If you’re 65 now or will be soon, you likely have already been introduced to a myriad of insurance choices. We know there are several choices you may have never heard of before. Also, knowing who is eligible and for what benefits is complicated, too.
The information presented here today will attempt to remove some of the mystery surrounding Medicare (senior health care coverage) and Medigap Supplement policies. Also included is a quick reference to eligibility for Medigap coverage and what benefits you can expect from the plans.
Before going further, it’s best to put one question to rest. Many people do not understand the difference between a Medigap policy or a Supplement policy. The reason for the confusion seems to stem from how they’re defined. The reality is there is no difference between the two. They are the same and feel free to use the terms interchangeably.
What Exactly is a Medigap Policy?
A Medigap insurance policy helps pay costs that senior health care coverage does not cover. Some examples of what Medigap covers include services and supplies, copayments, coinsurance, and deductibles. Original plans do not cover these costs, hence the term, Medigap. Note that none of the costs of a Medigap policy receive coverage under Medicare.
Fortunately, all Medigap policies fall under state and federal jurisdiction that protects you, and every policy must clearly state that it is Medigap Supplemental Insurance. Further, although private insurance companies sell Medigap policies, the basic coverages are identical, regardless of which insurance company offers them for sale. The only real difference between any two Medigap policies with the same letter designation is the cost.
A Look at the Coverages within Medigap Plans
Individual insurance companies sell Medigap plans, and all of them must have basic coverages included. Also, while senior health care coverage is good coverage, it doesn’t cover all of your expenses. That means you will have out-of-pocket expenses to deal with after your treatment.
Standardized policies can help pay some of the costs, and they’re convenient and easy to use. Because the basic coverages are the same between insurance carriers, comparing benefits is more uncomplicated, but every company must offer at least Plan A.
- The plans cover approximately 20 percent of your Part B medical expenses you would otherwise have to pay out of pocket
- There are no networks to contend with, so you can choose your doctor, as long as they accept you as a patient
- Travel anywhere in the US without restrictions and receive treatment
- Referrals are not required before you can see a specialist
- Several plans to choose from designed to meet your budget and your needs
- No turndowns. Guaranteed acceptance in a plan up to six months after enrolling in Part B at age 65 or older
Typically, you become eligible for and entitled to senior health care coverage as long as you meet any of these criteria:
- You’ve reached at least 65 years old
- Disabled and you have received disability benefits from Social Security or RRB (Railroad Retirement Board) benefits
- Received a diagnosis of ESRD (end-stage renal disease) or ALS (Lou Gehrig’s Disease)
Initial Enrollment Period
This initial enrollment period is the time when you first become eligible for coverage. It is a 7-month window that allows you to enroll in senior health care coverage (Part A, Part B, or both). If you have already enrolled in Part A and Part B, you can enroll in Prescription Drug Coverage (Part D).
Remember this enrollment period because to qualify for and subsequently purchase a Medigap policy, you must enroll in senior health care coverage Part A and Part B. You can then select other Medigap policies from private insurers.
It’s best to purchase a Medigap policy during the six-months starting at the beginning of the month you will turn 65 or older and already enrolled in Part B. Coverages, limitations, and changes get very confusing. The good folks at Coverage Coach know the plans, coverages, and regulations because they work with them every day.
After the initial enrollment period expires, you may find it impossible to purchase a Medigap policy, or if you do find one, it might cost much more. Keep in mind, too, that after the window for initial enrollment closes, enrollment changes are permitted only during the standard Open Enrollment Period or the General Enrollment Period.
Why It’s Vitally Important to Purchase a Medigap Plan ASAP
You may know that when you’re first eligible to purchase a Medigap policy, the rates are generally less, and you will have more choices within the policy selection. As previously mentioned, the Initial Enrollment Period is the best time to purchase a policy.
If you wait until you’re outside the enrollment period, Medigap insurance companies (private insurers) can and will use medical underwriting to help them decide if they will extend an offer of coverage to you. If you stay within the enrollment period, you will afford yourself much better opportunities if you currently have health problems, to find favorable coverage for the same premium as someone with good health.
Once again, if you wait to apply until after the enrollment period, the insurance company is not compelled to extend an offer of insurance to you if you don’t meet their medical underwriting requirements unless you’re eligible for guaranteed issue rights.
Also, your Medigap purchase rights might depend on when you enrolled in the medical coverage (Part B), one of the requirements for Medigap eligibility. If you are now age 65 or older, your open enrollment period begins when you enroll in Part B, and it can’t ever be changed or repeated.
It’s wise to enroll in the medical coverage (Part B) and purchase a Medigap policy as soon as you’re eligible. Remember, insurance companies can deny your application or charge much more for it if you had health problems in the past, or you have ongoing issues now, if you apply outside of the open enrollment period.
How Medigap Pricing Works
You already know the benefits in every Medigap policy stay consistent regardless of who sells the plan. Unfortunately, the premiums do not stay the same from company to company, and the only difference between them is the price. The companies use several life factors to assist them in determining a premium.
Your age and gender are always among the first questions asked, and if you use tobacco, your overall health, and where you live. It’s well known that private insurance companies use different pricing structures for their plans. Here are some of them:
- Price based solely on your age today or attained-age pricing. Premiums increase every year as you age, which is by far the most common method used by insurance companies
- With community-rated pricing, your age never affects your premium. A 65-year-old applicant receives the same premium quote as a 75-year-old would. The premiums won’t increase with age, but can and do increase with inflation.
- Issue-age pricing is more expensive but has a level premium for the life of the policy. They determine your premium based on your age at the time of purchase, and it never increases. This pricing structure is the least popular among insurance carriers.
Which is Better: MA or Medigap?
There are two distinct differences between Medicare Advantage (MA) and Medigap plans. Medigap plans, or Supplement Plans, work in conjunction with senior health care coverage to help pay for some, but not all, of the out-of-pocket costs that senior health care coverage does not cover.
MA Plans provide a broader spectrum of coverage for things like routine dental, vision care, prescription drugs, even gym memberships, to mention only a few. Private insurers offer MA plans that replace senior health care coverage, but in doing so, provide more coverage. Remember that you cannot have a Medigap policy and Advantage plan at the same time.
We hope the information here satisfies much of your curiosity about Medicare Supplement Policies and what they cover. Navigating the Medicare landscape is tricky, and anytime you need more information to clear things up, please, don’t hesitate to reach out. We are here for you always.