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Michael T Braden August 27, 2024 MEDICARE SUPPLEMENTS & MEDIGAP
CHOOSING A MEDICARE SUPPLEMENT PLAN
Medigap Insurance is often referred to as Medicare Supplemental Insurance. These Medigap/Medicare Supplement Policies help individuals pay for your share of the Medicare expenses that Medicare does not pay for and that you are responsible for.
Medigap Policies are popular because they cover the cost of Co-Pays for Doctor visits, and they give their members the ability to access Medicare Healthcare providers in every state.
Most new Medicare Beneficiaries are taken aback by the fact that Medicare pays for 100% of their Part A Hospitalization but only 80% of their Medicare Part B services, leaving them responsible for the other 20% themselves. This additional cost can be a real eye-opener for people, this is where Medigap Insurance comes into play. Medigap Insurance or Medicare Supplemental Insurance pays that 20% for you. Medicare Supplemental Policies also pay for cost-sharing items like Co-Pays & Excess Charges.
WHAT ARE GUARANTEED ISSUE RIGHTS FOR MEDICARE SUPPLEMENT PLANS?
WHICH MEDIGAP PLAN SHOULD I CHOOSE?
When you reach age 65 you can sign up for Medicare. Your Guaranteed Issue Period includes the three months before your birth month, your birth month, and the three months after your birth month. During this time, you can sign up for Social Security Benefits and Medicare. You can choose to participate in Original Medicare, enroll in a Medigap Plan which is commonly referred to as a Medicare Supplement Policy or you can choose a Medicare Advantage Plan. During your initial guarantee period, you cannot be turned down for any reason and any/all pre-existing conditions are accepted.
Medicare Supplement or Medigap Policies are sold to Medicare Beneficiaries by private insurance companies, and they pay for the things that are not covered by Original Medicare. These include things like Cost Sharing of Part B services, Outpatient Services, physicians Co-Pays, and Excess charges.Medicare Supplement Plans allow you to:
Use any Doctor or Hospital that accepts Medicare, anywhere in the US. So, you can have peace of mind if you travel between residences or if you plan on visiting friends and family out of town.
Give you peace of mind knowing what your costs will be.
Automatic Renewals – the insurance company can never drop you or change your coverage due to a health condition as long as you do not cancel your policy.
Streamlined Claims Process – Medigap providers automatically have cross-filing with Medicare. So, whenever your doctor or hospital files a claim with Medicare, that claim is automatically filed with your Insurance company as well.
Medigap is insurance to cover the "Gaps" in what is not covered by Medicare, like your deductibles and co-payments.
Some other things to know about Medicare Supplement insurance:
To have a Medigap Policy you must be enrolled in both Medicare Part A and Medicare Part B.
Each Medicare beneficiary must have their policy, there are no "Family" policies with Medicare.
You have the ability to drop your Medicare Supplement Policy anytime, however; if you want to sign back up at a later date your application will be subject to Underwriting for approval. The "Guaranteed Issue Period" is only when you first become eligible for Medicare Benefits.
The annual election period that happens every October - December is only for Medicare Advantage Plans & Prescription Drug Plans (PDP).
Most Medigap companies offer discounts for multiple medicare beneficiaries living at the same address.
It is illegal for Medicare Supplement Plans to include PDP (Prescription Drug Plans). You will need to purchase a standalone PDP if you do not have qualifying coverage from an employer or the VA.
ALL MEDICARE SUPPLEMENT PLANS ARE STANDARIZED
Which Medigap Plan should I choose? The correct answer is the one that you feel the most comfortable and secure with. You do not want to just look at how things are today, but try to project what type of plan will suit you best 10, 15 and 20 years from now. Each Medicare Supplemental or (Medigap) Plan is identified by a corresponding and identifiable letter. Medicare refers to these plans. These are Medigap Plan A, Plan B, Plan C, Plan D, Plan F, Plan G, Plan K, Plan L, Plan M and Plan N. Each one of these lettered policies provides the same set of benefits regardless of which company you choose A Plan K Policy from United Healthcare will have the same benefits as a Plan K from BCBS or Mutual of Omaha.
What is different is the pricing structures used by each company. Every Insurance provider has their own pricing structure for each area of the country they operate in. I have to emphasize that ALL Plans with the same letter have the same coverage, but the price is always different so use your Agent/Broker to help identify the best value and the best coverage for you and your family. Medigap Plans C and F are only available to those people who were enrolled in Medicare prior to January 1, 2020.
In 2020 Medicare Supplemental Plan G became the most comprehensive plan. It works exactly like Plan F except that you pay for the Part B deductible once per year. Your premiums will be lower though, and sometimes this creates annual savings.
For Medigap Plans K and L, after you meet your annual out-of-pocket limit and your annual Part B deductible ($203 in 2021), the Medigap plan pays 100% of covered services for the rest of that calendar year.
Plan N pays 100% of the Part B coinsurance, except for a co-payment of up to $20 for some office visits and up to a $40 co-payment for emergency room visits that don’t result in an inpatient admission.
Each Medicare supplement plan in the chart above has a letter, A – N. Each plan letter provides a different set of benefits. However, each lettered plan must have the same standardized coverage regardless of which insurance company you choose. For example, Medicare supplement Plan N at Blue Cross Blue Shield has the same benefits as Plan N from Humana Healthcare.
Plan F is the only supplemental insurance plan that covers ALL of the gaps, leaving you with nothing out of pocket. However, you are only eligible for a Plan F if you turn 65 before January 1st, 2020. There are others where you agree to do some cost-sharing and in return you get a lower monthly premium. If you prefer something like this, in the middle, you could look at Plan G and Plan N where you pay a few things yourself, in exchange for lower premiums.
HOW DO YOU GO ABOUT PICKING A MEDICARE SUPPLEMENT /MEDIGAP PLAN?
Most people enroll in Medicare supplement plans G or N. That’s because these offer the most coverage. However, the reason for the choices is to let you decide what is most important to you. Some beneficiaries want a plan that covers all the gaps and leaves them with no worries about the cost of medical procedures. Others prefer a Medicare supplement plan in which they cover some of their deductibles and co-pays out of pocket in order to achieve lower premiums. Refer to our Medicare Supplement Plan Chart to compare the benefits of all plans side by side.
MEDICARE SUPPLEMENT PLANS DURING YOUR OPEN ENROLLMENT INTO MEDICARE
Medicare Open Enrollment is a one-time window to enroll in any Medicare supplement plan in your area.
According to Medicare’s Guide to Health Insurance, the best time to buy a supplement policy is during your one and only Guarantee Issue/Initial Enrollment Period.
During your one-time Medigap open enrollment, the Medicare supplement company cannot ask you any medical questions. They cannot turn you down for any health conditions. They cannot refuse you a policy or charge you any additional amount due to health conditions, medications or pre-existing illnesses. You will have your choice of Medicare supplemental plans.
After this window passes, however, future insurance companies that you might apply with can accept or decline you based on health. That is why the Medicare Handbook states that open enrollment is the best time to enroll.
GUARANTEE ISSUE RIGHTS IF YOU ARE PAST AGE 65
Some people delay enrollment into a supplement because they have group health coverage through an employer. Later when you retire or lose that coverage, you have the right to purchase certain Medigap policies within the 63 days following the loss of your group coverage. This is called your Medicare supplement guaranteed issue rights.
The guaranteed issue window works just like open enrollment, except that is a shorter period of time and that your plan choices are limited to Plans A, B, C, F, G, K, N, and L. The insurance company cannot deny your application for any health reasons.
CAN PEOPLE CHANGE OR SWITCH MEDICARE SUPPLEMENT PLANS ANYTIME?
You can apply to change your Medicare Supplement at any time, but if you are past your open enrollment window, you will have to answer health questions in most states. The Medicare supplement insurance company will review your health history and medication history. They can accept or decline you.
CHOOSING A MEDIGAP PLAN DURING YOUR INITIAL ENROLLMENT PERIOD (IEP)
In certain circumstances, an insurance company must accept you for coverage without asking health questions. For example, if you are on Medicaid and you lose your Medicaid eligibility, you have a short window to apply for Medigap without health questions. Another example would be for someone coming off employer health coverage that is primary to Medicare. They will have a short window to apply for certain Medigap plans under guaranteed issue rules.
HIGH DEDUCTIBLE MEDICARE SUPPLEMENT PLANS
How do high-deductible Medigap plans work?
Medicare Parts A and B pay 80% of covered costs. Full Medigap Plans F and G pay the remaining 20%, so you don’t have to pay out of pocket. High-deductible Medigap Plans F and G don’t pay anything until you’ve reached your deductible, $2,780. If you have High Deductible Plan G, you also will have to pay your Part B deductible, which is $240 in 2024.
While that sounds like a lot, many people who choose a high-deductible plan never come close to reaching their deductible. That’s because Medicare covers the full amount of many Preventive Care services, including:
Flu vaccines and other immunizations
An annual wellness exam
Bone density tests
Prostate cancer screening — annual PSA blood test
If you are generally healthy, and you only go to the doctor now and then, chances are you won’t spend very much of your high deductible.
Assuming you have High Deductible Plan G (this doesn’t apply to High Deductible Plan F, which covers the Part B deductible), you’ll pay the Part B deductible first before your Medigap plan pays anything. Most people pay the Part B deductible during their first one or two doctor visits. After that, the billing will look like this:
When your healthcare provider charges $200 The 80% that Medicare Part B will pay $160 The 20% that you will pay before you reach your Plan G high deductible would be $40.
As you can see, if you’re generally well and don’t use healthcare often, you won’t spend enough to get close to your deductible ($2,780 in 2024).
The situation changes if you are hospitalized, because Medicare Part A has a $1,632 deductible per benefit period or episode of illness (for 2024). In that case, you’ll pay a lot upfront.
To be safe, you’ll need to have available enough money to pay the $1,632 Part A and the $240 Part B deductibles, which don’t count toward meeting your Medigap high deductible. Then, you’ll need about $700 to cover the 20% of Medicare Part A and B costs due before you meet your Medigap high deductible. Added together ($1,600 + $240+ $940), that is roughly $2,780.
After you pay that, your Medigap high-deductible plan will pay your remaining eligible out-of-pocket healthcare costs, which, for most people, is everything — 100%. But that initial hospitalization charge could be a budget-buster.
WHAT TYPE OF PERSON SHOULD CONSIDER A HIGH-DEDUCTIBLE MEDICARE SUPPLEMENT PLAN?
Plans F and G are the most popular Medigap plans because they take away ugly healthcare billing surprises. High-deductible F and G Medigap plans do the same thing, but choosing these plans means you have to have enough savings to pay the annual deductible upfront.
Premiums for the high-deductible plans are generally significantly lower than premiums for the full version. Most people will have years when they are sick enough to meet the deductible, but some years they won’t use enough healthcare to do that. Whether you’ll come out ahead in the end depends on how healthy you remain as you age, how long you live, and other unknowable things.
QUESTIONS YOU SHOULD CONSIDER WHENEVER YOU ARE THINKING ABOUT BUYING A HIGH-DEDUCTIBLE PLAN
ANNUAL PREMIUM INCREASES
Before you buy any Medigap plan, ask the person selling it how much the cost of the policy has increased over the last 10 years. The U.S. Department of Health and Human Services says the average increase is about 3.8% from 2010 through 2020. but some insurance companies raise costs less than others. If the company’s initial price looks low, make sure that the premium price increases will also be low. You can get this information from:
Your State Insurance Department
Your local nonprofit State Health Insurance Assistance Program
Your Insurance Broker
HONESTLY ASSESS YOUR HEALTH AND YOUR FINANCIAL SITUATION
While you might be healthy now, that could change in 10-15 years. It can be very difficult to change Medigap plans after you’ve made your initial choice. Don’t choose a high-deductible plan just because it is the best you can afford today. It may be burdensome down the road if your finances and health worsen.
IS IT DIFFICULT FOR YOU TO MANAGE YOUR MONEY?
Until you meet your deductible, your healthcare providers will charge you the 20% of your bill that Medicare hasn’t paid. Medicare also will send you a statement that tells you how much of your deductible you have met. Some people feel nickel-and-dimed by this billing and the necessity of keeping track. With high-deductible plans, it helps if you have patience for record-keeping.
THINGS TO REMEMBER:
High-deductible plans — those that require you to pay $2,780 Out-Of-Pocket before your Medigap plan starts paying your expenses — can save you money on Medigap insurance if you have enough money to cover the deductible in a worst-case scenario.
But don’t just pick a plan because the premium is cheap. Consider your future health and finances.
Ask your Broker for the premium increase history for each company you are considering.