Many private insurance companies sell coverage to supplement Medicare coverage. Two basic types of coverage are available: Medigap policies and Medicare SELECT.

What Do Medigap Policies Cover?

Medigap insurance policies are designed to fill in the gaps in Medicare coverage, including patient deductibles and copayments. Medigap policies are highly regulated by both federal and state law.

Coverage depends upon the type of policy held by the patient. State law limits the variations on policies that may be offered by insurance companies. Generally, 10 or fewer types of policies are available in each state. The National Association of Insurance Commissioners developed 10 policies, which were adopted into federal and state law. These policies are designated by the letters "A" through "J." Policy "A" provides the most basic Medigap coverage, and the remaining policies provide different variations on coverage above the Policy A minimum. To ensure the availability of supplemental coverage, states must allow companies to sell Policy A, and companies must make Plan A available in any state in which they sell Medigap policies.

All of the policies cover the patient's copayments for Medicare Part A hospitalization and for the patient's hospitalization reserve days. They also cover all eligible hospital expenses after Medicare is exhausted to a lifetime maximum of 365 days, as well as Medicare Part B copayments after the patient's deductible has been met.

Additional benefits available through Policies B through J include preventative care, outpatient prescriptions, personal care services, and charges that exceed the Medicare reasonable and customary charge by more than the allowed amount.

Insurance companies cannot vary the content or the language of the statutory policies, nor can they alter the letter designations. Additionally, if Medicare pays on a claim, a Medigap insurance company must pay its share of the claim.

What Does Medicare SELECT Cover?

Medicare SELECT coverage is similar to Medigap coverage. It, too, is provided by insurance companies and health maintenance organizations (HMOs), but it imposes limitations on the hospitals and providers that a patient can see. In exchange for relinquishing control over their choice of providers, Medicare SELECT purchasers typically pay a lower premium than do Medigap purchasers.