Final answer:
Medigap or Medicare Supplement Insurance is coverage that pays for Medicare patients' deductibles, coinsurances, and balances, providing financial relief from out-of-pocket expenses inherent in original Medicare Plans A and B.
Step-by-step explanation:
The coverage that pays for Medicare patients' deductibles, coinsurances, and balances is known as Medigap or Medicare Supplement Insurance. This is additional insurance that Medicare beneficiaries can purchase from private insurance companies to cover the gaps in original Medicare Plan coverage.
Medicare Part A covers some hospital charges and is funded by payroll deductions, with patients responsible for deductibles and copayments. However, there are no limits on the total costs that can be incurred under Medicare Part A, which can become quite substantial for the insured. Medicare Part B provides optional coverage for non-hospital medical expenses, like physician services and outpatient visits, and also includes a monthly fee, deductible charges, and copayments, with the government paying about three-quarters of the overall costs.
Both parts require beneficiaries to pay a portion of their healthcare costs, which is where Medigap comes into play. It helps beneficiaries handle the out-of-pocket expenses that are not covered by original Medicare, thereby providing financial relief and protection from potentially overwhelming medical bills.