Illinois Health Insurance Practice Exam

How do Medigaps typically handle eligible hospital expenses?

1. Offer a choice of cash payouts to the insured

2. Pay healthcare providers directly

3. Reimburse the insured after submitting claims

4. Have no coverage for hospital expenses

The correct answer is: Pay healthcare providers directly

It's essential to understand that Medigap policies are designed to supplement Original Medicare by covering certain out-of-pocket costs, including hospital expenses. Medigaps typically pay healthcare providers directly rather than reimbursing the insured or providing cash payouts. This direct payment process ensures that providers receive the amount covered by the Medigap policy, helping to streamline the billing and claims process for the insured. While it's true that some options might suggest reimbursement after claims submission or cash payouts to individuals, these do not reflect the standard practices of Medigap policies, which focus on maintaining the relationship between providers and insurers for efficient processing of expenses. Additionally, Medigaps do offer coverage for hospital expenses, so saying they have no coverage would contradict their intended purpose of filling in gaps left by Medicare.