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Another Look at Medigap Coverage

2016 Medicare Open Enrollment Guidelines

“Medigap” is the short name for Medicare Supplemental Coverage. It provides insurance coverage for the costs of actual medical services that Medicare does not cover. Medicare does not cover some medical expenses at all and only pays part of other services. Medicare beneficiaries without Medigap coverage are responsible to pay for services not paid by Medicare out of their own pockets.
Medigap is managed by each State individually as opposed to Original Medicare or Medicare Advantage, which is managed by the federal government and The Centers for Medicare & Medicaid Services.
There are requirements that beneficiaries must meet in order to be eligible for Medigap. Enrollment in Medicare Part B is necessary for eligibility. The timing of enrollment is also important. There are two enrollment periods. Enrollment must take place within six months after your 65th birthday and receiving Medicare B benefits, as this table below illustrates. No medical screening is required during those periods. An application made at any other time will require a medical screening.
When Part D Medicare coverage was first established on January 1, 2016, Medigap did not include prescription drug coverage. The choice is now up to the issuing company’s discretion.
Even though having a Medigap policy can help save people money, more than 80 percent of recipients of Medicare do not choose to enroll in Medigap coverage. The benefit of Medigap coverage is the difference between the actual service cost and what Medicare covers and as a general rule, plans with higher premiums typically provide more benefits to the insured.
Of the nearly 20 percent of Medicare-eligible people who opt in for Medigap, one-third of them live in rural areas and two-thirds of those have income that falls below $30,000 per year.
Medigap Enrollment – What are the rules?
In order to be eligible for Medigap, a person who is 65 years or older must already be enrolled in Original Medicare (Parts A & B). People who have Medicare Advantage plans cannot enroll and use Medigap policies.
If a person does not enroll in a Medigap plan when first eligible they will have to undergo a medical screening in order to get on a policy. To avoid medical screenings, a person must either enroll within six months of turning 65, or enroll within six months of being a Medicare Part B recipient. People who are not yet 65 year old have a different set of rules.
The state a person lives in also has an effect on Medigap eligibility. About 50 percent of U.S. states do not require private insurance entities to offer people who are less than 65 years old a Medigap policy choice. Those that do mandate Medigap availability allow companies to first require medical screenings. For instance, someone under 65 years old, who lives in Vermont and that suffers from End Stage Renal Disease (ERSD) is not eligible for Medigap. However, if that person lived in Delaware, he or she would be eligible for a Medigap policy.
Medigap Explained
There are 10 types of Medigap plans, which are labeled A through N, and each has specific benefits (see table below). As a general rule, Medigap policies that have higher monthly premiums may have the most benefits to offer.
Medigap plans A through N offer the same basic elements as you can see from the below chart. Different plans offered by different private carriers may offer different, extra benefits, which are not only designed to attract consumers to their particular plan, but to also bring down the insured’s overall medical costs.
Before picking a Medigap plan, it’s important to know what kind of services you will need to pay for in the near future. For instance, if a person will need skilled nursing services, Medigap Plans A and B are not good choices because they specifically do not cover skilled nursing facility care.
The cost of a particular Medigap plan may vary by state and will vary by carrier so it’s important to shop around and know your choices. In some cases, it may be most helpful to simply enlist the help of a licensed health insurance agent. They are not only more experienced because they are in the profession of examining a person’s financial and medical circumstances and finding the right plan for them, but they are also more familiar with the different types of plan benefits.
Medicare Advantage Plans and Medigap
Medicare Advantage or Medicare Part C as it is also called, is a Medicare plan offered by a private carrier. Medicare Advantage plans offer the same coverage as both Parts A and B under Original Medicare. Although a person who enrolled in a Medicare Advantage plan must also pay their standard Part B premium in addition to their Medicare Advantage premium, they are oftentimes getting benefits that people on Original Medicare do not have access to.
Unfortunately, people with a Medicare Advantage plan cannot use a Medigap policy to bring their out-of-pocket costs down. If a Medicare Advantage recipient absolutely wants a Medigap policy, they will have to switch back to Original Medicare.