Medigap Remains Valuable for Rural Medicare Beneficiaries

Medigap, the Medicare supplement coverage that helps fee-for-service beneficiaries fill gaps in their benefits, continues to be important for low-income beneficiaries and especially those living in rural areas, according to America’s Health Insurance Plans (AHIP).

A new report analyzing data from the 2012 Medicare Current Beneficiary survey found that more than 10 million Medicare beneficiaries rely on Medigap to help cover significant out-of-pocket costs, such as deductibles, coinsurance, and copays. Overall, 21% of Medicare beneficiaries had a Medigap policy in 2012.

“Medigap remains an increasingly popular option for millions, particularly low-income beneficiaries, who value the peace of mind and financial protection this coverage provides,” AHIP President and CEO Karen Ignagni said in a statement.

The report from AHIP found that the Medigap population was older with 47% of policy holders age 75 years or older. In comparison, only 38% of all Medicare beneficiaries fall into that older population.

While Medigap is important for all incomes, 40% of enrollees had annual incomes below $30,000, and 21% had annual incomes below $20,000. There were differences between the incomes of rural and urban policy holders. While 38% of policy holders in urban areas had incomes of less than $30,000, half of Medigap enrollees in rural areas reported income of less than $30,000.

Only 23% of rural Medigap policy holders had annual incomes of $50,000 or more compared with 35% of urban enrollees.

Last year, a survey from AHIP found that almost all (94%) of seniors enrolled in Medigap were satisfied with their coverage. In 2012, 79% of enrollees said their Medigap policy provided an excellent or good value for the money.

If their Medigap coverage was no long available to them, respondents said out-of-pocket costs and the additional complications related to medical billing would be their top concerns. With the coverage, enrollees value limits on out-of-pocket costs, ease of dealing with medical bills and paperwork, and the ability to budget for unexpected medical costs.