Final answer:
Medigap, also known as Medicare Supplement Insurance, is a health plan sold by private insurance companies designed to cover out-of-pocket costs not covered by Medicare, such as deductibles and copayments. These plans are especially valuable for the elderly, who may face higher healthcare expenses.
Step-by-step explanation:
The health insurance plan sold by private companies designed to supplement Medicare is known as Medigap or Medicare Supplement Insurance. These plans help pay for healthcare expenses not covered by Medicare, such as deductibles, copayments, and coinsurance. While Medicare Part A covers hospital stays and Part B covers outpatient services, Medigap plans can assist with the associated out-of-pocket costs that Medicare beneficiaries are otherwise responsible for paying.
The concept and need for Medigap arise because traditional Medicare (Part A and Part B) does not cover all healthcare costs, which can be substantial, especially for the elderly. Consequently, private insurance companies offer Medigap policies to fill these coverage gaps, making healthcare more affordable for beneficiaries. Having private health insurance through a Medigap plan can be a critical financial safety net for seniors and can greatly reduce the worry of how to pay for medical care in one's later years.
It is important for those eligible for Medicare to explore their options carefully and choose a Medigap policy that best suits their healthcare needs and budget. Insurance providers offering these policies must follow federal and state laws designed to protect consumers and must clearly identify these policies as 'Medicare Supplement Insurance.'