Medicare Supplement (Medigap)

Friday, January 31, 2014 8:11 AM

Original Medicare pays for many, but not all, health care services and supplies. A Medicare Supplement (Medigap) policy, sold by private insurance companies, can help pay some of the health care costs (“gaps”) that Original Medicare does not cover, like copayments, coinsurance, and deductibles. Some Medigap policies also offer coverage for services that Original Medicare doesn’t cover, like medical care when you travel outside the U.S. If you have Original Medicare and you buy a Medigap policy, both plans will pay their share of Medicare-approved amounts for covered health care costs. Medicare does not pay any of the costs for a Medigap policy.

Every Medicare Supplement policy must follow federal and state laws designed to protect you and it must be clearly identified as “Medicare Supplement Insurance.” Medicare Supplement insurance companies can sell you only a “standardized” Medicare Supplement policy identified in most states by letters, Plans A through N*. The policies are standardized; the benefits for a particular plan are the same for each insurance company within a state **. The primary difference is the cost, but factors like underwriting and rating methodology can also vary from company to company, and state to state. Because insurance companies may charge different premiums for exactly the same Medigap coverage, as you shop for a Medigap policy, be sure you are comparing the same Medigap policy (for example, compare Plan A from one company with Plan A from another company).

* Effective June 1, 2010, the types of Medicare Supplement Plans that you can buy changed:

There are two new Medigap Plans offered—Plans M and N.
Plans E, H, I, and J are no longer be available to buy. If you already have or you buy Plan E, H, I, or J before June 1, 2010, you can keep that plan. Contact your plan for more information.

** Note: In Massachusetts, Minnesota, and Wisconsin, Medigap policies are standardized in a different way.

If You Want to Buy a Medicare Supplement (Medigap) Policy

Generally, you must have Part A and Part B to buy a Medicare Supplement policy.
You pay a monthly premium for your Medicare Supplement policy to the private insurer, and you pay your monthly Part B premium.
A Medicare Supplement policy only covers one person. If you and your spouse both want Medicare Supplement coverage, you must each buy separate policies.
If you are under age 65, you may have additional rights to buy a Medicare Supplement policy, depending on the laws in your state.

The Cost of Medicare Supplement Plans

Though policies with the same name cover the same benefits, the price may differ from company to company. Insurance companies offering Medicare Supplement plans set their own premiums that can be priced, or "rated," according to your community, the age at which you purchased the policy or the age you are during each year you hold the policy.

Because you need to have Medicare Part A and Part B to get a Medicare Supplement policy, you have to pay the monthly Medicare Part B premium as well as a premium to the Medicare Supplement insurance company.

Each insurance company decides how it will set the price, or premium, for its Medicare Supplement policies. It is important to ask how an insurance company prices its policies. The way they set the price affects how much you pay now and in the future.

When You May Enroll In and Switch Medicare Supplement Plans
You may enroll in a Medicare Supplement plan during the six month period starting on the first day of the month in which you are 65 years or older and enrolled in Medicare Part B. (Some states have additional open enrollment periods.). After this initial enrollment period, your option to buy a Medicare Supplement policy may be limited.

If you apply for a Medicare Supplement plan, you have a "free look" period of 30 days to decide if you like your new policy. The 30-day period begins on the first day the policy is active. If you decide to cancel your policy during the "free look" period, and if you are inside your Open Enrollment Period, you can apply and be approved for a new Medicare Supplement plan. If you are outside your Open Enrollment Period, your application can be declined. This is why people who are applying for a new Medicare Supplement plan should not cancel any current plan until they are approved for the new plan.

Other Considerations When Selecting a Medicare Supplement Plan
If you have a Medicare Supplement policy and join a Medicare Advantage Plan (like an HMO or PPO), you may want to consider dropping your Medicare Supplement policy. You can continue to pay your Medigap premium, but your policy can’t be used to pay your Medicare Advantage Plan copayments and deductibles.

If you want to drop your Medicare Supplement policy, you must contact your insurance company to cancel the policy.
If you already have a Medicare Advantage Plan, it is illegal for anyone to sell you a Medicare Supplement policy unless you are switching back to Original Medicare.
If you join a Medicare health plan for the first time, and you aren’t happy with the plan, you will have special rights to buy a Medicare Supplement policy if you return to Original Medicare within 12 months of joining.
- If you had a Medicare Supplement policy before you joined, you may be able to get the same plan back if the company still sells it.
- The Medicare Supplement policy can no longer have prescription drug coverage even if you had it before, but you may be able to join a Medicare Prescription Drug Plan.
- If you joined a Medicare health plan when you were first eligible for Medicare, you can choose from any policy.
If you buy a Medicare SELECT policy, which is a type of Medicare Supplement policy that may require you to use hospitals and, in some cases, doctors within its network to be eligible for full benefits, you also have rights to change your mind within 12 months and switch to a standard Medicare Supplement policy.
You can’t have drug coverage in both your Medicare Supplement policy and a Medicare drug plan.