Supplemental medical insurance, also called Medigap, is additional health and prescription insurance that pays for the remaining balance on medical bills that is not paid for by Medicare. Medigap coverage is sold by private insurance companies to fill the gap between what Medicare pays and what is the responsibility of the insured. Ideally, the entire bill is paid between the two policies. The federal government regulates supplemental insurance plans, which vary from state to state. AARP is one of the largest sources used by consumers for Medigap insurance.
Significance
AARP, or the Association for the Advancement of Retired Persons, is not an insurance company. It is a non-profit consumer organization that pools its numbers to negotiate deals with outside insurance companies to provide members with better premiums. All insurance companies that carry the AARP seal of approval meet and exceed federal guidelines.
Function
Federal laws require insurance companies, such as those that contract with AARP, to offer 12 options for Medigap coverage. AARP provides members with counselors and a plethora of information in their publications and on their website for choose the best policy. Take into consideration the amount of healthcare needed prior to getting the Medigap policy to determine the best kind of coverage needed (see Resources below).
Types
By law, Medicare supplement insurers cannot sell more than one policy to each consumer. Premiums vary in the different policies and often are used to determine policy choices. United Health Care Insurance Company sells AARP Medicare supplemental insurance. They pay a royalty to the organization for use of its name and endorsement. Plans vary from state to state and are governed by additional state laws. United does not offer the AARP plans in all areas.
Features
The various plans are determined by needs. They range from point of service plans that are considered Medicare Part "B" plans and require large deductible and out-of-pocket minimum payments, to participating provider options that limit the places where you can go but have less expensive deductibles. Other plans with higher premiums include preventative services at no additional cost and prescription drug coverage.
Benefits
AARP chooses its health insurance partners by looking at the total wellness protection the company offers with its insurance plans. It is a consumer advocacy group that works for the betterment of its membership through bargaining for better insurance plans, lobbying and providing relevant information about issues affecting the elderly. AARP does not make recommendations on which policy to purchase, but they do offer guidance and access to information about Medicare and Medigap. Membership in the AARP organization is not a requirement to purchase AARP endorsed supplemental insurance polices.
Warning
Medigap is not the only recourse that seniors have to fill the holes left by Medicare. Other programs such as Medicaid, Medicare Savings Programs, or a State Health Insurance Assistance Program (SHIP) may be more suitable and more cost-effective if the qualifications for coverage from those programs are met.
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