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Medicare Supplement Plans
What are Medicare Supplement Plans?
Medicare Supplement plans, often called Medigap, are private health insurance policies designed to fill in the gaps of Original Medicare coverage. Original Medicare, which includes Part A (hospital insurance) and Part B (medical insurance), doesn't cover all health-related costs. For instance, you're still responsible for co-payments, coinsurance, and deductibles. This is where Medicare Supplement plans can be beneficial.
Here's some important information about these plans:
Coverage: Medigap plans help cover out-of-pocket costs that Original Medicare does not cover, like deductibles, co-pays, and coinsurance. Some plans also cover services that Original Medicare does not cover, like medical care when you travel outside of the U.S.
Standardized Plans: Medigap policies are standardized and must follow federal and state laws designed to protect you. They are identified by letters (A through N) in most states. Each standardized policy must offer the same basic benefits, no matter which insurance company sells it. So, Plan A from one company is exactly the same as Plan A from another company. But note that costs can vary from one insurer to another.
Eligibility and Enrollment: You're eligible for a Medigap policy if you have Medicare Part A and Part B. The best time to buy a Medigap policy is during your Medigap open enrollment period, which is the six months period that starts the first day of the month in which you're 65 or older and enrolled in Part B. During this period, you can't be denied a policy or charged more due to health problems. Outside this period, insurers can apply medical underwriting, and you might not be able to buy a policy, or it could cost more.
Cost: The cost of Medigap policies can vary widely. Factors affecting the price can include the amount of coverage provided, the insurance company, your location, and your age. Some policies are "age-rated" (the premium is based on your age when you buy the policy), "community-rated" (everyone in an area pays the same premium, regardless of age), or "attained-age-rated" (premiums increase as you age).
Prescription Drugs: Medigap policies sold after January 1, 2006, are not allowed to include prescription drug coverage. If you want prescription drug coverage, you can join a Medicare Prescription Drug Plan (Part D).
Compatibility with Other Plans: You can't use Medigap if you have a Medicare Advantage Plan. Also, it's illegal for anyone to sell you a Medigap policy if you have a Medicaid or a Medicare Medical Savings Account (MSA) Plan.
Eligibility for Medicare Supplement Plans
Medicare Supplement Plans, also known as Medigap plans, are designed to fill in the "gaps" in coverage that are not covered by Original Medicare, including co-insurance, co-payments, and deductibles. However, not everyone is eligible for these plans.
To be eligible for a Medicare Supplement plan, you must meet the following criteria:
Have Medicare Part A and Part B: Medigap supplements your Original Medicare benefits, which means you need to have Medicare Part A (hospital insurance) and Part B (medical insurance) before you can enroll in a Medigap plan.
Age Requirement: Although this can vary by state, you usually need to be 65 or older to qualify for a Medigap plan. However, certain states require insurance companies to offer at least one kind of Medigap policy to people with Medicare who are under 65.
Residency: You must reside in the state where the Medigap policy is offered. Insurance companies might have different plans and premiums for different states.
Enrollment in Medicare Advantage Plan: You are not eligible to have a Medigap policy if you're in a Medicare Advantage Plan. You can switch to a Medigap policy if you switch back to Original Medicare.
Open Enrollment: The best time to enroll in a Medigap plan is during your Medigap open enrollment period. This six-month period starts on the first day of the month in which you're both 65 or older and enrolled in Medicare Part B. During this period, you have a guaranteed issue right, which means that insurance companies cannot refuse to sell you a policy, cannot impose pre-existing condition waiting periods, and cannot charge you more due to health status.
After this enrollment period, your ability to buy a Medigap policy may be limited and it may be more costly. Some states have additional open enrollment periods.
Not Dual-Eligible: If you have both Medicare and Medicaid, typically known as being dual-eligible, you cannot use a Medigap policy to pay for costs you have under Medicaid, and insurance companies are generally not allowed to sell you a Medigap policy.
Remember, one Medigap policy only covers one person. If you and your spouse want Medigap coverage, you'll each have to buy separate policies.
Different Types of Medicare Supplement Plans
Medicare Supplement plans, also known as Medigap plans, come in several different types, identified by letters (A, B, C, D, F, G, K, L, M, N). Each lettered plan offers a different set of benefits, covering different amounts of your Medicare Part A and Part B costs.
Plan F, for example, covers all deductibles, coinsurance, and copayments, making it one of the most comprehensive—but also usually one of the most expensive.
Plan K and Plan L are cost-sharing plans, meaning they cover less of your costs upfront but protect you against catastrophic expenses by providing a maximum out-of-pocket limit.
Plan N covers all Part B coinsurance costs, except for a copayment of up to $20 for some office visits and up to $50 for emergency room visits that don’t result in an inpatient admission.
It's important to note that as of January 1, 2020, Medigap plans sold to new people with Medicare aren't allowed to cover the Part B deductible, so Plans C and F are not available to new enrollees, but if you already have one of these plans, you can keep it.
Although each type of plan is standardized, meaning benefits must be the same between insurance companies for the same lettered plan, premiums can vary widely, so it's beneficial to shop around.