| Medigap Plans (A through N)/Medicare Supplement Insurance |
What is Medigap (Medicare Supplement Insurance)? Original Medicare pays for many, but not all, health care services and supplies. Many people purchase supplemental insurance policies that are specifically designed to cover some of the health care costs (or "gaps"), like deductibles, copayments, and coinsurance. This supplemental insurance is provided by private health insurance companies and is called Medigap, or Medicare Supplement. In general, you will not need a Medigap policy if your Medicare coverage is through a Medicare Advantage plan or if you are covered by Medicaid. Specific income and resource requirements for Medicaid eligibility are determined by individual states. In either case, your Medicare Advantage plan or Medicaid generally fills the gaps in Medicare coverage. Additionally, you must have Medicare Part A and Part B to purchase a Medigap policy. Every Medicare Supplement policy must follow federal and state laws designed to protect you and it must be clearly identified as "Medicare Supplement Insurance." Medicare Supplement insurance companies can sell you only a "standardized" Medicare Supplement policy identied in most states by letters, Plans A through N. The policies are standardized; the benefits for a particular plan are the same for each insurance company within a state. The primary difference is cost, but factors like underwriting and rating methodology can also vary from company to company, and state to state. Because insurance companies may charge different premiums for exactly the same Medigap policy (for example, coompare Plan A from one company with Plan A from another company). If You Want to Buy a Medicare Supplement (Medigap) Policy: Generally, you must have Part A and Part B to buy a Medicare Supplement policy. You pay a monthly premium for your Medicare Supplement policy to the private insurer, and you pay your monthly Part B premium. A Medicare Supplement policy only covers one person. If you and your spouse both want Medicare Supplement coverage, you must each buy separate policies. If you are under age 65, you may have additional rights to buy a Medicare Supplement policy, depending on the laws in your state. TIP: All Medicare Supplement policies issued since 1992 are guaranteed renewable even if you have health problems. This means the insurance company can't cancel your Medigap policy as long as you pay the premium. However, if you bought your policy before 1992, it might offer coverage that isn't available in a new Medicare Supplement policy. Policies sold prior to January 1, 2006 may have included prescription drug coverage. Caution: In general, you will not need a Medigap policy if you receive your Medicare coverage through a Medicare Advantage plan or if you are covered by Medicaid. In either case, your Medicare Advantage plan or Medicaid generally fills the gaps in Medicare coverage. Furthermore, if you already have a Medicare Advantage Plan, it is illegal for anyone to sell you a Medicare Supplement policy unless you are switching back to Original Medicare. The Cost of Medicare Supplement Plans Though policies with the same name cover the same benefits, the price may differ from company to company. Insurance companies offering Medicare Supplement plans set their own premiums that can be priced, or “rated,” according to your community, the age at which you purchased the policy or the age you are during each year you hold the policy. Because you need to have Medicare Part A and Part B to get a Medicare Supplement policy, you have to pay the monthly Medicare Part B premium as well as a premium to the Medicare Supplement insurance company. Each insurance company decides how it will set the price, or premium, for its Medicare Supplement policies. It is important to ask how an insurance company prices its policies. The way they set the price affects how much you pay now and in the future. When You May Enroll In and Switch Medicare Supplement Plans You may enroll in a Medicare Supplement plan on a guaranteed issue basis during the six month period starting on the first day of the month in which you are 65 years or older and enrolled in Medicare Part B. (Some states have additional open enrollment periods.). This means an insurance company can't do any of the following because of your health problems:
Caution: You may apply to replace your Medicare Supplement policy at any time. However, do not cancel your existing policy until you have been approved by your new insurance company. Note regarding Medicare Advantage Plans: If you join a Medicare Advantage Plan for the first time, and you aren’t happy with the plan, you will have special rights to buy a Medicare Supplement policy if you return to Original Medicare within 12 months of joining. If you had a Medicare Supplement policy before you joined, you may be able to get the same plan back if the company still sells it. The Medicare Supplement policy can no longer have prescription drug coverage even if you had it before, but you may be able to join a Medicare Prescription Drug Plan. If you joined a Medicare health plan when you were first eligible for Medicare, you can choose from any policy.Plan Changes Effective June 1, 2010 Effective June 1, 2010 the federal government regulation of Medigap insurance made numerous changes to Medigap policies.These changes are as follows:
Insurance Companies selling Medigap policies are required to make Plan "A" available. If they offer any other Medigap plan, they must also offer either Medigap Plan "C" or "F". Not all types of Medigap policies may be available in your state. Special Medigap coverage is offered in Massachusetts, Minnesota, and Wisconsin. The federal government regulation of Medigap insurance generally requires that all plans cover these services:
A Plan "A" Medigap policy will cover only the above expenses. Plans "B" through "N" offer Plan "A" benefits plus some combination of these additional benefits:
All 10 plans may not be offered in your state, yet all 10 are standardized and certified by the U.S. Department of Health and Human Services so that each plan provides exactly the same kind of coverage no matter what state you live in (except for Massachusetts, Minnesota, and Wisconsin, which have their own standardized plans). What Consumer Safeguards are available? The federal government has mandated that several consumer safeguards be required in all Medigap plans:
In addition, most regulation of insurance is actually done on the state level, and there may be additional consumer safeguards in your state. Medicare SELECT is offered in some states as a managed care Medigap plan that provides full coverage only if you use the plan's network of health care providers. These policies have lower premiums than the Medigap plans that do not restrict your choice of provider. If you move out of the Medicare SELECT policy's service area, you have a guaranteed issue right to purchase a Medigap Plan A, B, C, F, K, or L that is sold by any insurance company in your state or the state you are moving to. You must exercise this right no later than 63 calendar days after your health care coverage ends. NOTE: If you buy a Medicare SELECT policy, you also have rights to change your mind within 12 months of your effective date and switch to a standard Medicare Supplement policy.
Many baby boomers who delayed financial commitments such as buying a house or having children may find themselves needing to continue working after age 65. Furthermore, if you were born in 1938 or later, your "normal" retirement age is greater than age 65 although you still qualify for Medicare benefits at age 65. In that case, you may choose to keep your employer-provided health insurance as well as sign up for Medicare. Companies with 20 or more employees must offer employees over 65 the same health insurance choices they do to their other employees. Your employer-sponsored insurance will be your primary payer so your claims need to be submitted to them first. Medicare will be the secondary payer, paying costs not covered by your employer plan. If you submit your claim to Medicare first, it will be rejected. When Medicare is the secondary payer, it requires documentation that your primary payer will not pay. Medicare coverage will be subject to the same rules of coverage as if you did not have an employer plan. In other words, the amount it will pay will still be the Medicare-approved amounts, and it will only pay for the kinds of service covered by Medicare. Example(s): Laura is age 70 and still working. She continues to receive the same coverage under her employer's health insurance plan that she always has, and she is also covered under Medicare. She recently needed some home health care service following surgery and knew that her employer's plan would not cover it, so she submitted it to Medicare. Medicare rejected the claim, because she did not provide any documentation that her primary payer would not pay. When she submitted the claim to her employer's plan and got a notice that it would not pay, she resubmitted her claim to Medicare along with the notice from her employer's plan, and Medicare paid. Since Part A coverage is premium-free for most people, you should sign up for it when you first become eligible. You may have to pay a penalty if you do not sign up when you become eligible at 65. However, you may not want to sign up for Part B, which carries a monthly premium, because you are receiving sufficient coverage from your employer's plan. As long as you remain on the employer's plan, you will not be penalized the annual 10% increases in Part B premiums for those who delay signing up after becoming Medicare eligible. There is another good reason not to enroll in Part B while receiving insurance from your employer: Medigap's six-month open enrollment period begins with attainment of age 65 AND your enrollment in Part B. It is only during this open enrollment period when you cannot be denied coverage under a Medigap policy or charged a higher premium. (There are other exceptions that affect Medicare Advantage and SELECT Medicare Supplement plans). Example(s): Bob will continue working until his last child finishes college, when he will be 67. Bob's employer has always provided him health insurance and continues to even after he becomes eligible for Medicare at age 65. When he does reach age 65, Bob enrolls in Medicare Part A, which costs him nothing. He decides not to enroll in Part B because it would provide little or no additional coverage to him above the coverage provided by his employer, and he would have to pay the Part B monthly premium. He also has to consider whether to purchase a Medigap policy--he has emphysema and is concerned that if he wants a Medigap policy, he needs to enroll in the open enrollment period. Therefore, Bob enrolls in Medicare Part B when his group health plan ends. At that time, he is sure that he will not be denied coverage because of his emphysema. If you decline coverage under your employer's health insurance, the employer cannot instead give you a Medigap policy. It can only give you a policy that covers services Medicare does not cover at all.
If you will receive an employer-sponsored health plan when you retire, your employer plan will be your primary payer, and Medicare will be your secondary payer. An employer-provided plan for retirees may be converted into a Medigap policy; in fact, some insurance policies automatically change coverage when you reach age 65 because they assume you will sign up for Medicare. If you are not eligible for an employer-provided retiree health insurance plan, you have eight months from your termination of employment to transfer from an employer plan to Medicare. You do not have to wait until the general open enrollment period of the first three months of a calendar year.
NOTE: Some employers may require their retirees to enroll in Medicare when the retiree becomes eligible. The employer may then provide coverage for certain costs or services not covered by Medicare. If your employer provides retiree coverage for yu, check with your benefits administrator on what the eligibility requirements are and what kind of coverage you might receive.
Citations: Medicare & You 2011; 2010 Choosing a Medigap Policy guide |
