As noted in a previous Cantissimo Senior Living blog post, Getting Started with Medicare, Original Medicare consists of Part A and Part B. This blog post focuses on Part...
Original Medicare (Part A and Part B) offers many benefits, but it has some "gaps." The most prominent gap is there is no limit on out-of-pocket expenses, which encompass deductibles, copayments, and coinsurance.
Medigap to the Rescue
One way to fill many of these gaps is through a Medicare Supplement Insurance policy (also known as Medigap) sold by private insurers. Medigap policies come in several different versions but must adhere to strict government standards. These standards allow easier comparisons between policies and protect consumers from unscrupulous insurers.
What Can Medigap Cover?
The main benefit of Medigap policies is "capping" out-of-pocket expenses for approved Medicare services. However, there are several other benefits that a Medigap policy may pay for all or part:
- Medicare Part A coinsurance and hospital costs (up to an additional 365 days after Medicare benefits are used)
- Medicare Part B coinsurance or copayment
- Blood (first 3 pints)
- Part A hospice care coinsurance or copayment
- Skilled nursing facility care coinsurance (for limited stay, not long-term care)
- Part A deductible
- Part B deductible
- Part B excess charges
- Foreign travel emergency care
Medigap policies are classified by letter (A-D, F, G, and K-N) and offer various types and levels of coverage. For example, below is a comparison of Medigap plan C and plan G:
|Benefits||Plan C Coverage||Plan G Coverage|
|Part A coinsurance and hospital costs||100%||100%|
|Medicare Part B coinsurance/copayment||100%||100%|
|Blood (first 3 pints)||100%||100%|
|Part A hospice care coinsurance/copayment||100%||100%|
|Skilled nursing facility care coinsurance||100%||100%|
|Part A deductible||100%||100%|
|Part B deductible||100%|
|Part b excess charges||100%|
|Foreign travel emergency care||80%||80%|
While the above plans differ slightly, there would likely be price differences between plan types and companies offering the policies. Also, the states of Massachusetts, Minnesota, and Wisconsin classify Medigap policies differently. More complete descriptions and comparisons of plan types can be found in the Medicare publication Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare.
How Does Medigap Work?
With Original Medicare and a supplemental Medigap policy, Medicare will first pay its share of covered costs. Then, the Medigap policy pays all or part of any remaining cost. The percent of the remaining cost paid depends on the type of policy purchased.
Medigap can only be purchased to supplement Original Medicare. Medicare beneficiaries who have Medicare Advantage or Medicaid cannot also have Medigap coverage.
Buying a Medigap Policy
Here's a four-step process for buying a Medigap policy. The purchase must occur during the Medigap Open Enrollment Period, which covers the six months beginning when a person turns 65 and is enrolled in Part B. Medigap coverage may not be available for purchase outside this period. Still, if it is, it may cost more.
Some people don't sign up for Part B at age 65 because they are still covered by company or union healthcare insurance. In this case, their six-month Medigap Open Enrollment Period begins when they eventually enroll in Part B.
- Step One: Decide on the type of Medigap coverage. Reading official Medicare publications or researching plan types on the web can be good sources of information. Information can also be found by calling 1‑800‑MEDICARE (1-800-633-4227) to learn about coverage options and the Medigap policies in the local area.
Also, health insurance brokers can be helpful in better understanding the options. These professionals can be found via a web search. However, getting a recommendation from an existing trusted advisor like an attorney or financial planner might result in a better fit.
- Step Two: Find insurers who offer Medigap policies. Some ways to find them are:
- Use the Medicare website to find a Medigap policy.
- Contact the State Health Insurance Assistance Program (SHIP) for Medigap policy information.
- Contact the State Insurance Department about complaints against companies selling Medigap in the state. Then, steer away from those companies.
- Online research
- Ask for recommendations from trusted family, friends, or advisors
- Step Three: Get quotes from various companies and compare policies. Make sure the policies are the same type. Even within the same policy type, prices vary between insurance companies. For example, a company may or may not set prices based on age. They also may have different discounts based on various criteria.
- Step Four: Purchase a Medigap policy during the Medigap Open Enrollment Period.
Note that a Medigap policyholder may pay the following separate monthly costs for Medicare:
- Medicare Part B Premium
- Medigap Premium
- Medicare Part D (optional drug coverage) premium
other Medigap Facts
- A Medigap policy covers one person. Couples must obtain separate policies.
- If a Medigap policy covers drug costs, the policyholder cannot also have other Medicare drug coverage.
- In some states, Medicare SELECT Medigap policies are available. Medicare SELECT requires the use of hospitals and (sometimes) doctors in a network except for emergency services. Those who buy Medicare SELECT have the right to switch to a standard Medigap policy within 12 months.