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Bankrate's 2008 Retirement Guide
Turbulent times
Retirement plans for many are in jeopardy. Understanding the problem is the first step to recovery.
Turbulent times
Medicare helps with health care costs
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Medigap policies
The original Medicare plan pays for many, but not all, health care services and supplies. To help pay your out-of-pocket costs, you might want to consider getting a Medigap policy, also called Medicare Supplement Insurance. Note: These plans can't be used to pay your co-payments or deductibles for Medicare Advantage plans.

You can buy a Medigap plan from a private insurance company, or you might be able to get this supplemental insurance from a former employer (your own or your spouse's) as a retiree benefit. There are also several government programs that can help you obtain Medigap coverage if you meet certain income requirements or other qualifications.

A Medigap policy is private health insurance that's designed to supplement the original Medicare plan and help pay some of the health care costs that aren't covered -- such as CO-payments, co-insurance and deductibles. Each Medigap policy only covers one person, so if you and your spouse both want coverage, you each must buy separate Medigap policies.

Each standardized Medigap policy, however, must offer the same basic benefits, no matter which insurance company sells it. Premiums will vary depending on the plan you choose and the company you buy it from (the typical premium is about $150 per month), but usually the only difference among Medigap policies different insurance companies sell is the cost.

The best time to buy a Medigap policy is during your Medigap open-enrollment period. In all states, there is an open-enrollment period that lasts for six months. It begins on the first day of the month in which you are both age 65 or older and enrolled in Part B (some states have additional open enrollment periods). For more information about buying a Medigap policy, call your State Health Insurance Assistance Program.

All Medigap policies must follow federal and state laws that are designed to protect consumers, and every Medigap policy must be clearly identified as "Medicare Supplement Insurance." Furthermore, Medigap insurance companies can only sell you a "standardized" Medigap policy. There are 12 such policies identified by letters (i.e., Medigap Plans A through L), except in Massachusetts, Minnesota and Wisconsin, where Medigap policies are standardized differently. Also, in some states, you might be able to buy another type of Medigap policy called "Medicare Select," which is a Medigap policy that requires you to use specific hospitals and, in some cases, specific doctors to get full benefits.

-- Posted: Nov. 10, 2008
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