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Medigap Helps Pay Out-of-pocket Costs
DETROIT (4/23/13)--If you're approaching the Medicare enrollment age--65--and enrolling in traditional Medicare parts A and B, now's a good time to focus on Medigap, also known as Medicare Supplement Insurance (The Detroit News April 8).

If you can afford it, Medigap insurance will help you pay for the out-of-pocket costs of Medicare's co-pays, co-insurance, and additional cost-sharing requirements such as deductibles.

The Medigap one-time open-enrollment period, which lasts six months, starts the month you turn 65 and enroll in Medicare Part B. This is the only time you have a guaranteed right to buy any Medigap policy sold in your state, regardless of your health. Once open-enrollment ends, you could be denied coverage or have to pay higher premiums.

Choose from 10 kinds of Medigap plans, depending on your needs and which gaps you'd like to fill. The two most popular plans are F and C, in that order, because they provide the most comprehensive coverage. The two newest options, M and N, are cost-sharing plans with cheaper premiums; these appeal to healthier retirees who don't use as much health care.

All 10 standardized Medigap health plans cover co-insurance for extended hospital stays, doctor visits and outpatient services, and for hospice care.

To choose an appropriate Medigap plan:

  1. Compare premiums. Even though all insurers must offer the same benefits within a specific kind of plan, premiums differ widely. For example, in Plan F, annual premiums for a nonsmoking 65-year-old range from $1,097 to $4,030. As you compare plans, find out how rates are determined: Do all enrollees pay the same regardless of age, with rates increasing because of inflation and other factors? Are premiums based on age when first purchasing the policy? Or do premiums rise as enrollees get older? Investigate the historical rates of increase.
  1. Select benefits. Because you might not be able to switch Medigap policies later, consider your current and future health needs. Decide, for example, if you want coverage for hospital annual deductibles, skilled nursing facility co-insurance, emergency care during foreign travel, at-home recovery care, preventive care Medicare doesn't cover, or charges from doctors who do not participate in the Medicare program.
  1. Check customer service record. Before you buy a plan, check the insurer's customer service performance.
Note that most Medigap policies don't cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing.

To learn more, use the online Medigap search tool at medicare.gov; click on the "Supplements & Other Insurance" tab at the top of the page, and then on "How to Compare Medigap Policies."

Or call 800-633-4227 and request a copy of the Medicare and National Association of Insurance Commissioner's guide called "Choosing a Medigap Policy: A Guide to Health Insurance for People With Medicare." The guide also contains information for residents of Massachusetts, Minnesota, and Wisconsin--the three states that offer standardized Medigap plans different from the other states.

For related information, read "How to Calculate Retirement Needs" in the Home & Family Finance Resource Center.
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