Supplemental health insurance covers gaps in your regular health insurance coverage. Normally, you have deductibles and co-pays with health insurance, paid out of pocket by the beneficiary. The most common supplemental insurance is intended for those covered by Medicare.

Original Medicare

Original Medicare is Medicare Parts A and B, which is an 80/20 policy. Medicare pays 80 percent of covered medical costs, and the insured pays a 20 percent co-pay. Many on Medicare are on a fixed income and have a difficult time paying their 20 percent co-pay.

Medicare Supplemental Insurance

Medicare came up with a supplemental insurance plan to help Medicare recipients pay their 20 percent co-pay, called Medigap coverage. Private insurance companies approved by Medicare sell this additional health insurance policy. These policies help beneficiaries receive 100 percent coverage. These additional policies run between $50 to $100 per month as of the end of 2009.

Benefits of Supplemental Insurance

If a Medicare recipient has a serious medical procedure, the supplemental policy pays for care that might go unpaid. For example, for a procedure that costs $10,000, Medicare would pay $8,000, and the supplemental policy would pay $2,000 and the beneficiary would pay nothing.

Purchasing a Supplemental Plan

You can choose from 12 different plans, Plan A to L. Each plan offers different amounts of coverage with the least amount of coverage being the lowest in price and the most coverage being the highest in price. The lower the price, the greater the chance the beneficiary has of having to pay part of the cost out of pocket.

Spouses

Spouses must each purchase a separate supplemental policy. To qualify for a supplemental policy, each will need to have Medicare Parts A and B.

Source:

Star Reviews: What is Supplemental Medicare Insurance?

WiseGeek.com: What is Supplemental Health Insurance?

Medicare.gov: Medigap (Supplemental Insurance) Policies

More Information:

Today's Seniors: How Do You Choose the Best Medigap Policy?