What are Medicare Supplement (Medigap) plans?
A Medicare plan simply does not cover everything. Oftentimes, there will be a gap between the coverage that is provided and the treatment that is actually needed. In order to bridge this gap, Medicare Supplement plans have been created. When a person needs to receive treatment, the pre-stated amount that the Medicare Supplement Plan will provide is paid, followed by the amount that the original Medicare plan will pay.
7 crucial facts about Medicare Supplement plans
- Anyone applying for a Medicare Supplement Plan must have original Medicare Part A and Part B.
- It is possible for a person to apply for a Medicare Supplement plan if he or she already has a Medicare Advantage Plan (also known as Medicare Part C or MA). But before he or she enrolls in the supplement plan, the Medicare Advantage plan needs to be abandoned.
- A monthly premium will be paid for a Medicare Supplement plan, as well as for original Medicare Part B. Part A is only free to those who have earned 40 credits, which means that they have worked and paid payroll taxes for at least 10 years.
- Medigap plans are only designed to provide coverage to one person. So, if a couple wishes to apply, they each need to get their own separate plans.
- Any insurance company that offers them and is licensed by the state in which the person seeking the coverage resides can purchase Medigap plans.
- Medigap plans that are sold after 2006 are not allowed to cover the cost of prescription drugs. If a person has a plan that he or she enrolled in before 2006, those benefits will carry over. For the rest of the population, if they want prescription drug benefits, they need to enroll in the Medicare Prescription Drug Plan, also known as Plan D.
- If a person has a Medicare Medical Savings Account (MSA) plan, it is illegal for any other healthcare provider to sell that person a Medigap plan.
Benefits that Medigap plans do not cover
- Vision benefits — This includes any eye appointments, as well as any coverage for prescription lenses, contact, or corrective eye surgery.
- Private nursing — Private nursing, in which a nurse comes to the home of a person to perform basic medical duties, is not a service that is covered by Medigap plans
- Hearing aids — Medigap plans do not help cover the costs of hearing aids.
- Dental care — Any dentist appointments or treatments that focus primarily on the teeth, braces or orthodontic appliances are not covered by Medigap plans.
Costs of Medigap plans
Medicare will not help cover any of the costs of enrolling in a Medigap coverage plan. Instead, Medigap plans will help pay for the costs that are incurred by Medicare Part B. The Medigap plan will pay the doctor directly for any costs otherwise paid for by Medicare Part B.
It is highly recommended that a person that is interested in a Medigap plan do comparison price shopping between different insurance carriers. That is because sometimes a person can get a better deal for the exact same policy from one carrier over another.
It is possible to purchase a Medicare SELECT plan, which requires policyholders to use in-network doctors and hospitals in order to be eligible for full coverage. If such a plan does not seem to be working out in the first 12 months, the person who purchased the plan is able to switch to a basic Medigap plan.
How Medigap plans are priced
- Community-rated plans (“no age-rated”) –For this plan, everyone is charged the same monthly premium, regardless of how old they are. Pricing will only fluctuate as a result of outside forces, such as overall inflation, rather than the age of the policyholder.
- Issue-age-rated plans (“entry age-rated”) — For this plan, the amount of money paid every month is based on person’s age when he or she purchased the plan. This means that the younger a person is when purchasing the plan, the cheaper the plan’s premium will be. The cost may fluctuate because of factors not related to the person’s age.
- Attain-age-rated plans — The monthly premium to be paid is determined by the enrollee’s current age. This means that when a person first enrolls in a Medigap plan, the premium will be fairly low. As that person gets older, his or her monthly premium will increase, as well, as due to external factors.
Other factors that determine cost:
Insurance companies will also have different prices for their Medigap plans, for a variety of reasons.
Offered discounts — Some discounts will be offered for women, those who do not smoke or for people who are married, because each of these factors tend to result in lower health costs over an extended period of time. It is also common to see discounts for those who pay annually, as opposed to those who pay their premiums each month. If a person pays through electronic means, the insurance companies’ costs will be lower and they may reduce prices. Finally, if several plans are purchased at the same time, discounts might be available. Checking with the different insurance companies will allow the number of discounts to be maximized.
Medical underwriting — Some areas allow medical underwriting, or the review of a person’s medical history, to be a factor when an insurance company is calculating their Medigap plan costs. This is only applicable when a person does not have guaranteed issue rights or is not in a Medigap open enrollment period.
Networks — Insurance companies might require people to use hospitals and other healthcare providers that are within a predetermined network in order to guarantee them full coverage. This means that a person’s Medigap plan’s price will vary, depending on whether or not he or she uses in-network healthcare providers.
When to buy a Medigap policy
A person is able to purchase a Medigap policy when he or she first becomes eligible for Medicare benefits, during the initial enrollment period. The initial enrollment period starts when a person first turns 65 and purchases Medicare Part B. There is no way to ever trigger this period again. So, it is recommended that if you want a Medigap policy, you should enroll before your initial enrollment period ends. The benefit of enrolling in a Medigap policy during the initial enrollment period is that the insurance carrier must accept you into their plan without taking a medical history.
After the initial enrollment period ends, there is no guarantee that an insurance company will sell a person a policy after his or her medical history has been considered.
To find a supplement plan, use the form below, or call us at our toll-free number to speak with a healthcare professional.