Medicare Supplement Insurance
Health care isn’t cheap, and no one knows that better than those in retirement. Many assume that once they reach 65, Medicare will take medical expenses out of their hands, covering the bulk of their annual health care costs. Unfortunately, this often isn’t the case. Some reports state that original Medicare policies cover only 64 percent of annual health care and medical expenditures.
Medicare doesn’t provide coverage for a multitude of health care and end-of-life care costs, and this has made Medicare Supplement Insurance a necessity for many American citizens.
So what is Medicare Supplement Insurance? Also known as Medigap coverage, these policies are essentially extra health insurance plans that individuals can purchase from private insurance companies. Because Medicare Supplement Insurance is designed to add onto preexisting Medicare coverage, you must first be enrolled in both Medicare Part A, which covers hospital services, and Part B, which covers expenses incurred from doctor services.
What does Medicare Fail to Cover?
Medicare doesn’t cover everything—in fact, it can leave you responsible for a great deal of expenses. If you find yourself in need of certain services that Medicare can’t cover, you’ll have to pay for them out-of-pocket if you don’t have Medicare Supplement insurance.
After adding up all of your medical bills, you may find that Medicare pays just over half of the total. This is because Medicare doesn’t cover a range of costly medical services, and only pays a portion of the allowed services. Part B medical insurance often only pays 80 percent of approved charges.
As medical bills can easily cost anywhere from a few hundred dollars to millions of dollars, it’s important to have a plan in place when Medicare fails to pay for the health services you or your loved one requires.
What are some of the most common expenditures that Medicare will not cover? Some of them may come as a shock.
Many seniors struggle with failing eyesight, but standard eye exams necessary for contact lenses and eyeglasses are not generally covered. Should you have Part B Medicare, you may find that you’re qualified for standard vision checkups during any preventive care appointment allowed by the coverage.
However, Medicare generally does not fund eyewear following an eye exam. If you have Part B Medicare, you may be able to fund a single set of eyewear, so long as you undergo cataract surgery that involves the implantation of an intraocular lens into the eye.
Hearing Aids and Exams
Part B Medicare covers doctor-prescribed diagnostic hear tests, but doesn’t provide coverage for regular hearing exams. Medicare also doesn’t cover the cost of hearing aids, and won’t pay for expenses incurred during appointments for selecting and fitting eyewear devices.
Medicare will not cover the expenses associated with basic dental care. This may include cleanings, fillings, and tooth extractions. However, Part A Medicare may pay for specific dental services undergone while hospitalized for an emergency.
Medicare won’t cover most nursing care expenses. It is only provided when an individual can prove necessity, but these regulations are strict. Furthermore, Medicare only covers skilled care, which is provided in a care facility and may include nursing, occupational therapy, physical therapy, or speech therapy.
What Do Medigap Plans Cover?
Medicare Supplement Insurance covers a host of health care costs that original Medicare doesn’t, including copayments, coinsurance, and deductibles. Out of pocket, these expenses can costs thousands upon thousands of dollars. Depending on the company and Medigap plan chosen, you may also receive coverage for medical care outside the United States during travel, which Medicare does not provide.
After January 1, 2006, Medigap plans could no longer include prescription drug coverage, so there will likely still be out-of-pocket costs for prescription drugs.
It’s important to note that Medicare Supplement Insurance does not override or replace original Medicare plans; they simply supplement the original benefits to fill in any gaps.
When Should I Apply for Medicare Supplement Insurance?
It’s essential that you understand when you are eligible for Medigap plans and time your application correctly.
Open Enrollment Period
Most people enroll in a Medicare Supplement Insurance plan during what is known as the Medigap Open Enrollment Period, which generally starts the month you turn 65 and have Medicare Part B.
This enrollment period is open for six months, and allows individuals to purchase any Medigap plan available in the area, regardless of pre-existing conditions.
This is by far the best time to purchase any Medicare Supplement Insurance; if you apply outside of this period, the insurance company may enforce medical underwriting, which can result in higher rates, and may mean you aren’t accepted into the plan.
Guaranteed Issue Right
If you’ve missed the open enrollment period, you may be able to purchase a Medigap plan when you have a guaranteed issue right. This means that if you are over 65, you have a guaranteed issue right within 63 days of when you end or lose certain types of health coverage. This loss or end of coverage may be due to the following circumstances:
• If you purchased a Medicare Advantage Plan when you first became eligible for Medicare but dis-enrolled within 12 months, you can purchase any Medigap policy in your state.
• If your previous Medicare Advantage Plan, Medicare Supplementary Insurance policy, or PACE program ends coverage or is found guilty of fraud, you may purchase the majority of Medigap policies.
• If you had group health insurance through employment that paid after Medicare and lost it, you are generally allowed to purchase most Medicare Supplement Insurance policies.
When you do have a guaranteed issue right, insurance companies must sell you a policy at the best available rate, regardless of pre-existing health conditions. This rate may vary based on your age, gender, geography, and whether or not you smoke.
If you qualify for Medigap under these guaranteed issue right terms, insurance companies must provide immediate coverage. You may be required to present proof of your guarantee disuse right due to lost health coverage, so keep copies of notices, letters, envelopes, and any applicable claim denials.
Before Turning 65
While federal law doesn’t force insurance companies to sell Medicare Supplement Insurance to anyone under 65, state governments often do. For example, if you have Medicare due to disability or certain medical conditions such as ALS or end-stage renal disease, you may apply before turning 65.
Some insurance companies will still sell Medigap policies even without being required by law. However, these companies may charge a great deal more for the policy. They may also deny necessary coverage for preexisting conditions, so it’s necessary to speak with an insurance agent about any health issues before purchasing any program.
Who Doesn’t Qualify for Medicare Supplement Insurance?
You may not be eligible for Medigap policies if you qualify for Medicaid, or you’re already part of a Medicare Advantage Plan. Generally, you cannot apply for Medigap plans until after you’ve turned 65, although there are exceptions to this rule.
What if I Have Pre-Existing Health Conditions?
If you sign up for a Medigap plan during the first six months after you turn 65 (and have Medicare Part B), insurance companies cannot charge you more for pre-existing health issues. Some Medigap insurance companies may enforce a six month wait time for coverage, but during this open enrollment period, any creditable coverage previously accumulated can be put towards shortening the coverage waiting period.
However, according to federal law, insurance companies can refuse to pay for prior medical conditions for the first six months of coverage should you purchase the policy outside of the open enrollment period.
If you purchase your Medicare Supplement Insurance policy when you have a guaranteed issue right, your insurance company cannot refuse to cover prior medical conditions.
What Type of Medigap Policy Should I Buy?
There are 10 Medigap plan types available in most states. Each of these plans is labeled with a different letter, and each corresponded to a specific level of coverage: A, B, C, D, F, G, K, L, M, and N.
Each insurance company can decide which Medigap plans they offer, but there are some stipulations. If an insurance company offers any type of Medicare Supplementary insurance policy, they must offer Medigap Plan A, Plan C or Plan F.
Plan A offers the most basic of coverage, offering full coverage for Medicare Part A coinsurance and hospital expenses, Medicare Part B coinsurance or copayments and blood, and Part A hospice care copayment. All subsequent policies cover these same benefits at varied levels, and may also offer additional benefits.
Plans with more coverage generally charge higher premiums, but it’s important to look through the provided coverage of each plan before making a decision. Different policies provide varied benefits, so it’s important to go provision by provision to determine the best fit. For example, Plan A offers full coverage on the first three pints of blood needed for a transfusion, while Plan K only covers 50 percent of the cost.
Take a look at the following chart from PBS.org to determine which coverage plan best suits your needs.
While the federal government does standardize and regulate Medicare supplement plans, private companies can impose their own variations of the coverage provided.
Is Medigap Standardized Across the Country?
Most states offer standard benefits in each letter category, which makes it easier to compare varied plans. However, standard Medigap policies may differ in Wisconsin, Minnesota, and Massachusetts.
What Does Medigap Cost?
The cost of your Medigap policy depends on a multitude of factors, including the area you live in, your age, when you applied, and whether or not you have a pre-existing health condition. Most plans will become more expensive as you get older. This cost may increase dramatically over the years, so sometimes it’s in your best interest to apply for supplementary insurance plans earlier.
Medicare doesn’t pay any of the expenses required for purchasing a Medigap policy, and you’ll be responsible for monthly premiums, in addition to the premiums for Medicare Part B.
In most cases, the moment you sign your Medigap insurance contract, you’ve agreed to allow the insurance company to procure your Part B claim information from Medicare. This enables them to pay the doctor directly, meaning this coverage handles some of your Part B Medicare costs as soon as coverage begins.
There is a silver lining; once you purchase a Medigap policy, your plan is guaranteed renewable at the same rate, even if you have health problems—so long as you pay your monthly premiums on time.
Note: If you’re married, and both you and your spouse want to purchase Medigap coverage, know that you’ll need to buy separate policies.
What Happens if I Want to Change Plans?
Be very careful when selecting your Medicare Supplement Insurance plan. If you choose a certain plan, then later wish to switch to another, you’ll need to be sure your insurance company offers this specific plan. If they don’t, you’ll need to switch insurers, who may reject you due to preexisting medical conditions, as you’ll have already utilized the open enrollment period.
After changing Medigap plans, you might have to wait to receive coverage. If you’ve changed outside the open enrollment period and you do have a pre-existing condition, you’ll likely need to wait a certain amount of time before receiving coverages for expenses directly related to that condition.
What Doesn’t Count as Medicare Supplement Insurance?
When looking for Medigap policies, there are a few plans that may seem to provide similar benefits, but offer very different coverage, at very different costs. Medicare Advantage and Medicare prescription drug plans are not Medicare Supplement Insurance, and neither is Medicaid. Veteran’s benefits, TRICARE, and Union plans are not considered Medigap policies.
Wondering how you’re going to handle the costs of health care after retirement? Medicare Supplement Insurance is a wise route for individuals looking to avoid paying steep expenses out of pocket when Medicare reaches its limits. If you’re looking for protection from the frequently unexpected costs of Medicare coverage, it’s important to look at your Medigap options.