A Medicare supplement is an option for a person who receives Medicare from the United States government to obtain additional medical coverage through a private health insurance company. These options are sold to the beneficiaries of Medicare to cover expenses that the government plan does not. It can also be used for coverage to assist with items that are only partially covered by Medicare insurance. The program is referred to by many as Medigap since it covers the difference in the total amount charged and the expenses reimbursed by Medicare.
In order to take advantage of a Medicare supplement, a person must be enrolled in both part A and B of the Medicare program. Once an individual is within six months of age 65, he or she may obtain a Medigap plan. This is provided initially without a medical screening. If a person does not enroll during the required time frame to obtain Medicare, however, the health insurance company is able to request a statement from a physician.
The United States Health and Human Services Department (HHS) has standardized the Medicare supplement program through its Centers for Medicare and Medicaid Services department. HHS has also divided the plan into twelve different options for participants. Listed as A through L, these options are administered by private companies that pay the federal government for the right to provide the coverage and collect the profits.
The HHS has attempted to regulate the costs versus coverage factors by mandating a certain proportional payout for services in accordance with the premium paid. This has its challenges, however, since the average age of a person on an older plan is older than the average age of a person on a newer plan. This causes the insurance company to pay more out to hospitals for the older patient and that cost is passed onto the newer participant.
The exact rules regarding a Medicare supplement vary between the states. Most states allow the private industry to set its standards for policies and allow free market principles to control costs. However, in Massachusetts, Minnesota, and Wisconsin, a number of provisions have been made regarding the program. In these states, the Medicare supplement must provide additional prescription drug coverage regardless of the plan option.
The concept of Medigap and a Medicare supplemental aids manyindividuals throughout the U.S. According to the Henry J. Kaiser Family Foundation, 18 percent of individuals enrolled in Medicare insurance have added a Medicare supplement as of 2006. This includes individuals with personal policies and those provided by an employer. However, the figure does not include those people who have enrolled in the Medicare Advantage plan.
