MEDICARE SUPPLEMENTAL INSURANCE

‘MEDIGAP' AND ‘THE DONUT HOLE'

‘Medigap'

The term ‘Medigap' refers to the fact that there is usually a ‘gap' between what your bills are and what Medicare pays. Like any insurance, there are deductibles and co-pays, as well as rates for services that may be higher than what Medicare allows, or things Medicare doesn't cover.

In order to cover the ‘gap', many people buy private insurance that acts as a supplement to Medicare, so that you don't have to make up the difference out of your own pocket. This insurance is usually referred to as 'supplemental' or 'Medigap' insurance.

The ‘Donut Hole'

A new term has become popular with the Part D prescription drug plan, and that is ‘the donut hole.' Plan D plans provide good coverage if your prescription drug bills average under $200 a month. But if they are more, there can be a significant 'hole' in coverage.

That is, Medicare Part D categorizes expenses for drugs into three levels. For the first level, Medicare pays 75% of the cost, and for the third level it pays 95% of the cost. The middle level is where it pays nothing. Like a donut that has a hole in the middle, Medicare Part D has a hole in the middle of its coverage. Hence the term 'donut hole.'

This is why it is very important to select the right Medicare drug plan for your situation. For more information, see our section on Part D at the link below.

Medicare Part D: Prescription Drug Plan

If you need further help with this, you can get ‘Medigap' information from Medicare or by sending us an email at the links below.

You can also click on the English or Spanish links below for free Government publications on Medigap issues.

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