If you are a Medicare beneficiary or will be eligible for Medicare benefits soon, you may be wondering how a Medicare Supplement plan works in relation to Obamacare. Obamacare has little, if any, direct impact on Medicare Supplement plans.

Do Obamacare requirements affect Medicare Supplement plans?  

Obamacare is the common name for the Affordable Care Act (ACA) that was passed into law in 2010.

Obamacare generally requires insurers and employers to offer health insurance that provides certain minimum essential coverage. The law also requires people to have minimum essential insurance coverage or pay a penalty.

Medicare Supplement (also known as Medigap) plans are offered by private insurance companies. Medicare Supplement plans are designed to fill some of the gaps in Medicare Part A and Part B coverage. These plans may cover Medicare Part A and/or Part B deductibles, coinsurance and copayments. Some Medicare Supplement plans may cover the excess charges of providers who do not accept Medicare assignment—expenses that you would have to pay out-of-pocket if you did not have coverage through a Medicare Supplement plan.

By their very nature as “supplemental” insurance, Medicare Supplement plans generally do not provide minimum essential coverage, as defined under Obamacare. You don’t have to worry about paying a penalty for insufficient insurance coverage, though, if you have Medicare coverage. And you must have Medicare Part A (hospital insurance) and Medicare Part B (medical insurance) to qualify for a Medicare Supplement plan, so again, Obamacare’s requirements are met.

Medicare Supplement plans work in conjunction with Original Medicare (Part A and Part B) to help cover out-of-pocket expenses. As far as Obamacare is concerned, you won’t owe a fee for having a Medicare Supplement plan because your plan will always be paired with Original Medicare, which provides minimum essential coverage.

A look at Obamacare vs. Medciare deductible amounts

An eHealth study found that the average Obamacare (ACA) deductible is much higher than total of average Medicare deductibles.*


Average Deductible Comparison ACA vs. Part D

Source: Premiums and Out-of-Pocket Costs Before and After Medicare, eHealth, 2018.

*The study averaged ACA deductibles for people ages 63-64. It then averaged the Medicare Part A, Part B, and Part D deductibles for people aged 65-70. The study included data from late 2017 into June 2018.

Medicare Supplement plans and pre-existing health conditions

Under Obamacare, health insurance companies and employers who sponsor group health insurance typically can’t deny health coverage to someone with a pre-existing health condition.  For reasons mentioned above, this Obamacare rule doesn’t apply to Medicare Supplement plans.  However, as a Medicare beneficiary you have some protections related to guaranteed-issue rights.

  • If you apply for a Medicare Supplement plan during the Medicare Supplement Open Enrollment period (typically the six-month time period when you’re at least 65 years old and you first enroll in Medicare Part B), you cannot be turned down or charged more due to a pre-existing condition.
  • If you enrolled in a Medicare Advantage plan when you were first eligible for Medicare, but changed your mind and returned to Original Medicare (Part A and Part B) within the first year, you cannot be turned down or charged a higher premium for a Medicare Supplement plan.
  • There may be other situations where you have a guaranteed-issue right to buying a Medicare Supplement plan.

Please note that in some cases, even if you have a guaranteed-issue right, the Medicare Supplement insurance company can impose a waiting period of up to six months before covering costs related to your pre-existing condition.

If you apply for a Medicare Supplement plan anytime outside a guaranteed-issue period, however, you probably won’t have guaranteed issue rights.

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