Understanding Medicare Supplement Plans – AKA Medigap Plans

Medicare Supplement Plans, also known as Medigap, play a crucial role in filling the gaps left by Medicare coverage. In this informative guide, you'll explore the ins and outs of Medigap insurance, including when to enroll, available plans, costs, and the factors to consider when choosing the right coverage to meet your healthcare needs and financial situation.

Medicare is an excellent government program that helps seniors pay for necessary medical expenses that they would not be able to afford otherwise, but there are a lot of things that the program doesn’t pay for. Millions of Americans rely on Medicare to get the healthcare that they need, but there are dozens of different holes in the coverage that could leave participants with some hefty bills.

For those who have Medicare Parts A and B, it may be difficult to pay many of the additional out-of-pocket expenses such as copayments, coinsurance, and deductibles that are required. This is why a Medicare Supplement insurance policy can be helpful.

Medicare Supplemental insurance, also known as Medigap, coverage is a type of supplemental coverage to what Medicare covers.

If a Medicare participant has expenses that are not covered in the first place by Medicare, though, (such as non-essential cosmetic surgery), their Medicare Supplement policy generally won’t pay for the coinsurance or deductible.

Also, as a general rule, Medigap policies do not cover custodial care or long-term nursing home or home care.

The law guarantees the availability of Medigap policies to all new Medicare enrollees without any medical examination if someone enrolls in Medicare Supplement within six months of their 65th birthday.

At that time, the individual cannot be denied a Medicare Supplement policy or be charged more for Medigap because of their health.

Congress established federal standards for Medicare Supplement policies in 1990. As part of the Omnibus Budget Reconciliation Act, Congress required the National Association of Insurance Commissioners to address the subject of Medicare supplement insurance policies.

Specifically, this group’s task was to develop a standardized model Medicare supplement insurance policy that would provide certain “core” benefits, plus as many as nine other policies.

These model policies could then be adopted by the states as prototype policies for their insurers to offer as Medicare supplement insurance policies. The intent of this law regarding Medigap was to reduce the number of Medicare Supplement policies being offered for sale.

It also was intended to help consumers understand and compare Medicare Supplement insurance policies, thereby helping them make informed buying decisions by:

Standardizing Medicare supplement insurance coverage and benefits from one policy to the next;
Simplifying the terms used in those Medicare supplement insurance policies;
Facilitating Medigap policy comparisons; and
Eliminating Medicare supplement insurance policy provisions that could be misleading or confusing.

Available Medicare Supplemental Insurance Plans

Medicare Supplement, or Medigap insurance, is specifically designed to supplement Medicare’s benefits, and it is regulated by federal and state law. Medicare supplement insurance policies must be clearly identified as Medicare supplement insurance and must provide specific benefits that help fill the gaps in Medicare coverage – thus the name Medigap.

Other kinds of insurance may help with out-of-pocket health care costs, but they do not qualify as Medicare supplement, or Medigap, insurance plans. Unlike some types of health coverage that restrict where and from whom care can be received, Medigap policies pay the same supplemental benefits – regardless of the health care provider selected. If Medicare pays for a service, wherever provided, the standard Medicare supplement, or Medigap, policy must pay its regular share of benefits.

Although the benefits are identical for all Medicare supplement insurance plans of the same type, premiums can vary a great deal from one Medigap insurer to another and from area to area.p
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For many years, there were 10 standardized Medicare supplement plans. These plans were named Medicare supplement policies A through J, with Plan A being the most basic Medigap core benefits, and Plan J being the most comprehensive plan. Recently, however, additional Medicare supplement plans have been added.
These standard Medigap policies can help pay some of the costs in the Original Medicare Plan. If a participant is in a Medicare Advantage Plan, or Medicare Part C, they do not need a Medicare supplement policy.

Prior to June 2010, each standard Medicare supplement plan, labeled A through N, offered a different set of benefits, filled different “gaps” in Medicare coverage, and varied in price. Some insurers offered a “high deductible option” on Medicare supplement plan F. Several of the plans have been phased out and replaced by other letters. The current plans are:

Plan A
Plan B
Plan C
Plan D
Plan F
Plan G
Plan K
Plan L
Plan M
Plan N

For the most part, the basics regarding Medicare supplement policies have remained the same. However, with the June 2010 changes, some of the standard Medicare supplement plans have been eliminated, and new Medicare supplement plans have been introduced.

Every Medicare supplement policy must cover certain basic benefits. These basic benefits are as follows:

For Medicare Part A coverage:

Coinsurance for hospital days (certain conditions apply)
Cost of 365 more hospital days in your lifetime once you have used all Medicare hospital policy benefits.

How and When to Enroll in Medicare Supplemental Insurance Coverage

The best time for an individual to purchase a Medicare Supplement plan is during the open enrollment period. This is the period of six months from the date that a person is first enrolled in Medicare Part B and their age is 65 or over.

It is during this time of open enrollment that an individual cannot be turned down by the Medicare Supplement insurance company due to preexisting conditions. Also, the individual cannot be charged a higher amount of premium due to poor health if they purchase a policy during this open enrollment period.

However, once the open enrollment period is over, the individual may not be able to purchase the policy that they want because of certain preexisting conditions. Therefore, should an individual with preexisting health conditions wait until after the open enrollment period is over before enrolling in a plan, then they may have a much more limited choice as to what plans – if any – they may qualify for.

If a person has not turned 65 but has Medicare Part B, then their 6-month open enrollment period will begin with they become 65. (Note that there are some states that require at least a limited amount of time for open enrollment in Medicare Supplement for Medicare participants who are under age 65).

There are some instances when an individual can obtain a Medicare Supplement policy after their normal open enrollment period ends. In such cases, the Medicare Supplement insurance company cannot deny the individual coverage or even change the premium amount due to current or past health issues.

Some examples where this can happen include:

When an individual has lost their health coverage and they are not at fault under a Medicare Advantage plan, a Medicare Supplement plan, a Medicare Select plan, or employer coverage.
When an individual joins a Medicare Advantage plan for the first time and within one year of joining that plan, the individual decides that they want to leave Medicare Advantage.
There is a 63-day open window during which an insured must apply to the Medicare Supplement company and show them a letter of plan termination or involuntary termination.

In addition, if an individual is new to Medicare when they initially join a Medicare Advantage plan, then they could be able to choose any Medicare Supplement plan that they desire – provided that the Medigap company offers them for sale.

If the individual already had a Medicare Supplement policy prior to the time that the joined the managed care plan, then they could be allowed to obtain the same plan back again. If their previous plan is not available, then the individual will be guaranteed the right to purchase Medicare Supplement plans A, B, C, or F from any Medicare Supplement insurer that offers these plans in their state.

Prior to enrolling in a Medicare Supplement policy, an individual should determine if the desired plan excludes or limits coverage for any preexisting conditions after the open enrollment period ends.

Deciding Which Plan Is Right for You

One of the most important decisions that you’ll need to make when shopping for a Medigap plan is deciding which one of the policies is going to work best for you. There are several key categories that you will need to review to ensure that you’re getting the best supplemental plan to meet your healthcare needs.

The first factor that you should look at is your health. The main purpose of the Medigap plan is to ensure that you’re getting the healthcare that you need without being responsible for those massive hospital bills. If you’re in excellent health with few pre-existing conditions, then you can consider purchasing one of the smaller Medigap plans that leave more holes in the coverage.

On the hand, if you’re in poor health with a lot of severe health complications, then you will need to buy a more comprehensive plan, like a Plan F, which fills in all of the gaps left behind by Medicare. It is vital that if you are in poor health that you get set up on a comprehensive plan while you are in the initial enrollment period. You may not be able to qualify for an affordable rate later on when you will have to go through a medical exam.

Another factor that you should consider when you’re looking for coverage is your finances. Medigap plans are an excellent way to protect your savings account from being drained by expensive hospital bills, but that doesn’t mean that you should stretch your budget to purchase one of these supplemental plans. It’s important that you buy a plan that will fit your budget without leaving you pinching pennies at the end of every month.

Everyone would prefer to have a Medigap Plan F, which fills in all of the holes, but those are also going to be the most expensive policies. If you look at your finances and decide that you don’t have the money for the comprehensive coverage, then you should purchase a smaller policy, like a Plan A.

For the last category, you need to predict the future. Not only do you need to look at your current health, but you should also make an educated guess about any health problems that you will run into in the future. Taking into account family history and any past medical problems that could resurface is your best indicator of future problems. If your family has a trend of having heart attacks later in life, then you will need to ensure that you have the additional coverage that you will need.

How Much Does a Medigap Plan Cost?

Medicare Supplement premiums can be rated in a couple of different ways. With an attained age rating, the premium owed by the insured can increase as they get older. Therefore, if the individual purchases the policy when they are age 65, then they will pay a premium amount that the insurance company charges for 65-year-old insureds. Then, when the insured turns age 66, they will pay the amount of premium that is charged to 66 year-olds, and so forth.

If a Medicare Supplement policy, however, is issue-rated, then the insured will pay the same amount throughout time, regardless of their increasing age. For example, if the insured is 65 years old when they purchase the policy, they will always pay the same rate that is charged to 65-year-old policyholders of that Medicare Supplement insurer.

Regardless of whether an insured pays premiums based on attained age or issue age, all premiums will typically go up each year due to inflation. There are, however, other factors that can affect the amount of premium that an insured pays. Some of these factors include whether or not the insured smokes as well as possible discounts for married couples.

In terms of raising rates from their street rate – the rate that is charged at the original purchase date – Medigap insurers may raise their rates in various ways. For instance, an attained age company could raise rates on an across-the-board basis, while the issue age company could raise rates for each “band” simultaneously.

In any case, most of the premium rate increases that occur are due in large part to the rise in the cost of deductibles and coinsurance because of high inflation in health care costs nationwide.

Replacing Supplemental Medicare Coverage

Medicare Supplement policies are designed so that people will not need other similar coverage. In fact, it is not even legal for insurance companies to knowingly sell anybody a second Medicare Supplement policy – even if the coverage overlaps for just one day. The practice of selling more than one policy to an individual is known as stacking.

It is also illegal to sell someone a Medicare Supplement plan if they are already in a Medicare Advantage plan. Therefore, a Medicare Supplement replacement form was developed to be used if a person chooses to replace an existing Medicare Supplement policy with another plan.

Replacing a Medicare Supplement policy is not illegal if the benefits of the new plan will be better or if the premium on the new policy will be equal to or less than that of the current plan. It is also allowed if the new policy will contain fewer benefits, along with less premium due. In any case, an individual must be sure to have a good reason for switching from one Medigap plan to another. And it makes sense, too, that an individual should not keep an inadequate Medigap plan just because they have owned it for a long period.

Whatever the reason, all applicants must sign a notice indicating that they are aware of the differences in the replacement transaction. The Medicare Supplement replacement form serves to explain the reason for the policy replacement.

There are some situations that would allow you to be eligible for an additional guaranteed-issue Open Enrollment Period. It’s important for you to take note of these situations. One common circ*mstance is if you lose coverage because of your employer stops offering Medicare coverage or if you move out of a Medicare Advantage service area.

Some of the other ways that allow you to enter Open Enrollment is if your Medicare Advantage plan is discontinued or if you have a Medigap plan, but you were misled by the insurance company.

If you decide that you want to switch Medigap policies, you can still keep your old plan for up to 30 days to decide if the new one is going to give you the additional protection that you need. This is called the “free-look” period. When you’re applying for the new plan, you’ll have to sign a form that states that you’re going to cancel the old policy before the free-look period is up, or you will cancel the new policy if you do not like it. During this period, you will have to pay the premiums for both of the plans.

The Best Quotes on Medigap Coverage

When seeking a Medicare Supplemental insurance plan, it is often best to work with a company or agency that has access to more than just one insurance carrier. This way, you can several different quotes to determine which will be the best for your budget. In doing so, we can help.

We work with many of the top Medicare Supplement insurers in the marketplace today, and we can get you all of the important information that you need quickly, easily, and conveniently – all from your home computer. If you’re ready to begin the process, all you need to do is just simply use the form on this page.

Should you have any additional questions regarding Medicare Supplement coverage, please feel free to contact us directly. Our experts are happy to help walk you through any information that you may need. We can be reached by phone, toll-free, by calling 888-229-7522.

We understand that shopping for Medicare Supplemental insurance can sometimes seem overwhelming – so we want to ensure that you have all of the details that you need before making a decision. Contact us today – we’re here to help.

Understanding Medicare Supplement Plans – AKA Medigap Plans - Good Financial Cents® (1)

Final Thoughts on Understanding Medicare Supplement Plans – AKA Medigap Plans

Medicare is a vital program for seniors, yet it leaves significant gaps in coverage. Medicare Supplement, or Medigap, insurance steps in to cover expenses like copayments, deductibles, and coinsurance. Understanding these policies is crucial to ensuring comprehensive healthcare.

Medigap policies offer standardized benefits, but premiums vary. When choosing a plan, consider your health, finances, and potential future needs. Enrollment is typically best during the six-month open enrollment period, guaranteeing coverage regardless of preexisting conditions.

Medigap replaces the need for duplicate coverage and can offer peace of mind for your healthcare needs.

Understanding Medicare Supplement Plans – AKA Medigap Plans - Good Financial Cents® (2024)