Final answer:
To be eligible for Medigap, consumers must be enrolled in both Medicare Part A and Part B. The individual mandate, although no longer carrying a fine, was aimed at reducing adverse selection in the health insurance market. Additionally, consumers should be cautious about underinsurance and assess their coverage needs carefully.
Step-by-step explanation:
To be eligible for Medigap or Medicare Supplement Insurance, a consumer must be enrolled in both Medicare Part A and Part B. Medigap plans are designed to help pay some of the health care costs that Original Medicare doesn't cover, such as copayments, coinsurance, and deductibles. Importantly, Medigap is an additional coverage and is separate from the Medicare Advantage Plan (Part C), which provides Medicare benefits through a private-sector health insurer.
Those looking to purchase a Medigap policy need to be aware of the individual mandate, which required all individuals who do not receive health care through their employer or through a government program, like Medicare, to have health insurance or otherwise face a fine. While the penalty for not having health insurance was reduced to $0 starting in 2019, the requirement helped to encourage a wider segment of the population, including healthier individuals, to obtain health insurance. This helped to balance the insurance risk pool and could potentially lead to more reasonable plan prices by reducing adverse selection.
In addition, to address the problem of underinsurance, consumers should consider that having only minimal coverage may not be sufficient. This is particularly true for those who may spend at least 10 percent of their income on healthcare costs not covered by insurance or, specifically for low-income adults, those with medical expenses or deductibles that are at least 5 percent of their income.