Medicare Supplement Insurance Plans
If you’re concerned about Medicare costs, a Medigap health insurance policy (also called Medigap insurance or a Medicare Supplement insurance plan) helps pay the “gap” between what Original Medicare (Medicare Parts A and B) pays and what you pay out of your own pocket. You can get a Medicare Supplement policy through private insurance companies.
What you should know about Medigap
The Medigap policy you purchase must be clearly identified as “Medicare Supplement Insurance.” In most states, there are up to 10 different Medigap basic benefits options to choose from. Plans are labeled A, B, C, D, F, G, K, L, M, and N (Plans E, H, I, and J are no longer available). Plans with innovative benefits may be available and offered by a company. In Massachusetts, Minnesota and Wisconsin, Medigap policies are standardized in a different way.
All insurance companies selling a particular Medigap plan type in your area must offer the same basic benefits in that plan type, but may offer it at different prices. So, you may want to shop for the best price.
You can get a Medicare Supplement insurance plan only if you already have Original Medicare. Medigap may help pay for out-of-pocket costs under Medicare Part A (hospital insurance) and Medicare Part B (medical insurance), but it does not include benefits for Medicare Part C (Medicare Advantage plans), Medicare Part D (Prescription Drug Plans), or any other private health insurance, Medicaid, Veterans’ Administration benefits, or TRICARE.
Because Medigap insurance plans are regulated by state and federal laws, the basic benefits offered by plans of the same letter type are generally the same regardless of insurer. The differences will be in the price and who administers the plan. Each insurer may not offer all types of plans. Choose a health insurer you trust, and shop around for the best prices.
In some states, you may be able to buy another type of Medigap policy called Medicare SELECT. This type of plan may require you to use a specific network of doctors and hospitals.
Open Enrollment Period for Medicare Supplement insurance plans
Your Medigap Open Enrollment Period begins the first day of the month in which you are at least 65 and covered under Medicare Part B. You have six months to buy a Medigap insurance plan. If you are under 65, check with your state’s Social Security Administration to see if it offers additional open enrollment periods.
Be aware that Medigap plans supplement Original Medicare to fill in cost gaps. If you are considering a Medicare Advantage plan, be aware that you can’t use a Medigap plan in conjunction with a Medicare Advantage plan.
As long as you buy a Medigap plan during this six-month Medigap Open Enrollment Period, the insurance company cannot refuse to sell you a Medigap policy, charge you more because you have health problems, or make you wait for basic benefits to begin. However, you may have to wait up to six months for the Medigap policy’s benefits to include your pre-existing condition*. Original Medicare will generally still cover a pre-existing condition even if your Medicare Supplement insurance plan doesn’t pay for your out-of-pocket costs.
If you apply for a Medicare Supplement insurance plan outside of your Medigap Open Enrollment Period, the private insurance company may “underwrite” the plan. That means you may be subject to a physical exam, and the insurance company can refuse to sell you the plan or they can adjust your premium based on your health status.
If you enroll into a Medicare Advantage plan, you are not allowed to use and can’t be sold a Medigap policy. However, if you later return to Original Medicare, Parts A and B, within your first year of joining a Medicare Advantage plan, you may have a special right to sign up for a Medigap Supplement insurance plan.
How insurance companies set Medigap premiums
There are three ways an insurance company can set Medigap premium rates:
- “Community-rated” (or “no-age-rated”) premiums are the same for everyone, regardless of age.
- “Issue-age-rated” (or “entry-age-rated”) premiums are based on your age when you first buy the policy. The sooner you buy, the less you will pay.
- “Attained-age-rated” premiums are based on your current age, meaning it goes up as you grow older.
Other factors impacting the premium rates can include inflation, geography, medical underwriting (if you did not buy a plan when first eligible), and other discounts. You should check with each specific health insurer to see how it sets Medigap prices before you buy.
*Pre-existing conditions are generally health conditions that existed before the start of a policy. They may limit coverage, be excluded from coverage, or even prevent you from being approved for a policy; however, the exact definition and relevant limitations or exclusions of coverage will vary with each plan, so check a specific plan’s official plan documents to understand how that plan handles pre-existing conditions.
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