Understanding Medigap Plans
Medigap insurance
supplements Medicare’s
benefits, which is why it is
also called Medicare
supplemental insurance. Both
federal and state laws
regulate Medigap coverage. A
policy must be clearly
identified as Medicare
supplemental insurance and
it must provide specific
benefits that help fill the
gaps in your Medicare
coverage. Other kinds of
insurance may help you with
out-of-pocket health care
costs, but they do not
qualify as Medigap plans.
Standard Medigap Plans
There are twelve standard
Medicare supplement
insurance plans that help
pay some of your costs in
the original Medicare plan
and for some care it doesn't
cover.
Each one of the standard
Medicare Supplement
insurance plans, labeled A
through L, offers a
different set of benefits,
fills different "gaps" in
Medicare coverage, and
varies in price. Some
insurance companies offer a
"high deductible option" on
Medicare supplement
insurance Plans F, J, K and
L. All Medicare supplement
insurance Plans must cover
certain basic benefits.
(Plans K and L are recent
additions and very few
supplemental Medicare
insurers are offering those
plans). A review of the
Medigap comparison chart
posted with this article may
be helpful.
Medicare rates for 2008
are also posted elsewhere on
this site.
·
Basic Benefits
Covered by Medicare
Supplement Insurance Plans
A-J
·
Medicare Part A Hospital
Deductible
•$992 in 2007 ($1,024 in
2008) for each benefit
period for hospital services
Covered by Medicare
Supplement Insurance Plans
A-J
·
Skilled Nursing Home Costs
•Your cost ($124 in 2007,
$128 in 2008) for days
21-100 in a skilled nursing
home
Covered by Medicare
Supplement Insurance Plans
D-J
·
Medicare Part B Deductible
•Yearly deductible for
doctor services ($131 in
2007, $135 in 2008)
Covered by Medicare
Supplement Insurance Plans
C, F, J
·
Medicare Part B Excess
Charges
•The difference between your
doctor's charge and the
Medicare approved amount, if
your doctor does not accept
assignment.
Covered by Medicare
Supplement Insurance Plans
Medicare Supplement F
(100%), G (80%), I (100%), J
(%100)
·
Foreign Travel Emergency
•80% of the cost of
emergency care outside the
U.S.
•Up to $50,000 in your
lifetime
•You pay a yearly deductible
of $250
Covered by Medicare
Supplemental Insurance Plans
C-J
·
At-Home Recovery
•Help for activities of
daily living, such as
bathing and dressing, if you
are already receiving
skilled home care covered by
Medicare.
•Help for up to eight weeks
after you no longer need
skilled care
•Will pay up to $40 per
visit, seven visits per
week, or a total of $1,600
per year
Covered by Medicare
Supplement Insurance Plans
D, G, I, J
·
Preventive Care
•Up to $120 per year for
preventive services ordered
by your doctor
Covered by Medicare
Supplement Insurance Plans
E, J
·
Prescription Drugs (Basic)
•50% of prescription drug
costs up to $1,250 each year
after a yearly deductible of
$250
Covered by Medicare
Supplemental Insurance Plans
H, I . . . these Plans are
phasing out as of January 1,
2006 (effective date of Part
D).
·
Prescription Drugs (Extended
Coverage)
•50% of prescription drug
costs up to $3,000 each year
after a yearly deductible of
$250
Covered by Medicare
Supplement Insurance Plan J
* If you choose the "high
deductible option" on
Medicare supplement plans F
and J, you will first have
to pay a $1,860 deductible
in 2007 ($1,900 in 2008)
before the plan pays
anything. This amount can go
up every year. High
deductible option policies
often cost less, but if you
get sick, your costs will be
higher.
*Plans K and L provide
for different cost-sharing
for items and services than
Plans A through J. Once you
reach the annual limit
($4,140 for Plans K and
$2,070 for Plan L), the
plans pays 100% of the
Medicare co-payments,
coinsurance, and deductibles
for the rest of the calendar
year. The out-of-pocket
annual limit does NOT
include charges from your
provider that exceed
Medicare-approved amounts,
called "Excess Charges." You
will be responsible for
paying excess charges. the
out-of-pocket annual limit
will increase each year for
inflation.
Insurance companies must use
the same format, language
and definitions when
describing the benefits of
each of the Medigap plans.
They also must use a uniform
chart (similar to the
chart posted with this
article) and outline of
coverage to summarize the
benefits. The idea is to
make it easier for consumers
to compare policies. As you
shop for a Medigap policy,
keep in mind that each
company’s products are
alike, so they are competing
on service, reliability and
price. Talk to your friends,
neighbors, doctor and others
who may have experience and
an opinion.
Unlike some types of health
coverage that restrict where
and from whom you can
receive care, Medigap
policies generally pay the
same supplemental benefits
regardless of your choice of
health care provider. If
Medicare pays for a service,
wherever provided, the
standard Medigap policy must
pay its regular share of
benefits.
Medigap Premiums
Although the benefits are
identical for all Medigap
plans of the same type, the
premiums may vary greatly
from one company to another
and from area to area.
Insurance companies use
three different methods to
calculate premiums: issue
age, attained age and no age
rating.
If your company uses the
issue age method, and you
were 65 when you bought the
policy, you will always pay
the same premium the company
charges people who are 65
regardless of your age. If
it uses the attained age
method, the premium is based
on your current age and will
increase as your grow older.
Under the no age rating,
everyone pays the same
premium regardless of age.
Your state insurance
department must approve the
rates charged for all
Medigap policies. The
insurance company can raise
your premiums only when it
has approval to raise the
premiums for everyone else
with the same policy.
Medicare SELECT
Another Medicare
supplemental health
insurance product called
"Medicare SELECT," is
permitted to be sold by
insurance companies or
managed care plans
throughout the country.
Medicare SELECT is the same
as standard Medigap
insurance in nearly all
respects. If you buy a
Medicare SELECT policy, you
are buying one of the
standard Medigap plans. The
only difference between
Medicare SELECT and standard
Medigap insurance is that
each insurer has specific
hospitals, and in some cases
specific doctors, that you
must use, except in an
emergency, in order to be
eligible for full benefits.
Medicare SELECT policies
generally have lower
premiums because of this
requirement.
When you go to the insurer's
"preferred providers,"
Medicare pays its share of
the approved charges and the
insurer is responsible for
the full supplemental
benefits provided for in the
policy. In general, Medicare
SELECT policies are not
required to pay any benefits
if you do not use a
preferred provider for
non-emergency services.
Medicare, however, will
still pay its share of
approved charges regardless
of the provider you choose.
Medicare SELECT is
authorized for sale until at
least June 1998. At that
time, if you have a Medicare
SELECT policy, you will be
able to either keep the
SELECT policy with no
changes in benefits or
regardless of the status of
your health, purchase
another Medigap policy
offered by the insurer, if
the insurer issues Medigap
insurance other than
Medicare SELECT. To the
extent possible, the
replacement would have to
provide similar benefits.
Open Enrollment Guarantees
Your Right To Medigap
Coverage
State and federal laws
guarantee that for the first
6 months after the date you
are both
enrolled in Medicare Part B
and age
65 or older, you have a
right to buy the Medigap
policy of your choice
regardless of any health
problems you may have. If,
however, your birthday falls
on the first day of the
month, your Part B coverage
(if you buy it) begins on
the first day of the
previous month, while you
are still 64. Your Medigap
open enrollment period would
also begin at that time.
During this 6-month open
enrollment period, you can
buy any Medigap policy sold
by any insurer doing Medigap
business in your state. The
company cannot deny or
condition the issuance or
effectiveness, or
discriminate in the pricing
of a policy because of your
medical history, health
status or claims experience.
The company can, however,
impose the same preexisting
condition restrictions that
apply to Medigap policies
sold outside the open
enrollment period.
Preexisting conditions are
generally health problems
for which you saw a doctor
within the 6 months before
the date that the policy
went into effect. Your
Medicare card shows the
effective dates for your
Part A and/ or Part B
coverage. To figure whether
you are in your Medigap open
enrollment period, add 6
months to the effective date
of your Part B coverage. If
the date is in the future
and you are at least 65, you
are eligible for open
enrollment. If the date is
in the past, you are
generally not eligible. (If
you were entitled to
Medicare before age 65, see
the following section on
open enrollment and persons
with disabilities.)
If you are covered under an
employer group health plan
when you become eligible for
Part B at age 65, carefully
consider your options. Once
you enroll in Part B, the
6-month Medigap open
enrollment period starts and
cannot be extended or
repeated.
If you are covered under an
employer plan that is
primary to Medicare in
paying your medical bills,
you will not need a Medigap
plan until you are no longer
covered under the employer
plan. If you begin buying
Part B as a supplement to
your employer plan while it
is the primary payer, you
will start your Medigap open
enrollment period when it is
of little use to you.
You may, therefore, want to
wait to buy Part B until you
are ready to make optimum
use of your Medigap open
enrollment period. Also keep
in mind that if you have
already triggered your
Medigap open enrollment
period at age 65, you cannot
get another one by dropping
Part B and re-enrolling
during a special enrollment
period after you are no
longer covered under the
employer plan.
Medigap Open Enrollment and
the Persons With
Disabilities
If you become eligible for
Part B benefits before age
65 because of a disability
or permanent kidney failure,
federal law guarantees you
access to the Medigap policy
of your choice when you
reach age 65. During the
first 6 months you are age
65 and enrolled in Part B,
you can buy the policy of
your choice regardless of
whether you had enrolled in
Part B before you were 65.
During these 6 months, you
cannot be refused a policy
because of your disability
or for other health reasons.
Moreover, you cannot be
charged more than other
applicants, which can
greatly reduce the amount
you are paying. A waiting
period of up to 6 months,
however, may be imposed for
coverage of a pre-existing
condition.
Several states go beyond
federal law and require at
least a limited open
enrollment for Part B
beneficiaries under 65.
Check to see whether your
state does. In addition to
any state requirement,
federal law requires that
you be given an open
enrollment opportunity when
you turn 65, even if you
were previously entitled to
open enrollment under state
law.
Guaranteed Renewable
All standard Medigap
policies are guaranteed
renewable. This means that
the insurance company cannot
refuse to renew your policy
unless you do not pay the
premiums or you made
material misrepresentations
on the application. Older
Medigap policies (sold
before 1992) may allow the
company to refuse to renew
on an individual basis.
These older policies provide
the least permanent
coverage.
Older Medigap Policies
Many federal requirements do
not apply to Medigap
policies sold before 1992,
when Medigap was
standardized. There is
generally no requirement
that you switch to one of
the standard plans if you
have an older policy.
However, you may be required
to switch if your older plan
was not guaranteed renewable
and the company discontinues
the type of policy you have.
Check with your state
insurance department to find
out what state-specific
requirements are in force.
Switching Medigap Policies
Even if you are not required
to convert an older policy,
you may want to consider
switching to one of the
standardized Medigap plans
if it is to your advantage
and an insurer is willing to
sell you one. If you do
switch, you will not be
allowed to go back to the
old policy. Before
switching, compare benefits
and premiums, and determine
if there are waiting periods
for any of the benefits in
the new policy. Some of the
older policies may provide
better coverage, especially
for prescription drugs and
extended skilled nursing
care. On the other hand,
older Medigap polices, which
cannot be sold to new
applicants, may experience
greater premium increases
than newer standardized
policies that can enroll new
applicants (younger,
healthier policyholders
whose better claims
experience will help to
moderate premiums).
If you have had a Medigap
policy for at least 6 months
and you decide to switch,
the replacement policy
generally cannot impose a
waiting period for a
preexisting condition. If,
however, a benefit is
included in the new policy
that was not in the old
policy, a waiting period of
up to 6 months--unless
prohibited by your
state--may be applied to
that particular benefit.
You do not need more than
one Medigap policy. If you
already have a Medigap
policy, you must sign a
statement when you buy
another indicating that you
intend to replace your
current policy and will not
keep both policies. However,
do not cancel the old policy
until the new one is in
force and you have decided
to keep it.
Use the "Free-Look"
Provision
Insurance companies must
give you at least 30 days to
review a Medigap policy. If
you decide you don’t want
the policy, send it back to
the agent or company within
30 days of receiving it and
ask for a refund of all
premiums you paid. Contact
your state insurance
department if you have a
problem getting a refund.
Carrier Filing of Medigap
Claims
Under certain circumstances,
when you receive medical
services covered by both
Medicare and your Medigap
insurance, you may
not have to
file a separate claim with
your Medigap insurer in
order to have payment made
directly to your doctor or
medical supplier.
By law, the Medicare carrier
that processes Medicare
claims for your area must
send your claim to the
Medigap insurer for payment
when the following three
conditions are met for a
Medicare Part B claim:
-
Your doctor or supplier
must have signed a
participation agreement
with Medicare to accept
assignment of Medicare
claims for all patients
who are Medicare
beneficiaries;
-
Your policy must be a
Medigap policy; and
-
You must instruct your
doctor to indicate on
the Medicare claim form
that you wish payment of
Medigap benefits to be
made to the
participating doctor or
supplier. Your doctor
will put your Medigap
policy number on the
Medicare claim form.
When these conditions are
met, the Medicare Carrier
will process the Medicare
claim, send the claim to the
Medigap insurer and
generally send you an
Explanation of Medicare
Benefits (EOMB) or Medicare
Summary Notice (MSN). Your
Medigap insurer will pay
benefits directly to your
doctor or medical supplier
and send you a notice that
it has done so.
