MEDICARE SUPPLEMENT PLANS
Medicare Supplement Insurance is the traditional choice for people looking to close the gaps in Original Medicare. These plans are known to offer some of the most comprehensive coverage available, and deliver great piece of mind. In this guide, we’ll review the basics of Medicare Supplement Insurance and also look into some of the details of how they work and how to enroll in one.
What Is Medicare Supplement Insurance?
Medicare Supplement Insurance is a product offered by private insurance companies that helps make your Medicare benefits more comprehensive. Medicare Supplement Insurance can take your Medicare coverage from a “7” or “8” to a “9” or a “10.” In this guide, we’ll dive deep into the benefits and options available for Medicare Supplement Insurance. By the end, you’ll be able to make a wise choice for your Medicare coverage.
What Is Medicare Supplement Insurance?
Medicare Supplement Insurance policies are health insurance plans offered by private insurance companies. This coverage is designed to complement Original Medicare, Parts A and B. These policies work by paying for some of the costs that you’d normally have to pay out of pocket when you have Medicare coverage. Since these costs are regularly referred to as gaps in Medicare, these supplemental policies are also known as Medigap plans.
The beautiful thing about Medigap plans is that they have been standardized through federal and state legislation. The benefits provided by these plans – what they cover – are exactly the same in 47 states. There are currently 12 Medigap plans available in the 47 standardized states. The plans are identified by letter: A, B, C, D, F, G, K, L, M, N, High Deductible F (HDF), and High Deductible G (HDG). The benefits for each of the Plans are the same in all of the 47 standardized states. So, Plan K in California has the exact same benefits as Plan K in Florida. This makes it very easy to shop for and compare Medigap plans. Since the core coverages are identical, you are able to directly compare them on price.
When you have Medigap coverage, you’ll end up presenting two insurance cards when you get health care. You’ll present your red, white, and blue Original Medicare card and your Medicare Supplement Insurance card. Your provider will end up billing both Medicare and your insurance company.
While there are technically 12 Medigap plans available, there are two plans that are most popular with people enter Medicare today: Plans G and N. These plans are also extremely popular with people who have been on Medicare for a while and want to save money on their coverage.
Medigap Plan G
This is the most comprehensive of all the Medigap Plans available to people who become Medicare-eligible after 12/31/19, meaning that Plan G will cover more gaps, and save you more money, than any other plan available. Plan G will cover 100% of your costs in these areas:
- Up to 365 extra hospital stay days beyond Original Medicare
- Part A coinsurance / copayments for hospital stays and skilled nursing facility care
- Part A hospice care costs
- Part A deductible
- Your first three pints of blood
- Part B coinsurance
- Part B excess charges
- Emergency coverage while outside the United States
There is only one gap not covered by Plan G: the Part B deductible. You must pay this small deductible before the plan will begin paying any benefits. Once you’ve met the deductible, Plan G will cover 100% of your costs for Medicare-approved services and procedures for the rest of the year.
Medigap Plan N
Plan N is very similar to Plan G, but with a one unique twist. The main difference is that Plan N will not cover Part B “excess charges.” These are charges from medical providers who don’t accept Medicare’s prices, but still participate in the Medicare system. These kinds of providers can charge up to 15% beyond Medicare’s standard pricing in the form of excess charges. Excess charges are fairly rare. Also, you can find out ahead of time if a provider will assess excess charges. If they do, you can choose another provider. Or, you can still choose to see them, even if you have Medigap Plan N. Remember that the 15% excess charge is based on the Medicare-approved charge amount, which is a negotiated rate that is lower than full price.
The second difference between Plan N and G is that Plan N requires that you pay small co-payments for certain services:
- No more than $50 for emergency room visits (this amount is waived if you’re actually admitted to the hospital as an inpatient)
- No more than $20 for Part B office visits
Just like Plan G, Plan N does not cover the Part B deductible, so you’ll have to pay that first in order for Plan N to begin paying benefits. Assuming that you use doctors and facilities that don’t impose excess charges (most don’t), the only real different between Plan N and G is the small co-payments.
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Who Is Eligible For Medigap Plans?
Since these plans are designed to work with Original Medicare, they are only available to those who are actively enrolled in Part A and B of Medicare. Besides this, you may find that in your state you have to be at least 65 years old to enroll in Medigap Plans. This is a state by state rule; some states will allow those who enter Medicare early to get Medicare Supplement coverage.
When Can I Enroll in Medigap Plans?
Technically, you can enroll in Medicare Supplement Insurance at any time as long as you are enrolled in Parts A and B and are at least 65 years old. However, there are times when it’s much easier (and smarter) to enroll in a Medigap Plan.
The best time to do so is during your Medigap Open Enrollment Period (OEP). This enrollment period is a six month window that begins when BOTH of these conditions are met:
- You are enrolled in Part B, and
- You are 65 years old
Your Open Enrollment Period for Medigap can’t happen before age 65, but it can happen well after you turn 65 if you delayed taking Part B because you worked past 65. During this enrollment window, you are guaranteed enrollment into any Medigap plan available in your state. You can’t be turned down, and you can’t be charged higher rates because of your health (pre-existing conditions are not counted against you).
If you don’t enroll in Medicare Supplement Insurance during this window but you decide you want this kind of coverage at a later time, you can still apply for coverage. However, you will now have to answer health-related questions on your application and the insurance company will investigate your health history. Your coverage may be declined, or you may be charged higher premiums based on your health status.
It is possible to qualify for a Guaranteed Issue Period (GI) based on certain circumstances like if you move out of your Medicare Advantage plan’s service area. However, since you don’t necessarily have control over these kinds of circumstances, the very best time to enroll in Medigap Plans is during your initial Open Enrollment Period.
How Are Premiums Set For Medigap Plans?
Since Medicare Supplement Insurance is offered as a secondary coverage by private insurance companies, they are able to set their own premiums for each of the standardized plans. There are three methods that insurance companies use to set their Medicare Supplement premiums:
- Attained age rated
- Issue age rated
- Community rated
Attained Age Rated Medigap Plans
With attained age rating, premiums are primarily based on your age each year. Since you’re older by one year every year, this rating method tends to cause premiums that increase with your age. This is the most common method of setting rates.
Issue Age Rated Medigap Plans
Issue age rating is rare. With issue age rating, your premiums are primarily based on your age when your policy is issued, rather than your advancing age each year.
Community Rated Medigap Plans
Community rating means that an insurance company sets one premium for all policyholders in the “community.” Age is not a direct factor in the premium.
Regardless of which method an insurance company uses, premiums tend to increase every year, and you should assume that this will continue in the future.
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What Do Medigap Plans Not Cover?
As comprehensive as Medigap Plans are, there are a number of things that they don’t cover. Medigap Plans will only cover what Part A and B cover. So, if Medicare doesn’t cover something, your Medicare Supplement plan won’t either. This is the case for:
- Prescription drugs
- Routine dental, vision, and hearing
Since your Medicare Supplement plan won’t cover these items, you’ll have to make alternative arrangements. In the case of prescription drug coverage, you’ll want to enroll in a standalone Part D Prescription Drug Plan. This plan will help with the cost of any medications you take.
As for dental, vision, and hearing, you have a more difficult choice to make. You can elect to simply pay cash for these services. Unfortunately, these costs can really add up over time, so you should consider adding supplementary coverage. There are policies that combine all three of these services, or you can pick and choose between them.
How Can I Get Help With Medigap Plans?
It can be intimidating to find and enroll in a Medigap plan that best suits your needs. Lakeland Medicare Advisors can make the process easy, pain-free, and efficient. Call or click to schedule a free, no-obligation Medicare consultation. Working together, we can help you review all the plans available in your area, and help you compare quotes for the most competitive plans. Get started today for free.