medigap?

Medicare doesn’t pay for every charge or service. You could be responsible for a percentage of your medical bills and out-of-pocket expenses. To help pay those bills, Medicare supplemental insurance, also known as Medigap, is available.

Medigap work with Original Medicare, which has two parts: A and B. Part A pays for inpatient hospital, skilled nursing facility, home health and hospice care. Part B pays for doctors’ visits, outpatient hospital care, durable medical equipment and other medical services.

Private insurance companies sell Medigap policies to cover Medicare coinsurance, co-payments and deductibles that you otherwise would have to pay yourself. Depending on the policy you choose, it could pay for costs that Original Medicare doesn’t cover, such as prescription drugs. You may need to buy a separate policy or Part D drug plan for drug coverage. Note: You are likely to pay a penalty for drug coverage if you add it later, rather than when you first enroll.

What is Medicare Advantage?

Medicare Advantage plans are an alternative to Medicare. These plans are purchased through private insurers and generally consolidate benefits from Medicare parts A and B.

MA is sometimes called Part C and is usually an HMO or PPO, says Patricia Barry, AARP’s “Ms. Medicare” columnist and author of “Medicare for Dummies, 2nd Edition.” With most Medicare Advantage plans, you must use doctors, hospitals and other providers in the plan or you pay more or all of the costs. Most MA plans include prescription drug coverage, but not all, so be sure to check if you want it, Barry says.