Our last blog informed you about Medicare Advantage plans as an alternative to Original Medicare. The other option is a Medicare Supplement also known as Medigap. Medicare Advantage combines your Original Medicare and is an all-in-one plan. Medicare Supplements on the other hand do not provide stand-alone coverage. Parts A and B are your primary insurance, then your supplement plan will help pay the remaining balance. If none of this information about Medicare Advantage sounds familiar, take a moment to read our previous blog, https://www.yoderinsurancesolutions.com/post/what-you-need-to-know-about-medicare-medicare-advantage
A Medigap policy is private health insurance that helps supplement Original Medicare. This means it helps pay some of the health care costs that Original Medicare doesn’t cover (like copayments, coinsurance, and deductibles). These are “gaps” in Medicare coverage. All Medigap policies must follow federal and state laws designed to protect you, and the policies must be clearly identified as “Medicare Supplement Insurance.” Medigap insurance companies in most states can only sell you a “standardized” Medigap policy identified by letters A through N. Each standardized Medigap policy must offer the same basic benefits, no matter which insurance company sells it. Cost is usually the only difference from one insurance carrier to the other.
The best time to buy a Medigap policy is during your Medicare Open Enrollment Period. This period lasts for 6 months and begins on the first day of the month in which you turn 65 and enrolled in Medicare Part B. During this period, an insurance company can’t use any medical underwriting. This means that the insurance company can’t do any of the following things because of your health problems:
Refuse to sell you any Medigap policy it offers.
Charge you more for a Medigap policy than they charge someone with no health issues.
When you are first eligible, you have the right to buy any Medigap policy offered in your state. In addition, you generally will get better prices and more choices among policies. It’s very important to understand your Medigap Open Enrollment Period. Medigap insurance companies are generally allowed to use medical underwriting to decide whether to accept your application and how much to charge you for the Medigap policy. However, if you apply during your Medigap Open Enrollment Period, you can buy any Medigap policy that the company sells, even if you have health problems, for the same price as people with good health. If you apply for Medigap coverage after your Open Enrollment Period, there’s no guarantee that an insurance company will sell you a Medigap policy if you don’t meet the medical underwriting requirements, unless you’re eligible for guaranteed issue rights.
If you have group health coverage through an employer or union, because either you or your spouse is currently working, you may want to wait to enroll in Part B. Benefits based on current employment often provide coverage similar to Part B so you wouldn’t want to pay for Part B before you need it, and your Medigap Open Enrollment Period might expire before a Medigap policy would be useful. When the employer coverage ends, you’ll have an opportunity to enroll in Part B without a late enrollment penalty which means your Medigap Open Enrollment Period will start when you’re ready to take advantage of it. If you or your spouse is still working and you have coverage through an employer’s group health coverage, contact your employer or union benefits administrator to find out how your insurance works with Medicare.
It's also important to understand that your Medigap rights may depend on when you choose to enroll in Medicare Part B. If you’re 65 or older, your Medigap Open Enrollment Period begins when you enroll in Part B and can’t be changed or repeated. In most cases, it makes sense to enroll in Part B and first purchase a Medigap policy when you’re first eligible for Medicare, because you might otherwise have to pay a Part B late enrollment penalty and miss your Medigap Open Enrollment Period. However, there are exceptions if you have employer coverage.
There are many types of health care coverage that may count as creditable coverage for Medigap policies, but they’ll only count if you didn’t have a break in coverage for more than 63 days.
As stated previously, you must have Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) to buy a Medigap policy. You will pay the private insurance company a premium for your Medigap policy in addition to the monthly Part B premium you pay to Medicare.
The prices of Medigap policies are typically attained-age-rated. This means the premium is based on your current age, or the age you’ve attained, so your premium goes up as you get older. Premiums will be the lowest when you initially sign up, however, they may also increase because of inflation and other factors.
If you decide to drop Medigap to join a Medicare Advantage Plan, you can only do this during the Medicare Open Enrollment Period between October 15 and December 7. If you join during Medicare Open Enrollment Period, your coverage will begin on January 1. If you choose to drop your Medigap policy to join a Medicare Advantage Plan, you may not be able to get it back so pay careful attention to the timing.
A Medigap policy only covers one person. If you and your spouse both want Medigap Coverage, you will each have to buy separate Medigap policies. Some insurance carriers do offer a household discount if you both enroll with them.
When you have your Medigap Open Enrollment Period, you can buy a Medigap policy from any insurance company that is licensed in your state.
Different insurance companies may charge different premiums for the same exact plan. As you shop for a policy, be sure you’re comparing the same plan (for example. Compare Plan G from one company with Plan G from a different company).
Medigap policies sold after January 1, 2006, do not include prescription drug coverage. If you want prescription drug coverage, you can join a Medicare Prescription Drug Plan (Part D) offered by private companies approved by Medicare.
Medigap policies just like Medicare Advantage plans do not cover long-term care (like care in a nursing home or an in-home nurse), vision or dental care, hearing aids, or eyeglasses.
One advantage to Medicare Supplements is there are no network restrictions. As long as the medical provider accepts Medicare, you are free to choose any provider. With Medicare Supplement, you never need to worry about how much your insurance carrier will cover when you see a certain doctor or hospital. That means no more having to look for hospitals in your network before you travel, just in case something goes wrong. This can give you peace of mind when you are traveling, knowing you don’t have to look for in-network providers. Another advantage is you are never surprised by deductibles or copays. You pay the same premium every month.
The biggest question we get when talking about insurance is, “What does this cover”, or “what am I going to have to pay?”. This varies from coverage letters (for example, from Plan G to Plan N). The most popular plan being sold as of now is the Plan G. Within this plan, there are three separate deductibles; general doctor visits/ outpatient; blood if you need over 3 pints; and durable medical equipment (crutches, wheelchair, c-pap breathing mask/ hose, etc). The three deductibles are each $198 for the year.
In our next blog, we will go into detail on Part D, Prescription Drug Plan, which will need to be added to your Medicare Supplement policy.