If you are enrolled in original Medicare or expecting to enroll soon, you may have heard about Medicare Supplement Insurance policies, also referred to as Medigap policies. Let’s discuss these policies and see if they’re worth the additional premiums.

The first thing to understand about Medigap policies is that they are sold by private companies for the purpose of covering some of the healthcare-related costs not covered by Medicare. They cannot be combined with Medicare Advantage Plans: those policies supplement Medicare coverage.

Here’s how it works: if you have Medicare Part A and Part B, you can sign up for a Medigap policy, which will cost you an additional monthly premium.

When you need care, Medicare will pay for its share first, up to whatever amount it will cover. After that happens, your Medigap policy will pay for its share of the remainder.

An important thing to understand is that Medigap policies are not guaranteed to cover everything left over after Medicare pays its share. In particular, long-term care, vision and dental care, hearing aids, eyeglasses, and private-duty nursing are not likely to be covered.

Now that we know what a Medicare Supplement Insurance policy is and what it does, let’s establish whether or not you need one. After all, since Medicare is not free and in fact has deductibles, copays, and coinsurance, is it worthwhile to get a separate supplemental plan?

The most straightforward answer is that because Medicare does not cover everything, a Medigap plan may prove to be your financial salvation from medical bills.

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For example, Medicare Part A covers up to 60 days of hospitalization after you pay your deductible. What if you need more than 60 days?

Or take Medicare Part B, which covers 80% of approved services after you pay your deductible. What if you have $250,000 in Medicare Part B-approved expenses after your deductible? Can you handle a bill in the amount of $50,000 – or more, if less than 80% ends up being covered?

Medigap policies can chip away at those expenses Medicare doesn’t cover. How much they will reduce them depends on which Medigap plan you choose.

There are 10 different types of Medigap plans available across most of the country, and they offer a variety of different benefits. As with most types of health insurance, you can opt for plans with larger premiums if you want more coverage, or you can economize on premiums for less comprehensive coverage.

Returning to the example above, Medigap Plan K would pay 50% of the $50,000 remaining after Medicare. On the other hand, Medigap Plan F would cover the entire $50,000.

Medigap policies generally offer more flexibility than Medicare Advantage, which is designed to incorporate Medicare benefits with additional coverage. If you are leaving Medicare Advantage, an insurer can sell you a policy with coverage starting the day after your Advantage policy ends.

One final benefit of Medigap plans is that insurers cannot cancel them if you get sick. Continue to pay your premiums, and you can renew your policy for life.