What is a Medicare Supplement?

Medicare supplement insurance fills the gaps in the Medicare puzzleMedicare Supplements fill in the gaps of Original Medicare (Part A and Part B).

Original Medicare was designed to protect senior citizens from the acute costs of medical care.  It was not designed to provide comprehensive insurance for all medical costs.  As a result, supplemental insurance policies designed to work alongside Medicare became popular shortly after Medicare was signed into law in 1965.  These policies became known as Medicare Supplement, or Medigap, policies.  Today, nearly 14 million people use a Medigap plan to supplement, or fill in the “gaps”, of Original Medicare.

The gaps in coverage left behind by Original Medicare can be substantial.  These costs come in the form of deductibles, coinsurance and copayments.  In addition, unlike a group health insurance policy you’re familiar with from your employer, Original Medicare contains no “catastrophic” limit on out-of-pocket expenses.

What Medicare Supplement plans cover

Medigap coverage helps pay the deductibles, coinsurance and copayments of Medicare Part A and Part B.  For example, the Part A benefit period deductible is $1,556.  That means if you land in the hospital you will have to pay this deductible before Medicare starts to pay.  Most Medigap plans fully cover this deductible.  Medicare Part A also has steep daily coinsurance costs starting after day 60 in a hospital.

In addition, Part A has a $194.50 coinsurance cost per day for days 21-100  in a skilled nursing facility and no coverage at all after day 100.  Most Medigap plan fully pay these coinsurance costs.

Medicare Part B has an annual deductible of $233.  Only two Medigap plans, C and F, cover this deductible (these two plans are only available to those that turned 65 before January 1, 2020).  Part B also has a 20% coinsurance you are responsible for, with no out-of-pocket limit.  Most  Medigap plans cover this Part B coinsurance.

Benefits of a Medigap plan:

    • Helps you budget health care costs by providing more predictable expenses
    • Simplify your billing paperwork – your provider bills Medicare and Medicare bills the Medigap plan
    • No limitations on which doctor or hospital you can use – there are no networks that restrict your choices; especially important when traveling
    • Guaranteed renewable – the insurance company can never cancel your policy for any reason as long as you pay the monthly premium
    • No referrals required to see a specialist
    • Works anywhere Medicare works – As the primary payor Medicare determines where your Medigap plan will work, not the insurance company.

What Medicare Supplements DON’T cover

A Medigap plan is designed fill in the “gaps” of Original Medicare.  It doesn’t cover services that are outside of Medicare’s coverage.  There is one exception.  Medicare usually doesn’t cover foreign travel medical costs.  However, Medigap Plans C, D, F, G, M and N cover 80% of foreign travel emergency costs with certain restrictions.

Medigap doesn’t cover:

    • long term care
    • vision or dental care
    • hearing aids
    • eyeglasses
    • private duty-nursing

When to buy a Medicare Supplement

For most people, the first and best time to buy a Medigap policy is during the Medigap Open Enrollment Period.  The Medigap OEP begins on the first day of the month in which you’re both 65 or older and enrolled in Medicare Part B and it ends 6 months later.  During this time you can buy any Medigap policy you want without undergoing medical underwriting.  This means you don’t have to answer any health questions to qualify for the coverage.  Note, some states allow a Medigap policy to be sold to someone under 65 and on Medicare due to a disability or End-Stage Renal Disease.

After your Medigap OEP has expired, you can still buy or switch Medigap plans any day of the year.  The only difference is that you will have to go through medical underwriting.  If you can’t qualify based on your health, the insurance company can deny you coverage.

Guarantee Issue Right

You don’t have to go through the above mentioned medical underwriting if you have a guarantee issue right (also called “medigap protections”).  When you have a Guarantee Issue Right you are “guaranteed” to receive a Medigap plan.

There are several situations when you qualify for a guarantee issue right.  For example, if you already have a Medigap plan and your insurance carrier goes bankrupt, you have the right to buy any Medigap plan in your state.

Another example of a Guarantee Issue Right is when you have a Medicare Advantage plan and that plan stops giving care in your area.  In both of these situations, you have 63 days from the time you lost your coverage to purchase a Medigap plan if you want to use your guarantee issue right.

If you have a guarantee issue right an insurance company must:

    • Sell you a Medigap policy, regardless of your health condition.
    • Cover all your pre-existing health conditions
    • Can’t charge more for a Medigap policy based on your past or present health conditions

How does your current Medigap coverage stack up against what's available right now?

Call 913-717-6782

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How to choose a Medicare Supplement

The first thing you want to do is take a look at your current health and lifestyle and try to get an idea of what your future health care needs may look like.  Try to match this up with the benefits offered in the different Medigap plans.  This is important because you may not be able to change plans later based on your health.

After you decide on a plan, you want to find the correct insurance company to go with.  Some of the more popular plans have more than 30 different insurance companies competing for your business.  Some of the factors you should consider when choosing a plan are:

  • Monthly premium – This is the amount of money you pay the insurance company each month for your Medigap coverage.  How does it compare to the competition?
  • Monthly premium history – Policies will generally have a premium increase each year as the cost of medical care rises.  Does the company have a history of stable rate increases?
  • Financial Stability – Look at the financial rating of the insurance company from a trusted independent rating agency like AM Best, which specializes in the insurance industry.  What is the absolute level of financial stability and how does it compare to the other insurance companies that are offering coverage for a similar price?

Should you switch to a different policy?

There are many reasons why you may want to switch to a different Medigap policy:

  1.   Your current policy has suitable benefits, but you can find another policy that’s less expensive.
  2.   Your current policy has more benefits than you need and you’re tired of overpaying for your coverage.
  3.   You’re happy with your current benefits, but you want to change your insurance company.
  4.   You feel your coverage is too thin so you want a plan that offers more benefits.

Questions about your Medigap coverage?

Call 913-717-6782 for a free consultation or click the button below to receive a call or email.