What is a Medicare Supplement Plan?

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Medigap/Medicare Supplement

What are Medigap/Medicare Supplement Plans

A Medigap policy is an insurance policy that helps supplement Original Medicare and is sold by private insurance companies.

A Medigap policy can help pay for some or all of the remaining health care costs that Original Medicare doesn’t pay for at 100%.

If a beneficiary had Original Medicare and a Medigap Policy, Medicare is primary and will pay its share of the Medicare-approved amount for covered health care costs.  The Medigap policy is secondary and will pay a portion or all of the remaining cost that Original Medicare does not pick up at 100%.

All Medigap policies must follow federal and state laws designed to protect the Medicare beneficiary, and policies must be clearly defined as “Medicare Supplement Insurance.”  Each standardized Medigap policy must offer the same basic benefits, no matter which insurance company sells it.

Cost and potential underwriting guidelines are the only difference between Medigap policies with the same letter sold by different insurance companies.

What Medigap Policies Cover:

Insurance companies selling Medigap policies are required to make Plan A available.

If they offer any other Medigap policy, they must also offer either Plan C or Plan F to individuals who are not new to Medicare and either Plan D or Plan G to individuals who became eligible for Medicare on or after January 1, 2020.

Medigap plans E, H, I, and J are no longer sold, but beneficiaries can be grandfathered into those plans.

Plans F and G also offer a high-deductible plan in some states.  With this option, beneficiaries must pay for Medicare-covered costs up to the deductible amount before the policy pays anything.

** For plans K and L, after the beneficiary meets their out-of-pocket yearly limit and their yearly Part B deductible, the Medigap plan pays 100% of covered services for the rest of the calendar year.

*** Plan N pays 100% of the Part B coinsurance, except for a copayment of $20 for some office visits and a $50 copayment for emergency room visits that don’t result in an inpatient admission.

What Medigap Policies Don’t Cover

Generally, Medigap policies don’t services that Original Medicare does not cover.  For example, long-term care, vision, dental, hearing aids, prescriptions obtained at a retail pharmacy, or through-mail order.

Medigap Eligibility

Beneficiaries must have Medicare Part A and Part B

Beneficiaries must be a resident in the state that they are buying the Medigap policy from.

Beneficiaries under age 65 and disabled do not get the same rights to buy a Medigap policy as a beneficiary age 65 or older who is eligible for Medicare.  Michigan is a state-required to sell plans to U65 beneficiaries.  U65 beneficiaries buying a Medigap policy will have to pay a higher premium and may be subject to medical underwriting to determine eligibility.

Typically, Medicare beneficiaries eligible for Medicaid cannot buy a Medigap policy.  There are some exceptions to this rule.

Medigap Enrollment

Typically, the best time to buy a Medigap policy is during the Medigap Open Enrollment Period. This period lasts six months and begins the first day of the month in which a beneficiary is 65 or older and enrolled in Medicare Part B.

During the Medigap Open Enrollment Period insurance carriers cannot:

  • Refuse to sell a beneficiary any Medigap policy sold in their state.
  • Charge a beneficiary more for a Medigap policy than they charge someone with no health problems.

Beneficiaries’ rates are based on zip code, age, and gender.

  • Medigap rates typically increase each year as the beneficiary ages.

Outside of the Medigap Open Enrollment Period, insurance carriers are generally allowed to use medical underwriting to decide whether to accept a beneficiary, how much to charge, or to decline a beneficiary all together unless other guaranteed issue rights apply.

Medigap Guaranteed Issue Rights:

You have a guaranteed issue right if…

 

You have the right to buy…

 

You can/must apply for a Medigap policy…

 

You’re in a Medicare Advantage Plan (like an HMO or PPO), and your plan is leaving Medicare or stops giving care in your area, or you move out of the plan’s service area.

 

Medigap Plan A, B, C*, D*, F*, G*, K, or L that’s sold in your state by any insurance company.

 

You only have this right if you switch to Original Medicare rather than join another Medicare Advantage Plan.

 

As early as 60 calendar days before the date your health care coverage will end, but no later than 63 calendar days after your health care coverage ends. Medigap coverage can’t start until your Medicare Advantage Plan coverage ends

 

You have Original Medicare and an employer group health plan (including retiree or COBRA coverage) or union coverage that pays after Medicare pays, and that plan is ending.

 

Note: In this situation, you may have additional rights under state law.

 

Medigap Plan A, B, C*, D*, F*, G*, K, or L that’s sold in your state by any insurance company.

 

If you have COBRA coverage, you can either buy a Medigap policy right away or wait until the COBRA coverage ends.

 

No later than 63 calendar days after the latest of these 3 dates:

 

1. Date the coverage ends.

 

2. Date on the notice you get telling you that coverage is ending (if you get one).

 

3. Date on a claim denial, if this is the only way you know that your coverage ended.

 

You have Original Medicare and a Medicare SELECT policy. You move out of the Medicare SELECT policy’s service area.

 

Call the Medicare SELECT insurer for more information about your options.

 

Medigap Plan A, B, C*, D*, F*, G*, K, or L that’s sold by any insurance company in your state or the state you’re moving to.

 

As early as 60 calendar days before the date your Medicare SELECT coverage will end, but no later than 63 calendar days after your Medicare SELECT coverage ends.

 

(Trial Right) You dropped a Medigap policy to join a Medicare Advantage Plan (or to switch to a Medicare SELECT policy) for the first time, you’ve been in the plan less than a year, and you want to switch back.

 

The Medigap policy you had before you joined the Medicare Advantage Plan or Medicare SELECT policy if the same insurance company you had before still sells it.

 

If your former Medigap policy isn’t available, you can buy Medigap Plan A, B, C*, D*, F*, G*, K, or L that’s sold in your state by any insurance company.

 

As early as 60 calendar days before the date your coverage will end, but no later than 63 calendar days after your coverage ends.

 

Note: Your rights may last for an extra 12 months under certain circumstances.

 

Your Medigap insurance company goes bankrupt, and you lose your coverage, or your Medigap policy coverage otherwise ends through no fault of your own.

 

Medigap Plan A, B, C*, D*, F*, G*, K, or L that’s sold in your state by any insurance company

 

No later than 63 calendar days from the date your coverage ends.

 

You leave a Medicare Advantage Plan or drop a Medigap policy because the company hasn’t followed the rules, or it misled you

 

Medigap Plan A, B, C*, D*, F*, G*, K, or L that’s sold in your state by any insurance company.

 

No later than 63 calendar days from the date your coverage ends.

 

 

 

*Note: Plans C and F will no longer be available to people who are new to Medicare on or after January 1, 2020. However, if you were eligible for Medicare before January 1, 2020, but not yet enrolled, you may be able to buy Plan C or Plan F. People eligible for Medicare on or after January 1, 2020, have the right to buy Plans D and G instead of Plans C and F.

Switching Medigap Policies:

In most cases, beneficiaries won’t have a guaranteed issue right to switch Medigap policies without going through medical underwriting, unless they’re within their 6-month Medigap Open Enrollment Period or are eligible under certain specific circumstances for guaranteed issue rights.

If a beneficiary decides to switch, they will be required to go through medical underwriting.  The insurance carrier may approve the beneficiary at the preferred rate, rate them up, or decline the application.

Beneficiaries can switch Medigap policies at any time throughout the year as long as they can pass underwriting.

Beneficiaries moving out of state may not be able to keep their current Medigap policy and will get a guarantee issue to buy a new policy in their new state.

Canceling Medigap Policies:

If a beneficiary moves to a new Medigap carrier, moves to Medicare Advantage, goes back to just Original Medicare, or moves out of the plan state, they will need to call and request cancelation from their existing Medigap policy.  Some carriers may require the request to be sent in writing.