What is the purpose of a Medicare supplement policy?

A Medicare supplement policy, often referred to as Medigap, is specifically designed to help fill in the gaps left by Medicare. Medicare, while providing essential health coverage for older adults and certain younger individuals with disabilities, typically has limitations concerning out-of-pocket expenses, coinsurance, copayments, and deductibles.

The purpose of a Medicare supplement policy is to cover those out-of-pocket costs not covered by Medicare. This can include a variety of expenses such as the 20% coinsurance that Medicare Part B doesn’t pay, as well as costs associated with certain services or care that may not be fully covered by the standard Medicare plan. Therefore, having a Medigap policy can alleviate some of the financial burden associated with medical care and help ensure individuals have broader access to healthcare services without facing high out-of-pocket expenses.

In contrast, the other options do not reflect the primary function of a Medicare supplement policy: it does not provide primary coverage (which would conflict with the foundational role of Medicare itself), it does not replace Medicare coverage (as it is designed to complement it), and it definitely does not serve as a life insurance policy, which serves a completely different purpose related to providing a death benefit rather than health cost coverage.