November 22, 2011
Medicare Supplement Insurance - Medigap Plans
Medicare Supplemental Insurance is known by several names including Medigap, Med Supp, and Medicare Supplement. Medicare Supplement insurance is designed to cover a variety of out-of-pocket expenses associated with Original Medicare such as deductibles and co-payments. The type of Medicare Supplement plan determines which deductibles and co-payments are covered by the insurance. In 47 of the United States, there are ten standardized Medicare Supplement plans. The standardized Medicare Supplement plans are named with a letter (e.g. A) and all Medicare Supplement plans with the same letter offer the same benefits. In other words, the benefits for a Medicare Supplement Plan F enrollee in Virginia are the same for a Medicare Supplement Plan F enrollee in New Mexico. However, prices may vary significantly for the same Medicare Supplement plan so it is essential that you comparison shop before enrolling in a Medicare Supplement plan. Below is a summary of benefits offered by each of the ten standard Medicare Supplement plans:
| 2011 Medicare Supplement Plans | ||||||||||
| Medicare Supplement Benefits | A | B | C | D | F* | G | K | L | M | N |
| Medicare Part A co-insurance hospital costs up to an additional 365 days after Medicare benefits are exhausted | X | X | X | X | X | X | X | X | X | X |
| Medicare Part B co-payment or co-insurance coverage | X | X | X | X | X | X | 50% | 75% | X | X*** |
| First 3 pints of blood | X | X | X | X | X | X | 50% | 75% | X | X |
| Part A hospice care co-insurance or co-payment | X | X | X | X | X | X | 50% | 75% | X | X |
| Skilled Nursing Facility (SNF) care co-insurance | X | X | X | X | 50% | 75% | X | X | ||
| Medicare Part A deductible | X | X | X | X | X | 50% | 75% | 50% | X | |
| Medicare Part B deductible | X | X | ||||||||
| Medicare Part B 'excess charges' | X | X | ||||||||
| Foreign travel emergency coverage (up to plan limits) | X | X | X | X | X | X | ||||
| Medicare preventative care Part B co-insurance | X | X | X | X | X | X | X | X | X | X |
| Out-Of-Pocket Limit** | ||||||||||
| $4,660 | $2,330 | |||||||||
* There is also a high-deductible version of Plan F where beneficiaries pay costs up to a $2,070 deductible amount before the plan begins coverage.
** After the out-of-pocket limit is reached for plans K or L, the plan pays 100% of covered services for the remainder of the calendar year.
*** Plan N pays 100% of the Part B co-insurance costs except up to $20 copayment for office visits and up to $50 for emergency room visits.
Not every insurance company offering Medicare Supplemental Insurance offers all ten Medicare Supplement plans. An insurer may choose only to offer a subset of Medicare Supplement plans.
People with Medicare Supplement plans often buy prescription drug plans since Medicare eliminated prescription drug coverage from Medicare Supplement plans when Medicare Part D was offered.
Massachusetts, Minnesota, and Wisconsin do not offer the standard Medicare Supplement plans. Each of these states has its own unique Medicare Supplement offerings.
What is Medicare Supplement Insurance?
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Types of Medicare Supplement Pricing
Medicare Supplement plans pricing can be affected by numerous factors including when you enroll, age, sex, and whether or not you smoke.
Age-attained pricing bases your Medicare Supplement monthly premium on your age. This may make the plan very affordable if you enroll when you turn 65 but as you age, the premium amounts increases. This may make the Medicare Supplement plan very expensive over time. Age-attained plans may also increase monthly premiums due to inflation and other factors.
Community-rated premiums offer the same Medicare Supplement monthly premium for all enrollees in a plan type regardless of the age when they enrolled or their current age. An additional benefit of community-rated premiums is that the premium does not increase each year as you age. Community-rated Medicare Supplement policies are sometimes referred to as "no-age" rated policies. The monthly premiums in community-rated Medicare Supplement plans may increase due to inflation and other factors but will not increase because you get older.
Issue-age premiums determine the Medicare Supplement premium from the age you were when you first enrolled in the company's Medicare Supplement plan. A person who enrolls at age 70 will pay more than a person who enrolls at age 65. However, for both enrollees, the premium does not increase annually after you enroll. The monthly premiums in issue-age priced Medicare Supplement plans may increase due to inflation and other factors but will not increase because you get older.
Medicare Supplement Open Enrollment
Open-enrollment is typically the best time to enroll in a Medicare Supplement insurance plan. Medicare Supplement open enrollment starts in the first month a person age 65 or older is covered by Medicare Part B. The open enrollment period lasts for six months. During this enrollment period medical underwriting cannot be used to evaluate an individual's application for Medicare Supplement enrollment so he or she cannot be denied Medicare Supplement coverage or be charged a higher premium based on current or previous health problems. Some states have granted additional Medicare Supplement open enrollment rights for residents of the state. However, a Medicare Supplement plan may be allowed to make you wait for coverage for medical services related to a health problem you had prior to joining a Medicare Supplement plan (i.e. a pre-existing condition). A Medicare Supplement plan may only make an individual wait a maximum of six months for Medicare Supplement coverage to begin for medical services related to a pre-existing condition.
Medicare SELECT
"Medicare SELECT" refers to a type of Medicare Supplemental Insurance plan that requires you to use hospitals and/or physicians within its network of healthcare providers in order for you to be eligible for full plan benefits. Any of the ten Medicare Supplement plan types can be offered in a Medicare SELECT version by an insurance company.
Medicare Supplement Guaranteed Issue Rights
Also known as "Medigap Protections," guaranteed issue rights are privileges you are due from a Medicare Supplemental Insurance plan under a defined set of circumstances. When your circumstances dictate that you have guaranteed issue rights, a Medicare Supplement plan provider must sell you a Medicare Supplement policy, cover your pre-existing conditions, and the plan cannot charge you a higher monthly premium because of current or past health problems. Situations where a person eligible to enroll in a Medicare Supplement plan under guaranteed issue rights include:
- You're notified that the Medicare Advantage program in which you are enrolled is discontinuing the plan in your area. In this case, you have guaranteed issue rights for Medicare Supplement plans A, B, C, F, K, and L
- You have Medicare Parts A and B alongside an employer or union health plan that will be discontinued. In this case, you have guaranteed issue rights for Medicare Supplement plans A, B, C, F, K, and L
- You have a Medicare SELECT plan and you move out of the plan's coverage region. In this case, you have guaranteed issue rights for Medicare Supplement plans A, B, C, F, K, and L
- You ended your previous coverage in a Medicare Supplement plan in order to enroll in a Medicare Advantage plan and, in less than a year since enrollment in Medicare Advantage, you wish to go back to Medicare Supplemental insurance coverage. In this circumstance you may re-enroll in your prior Medicare Supplement plan with guaranteed issue rights. If that plan is not available, you may enroll in Medicare Supplement plans A, B, C, F, K, and L with guaranteed issue rights
In the above bullet points, residents in Massachusetts, Minnesota, and Wisconsin have different Medicare Supplement plan options since those three states do not offer the standardized ten Medicare Supplement plans.
Medicare Supplement plans are also "guaranteed renewable" which means that your enrollment in a Medicare Supplement plan cannot be terminated by the insurance company unless you provide false information to the plan, commit fraud, or don't pay your monthly premiums.
Pre-Existing Conditions & Medicare Supplement Plans
Health problems that you have prior to joining a Medicare Supplement plan are known as "pre-existing conditions." For individuals enrolling in a Medicare Supplement plan during the open enrollment period, the Medicare Supplement plan may only make an individual wait a maximum of six months for coverage to take effect for healthcare services related to a pre-existing condition. Individuals with Medicare Supplement guaranteed issue rights cannot have coverage excluded for pre-existing conditions. For individuals outside open enrollment and without guaranteed issue rights, a Medicare Supplement plan may use medical underwriting to decide whether to accept your application for enrollment and what to charge you for your Medicare Supplement plan.