Medical gap insurance is a financial need most people under age 55 have no idea exists unless they take care of or work closely with the financial matters of an elder relative. In a nutshell, medical gap insurance provides health care financial coverage for people with Medicare who need supplemental assistance. At first, one might think such a situation is a bit of an oxymoron. Isn't Medicare supposed to cover one's healthcare needs after they become eligible so they don't need to go out and buy it any longer or use an employer's plan? Yes and no. The problem with Medicare is they way that it's financial coverage is designed. The federal government created what is called colloquially the "Doughnut Hole." This term refers to the portion of medical expenses in a year that a covered person may have that Medicare will not cover. The costs are out-of-pocket for the recipient. The federal government a while back figured out that the majority of people have medical costs that stay under a certain cost level. By not covering below this level, the program avoids a number of expenses that the federal government believes can be handled by most retirees, regardless of income status. In doing so, Medicare then only covers basic co- pay costs under $1,200 and significant medical costs over $4,550 (figures as of 2010). Anything in between gets stuck with the personal wallet. The Doughnut Hole effect is not per medical incident. It works as an aggregate for entire calendar year. So if cumulative medical expenses that can be documented exceed the upper level of the Doughnut Hole, then medical expenses after that point are covered, regardless of whether it's for aspirin or a broken leg. However, even a $5,000 or $8,000 expense hit can be hard for many folks to address, and on fixed income in retirement such a financial hit can quickly cause unexpected debt or financial crisis quickly. Much of the crisis usually occurs since medical costs are usually coupled with a need to provide medical care immediately in some kind of emergency. The result is a bill that can't be paid. Gap insurance helps to solve this crisis problem in the Doughnut Hole by essentially providing health insurance coverage for costs that are out-of-pocket. The insurer knows that it will not get hit with costs over $4,550, so there is a limit to the risk involved, which is far better than normal health insurance. Additionally, if enough gap insurance policies are written, then the risk is spread among many clients who may never need the use of gap insurance in a given year. For the party the cost of gap insurance is far more palatable as a small monthly premium versus a sudden medical hit in the thousands of dollars.
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Are you in the Doughnut Hole? Gap Insurance may be your best solution.
Medical Gap Insurance