Medicare Supplemental Insurance

Individuals receiving the health care benefits available through Medicare often search for additional Medicare Supplemental Insurance, also known as Medigap coverage.  A Medigap policy is a health insurance plan sold by a private insurance company to help fill in coverage "gaps" in the Original Medicare Insurance Plan.

Supplemental Insurance and Medigap Policies

There are currently around fourteen standardized Medicare supplemental insurance plans and these are conveniently referred to as Medigap plans A through N.  Each of these insurance policies has a slightly different set of benefits offered to suit the needs of those seeking this kind of insurance policy.

Why Buy Supplemental Medical Insurance?

While some people might consider the Medicare benefits very generous, there are some pretty significant coverage gaps.  The expense of the standard cost-sharing arrangement for medical services can quickly add up.  Working in concert with private health care insurance companies, the federal and state governments developed a system to help individuals fill in these insurance gaps.

One of the nice features of the Medigap system is that just because you're a Medicare recipient, there isn't any obligation to purchase this supplemental insurance.  For those that are interested in providing themselves with additional health care insurance, they can choose from fourteen different levels of coverage.

Medigap Changes in 2010

There were some pretty significant changes to the Medigap program in 2010.  Some of the more significant changes include:

• Legacy Plans - Plans E, H, I and J are no longer available after May 31, 2010.  If you purchased one of these plans before June 1, 2010, you can keep that plan.
• Modified Benefits - Plans D and G purchased after June 1, 2010 will have slightly different benefits than those sold before that date.  If you purchased one of these plans before June 1, 2010, you can keep that plan and the benefits will remain the same.
• New Plans - Plans M and N are not available and offer additional choices to Medicare recipients.
• Basic Benefit - Hospice Part A coinsurance will be covered as part of the basic benefit starting with policies effective June 1, 2010.  Plan K will cover 50% of these costs, while Plan L will cover 75%.
• Part B Coinsurance - premiums will be reduced in Plans K, L, and N since they will now require you to pay a portion of Part B coinsurance and copayments.  All other Medigap plans pay 100% of Part B coinsurance and copayments.

Medigap Plan Features

One of the important aspects of the Medigap plan structure is that as you move alphabetically from A to J, subsequent plans add to the previous plan's health care coverage.  Therefore, Plan A is considered the core Medigap plan since all the other plans contain at least the benefits of Plan A.  At the other end of the spectrum, Medigap Plan J was the most comprehensive supplemental insurance plan offered.

Another feature of these Medicare supplemental insurance policies is that they are standardized no matter where you live in the United States (Massachusetts, Minnesota and Wisconsin are exceptions).  This means that you can make a direct comparison between insurance companies regardless of where you live.  In other words, Medigap Plan D is exactly the same, regardless of the insurance company offering the policy.  In theory this means that the only difference between company plans is the cost of the policy.

Buying Supplemental Insurance

In general, when you purchase a Medigap policy there are at least two components to that policy, Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance).  If you opt to get a Medigap policy, then you will need to pay the monthly premium of Medicare Part B directly to Medicare.  In addition, you will need to pay an insurance premium to the private insurance company providing the Medicare supplemental insurance.

Just to be clear, a Medigap policy has nothing to do with any coverage you might have from your employer; it is not a Medicare Advantage Plan, it is not Medicare Part B; and it is not connected with Medicaid.  What it will do is help close the gaps on your Medicare deductibles.  Some policies will also provide additional benefits that are not covered by Medicare such as routine check ups, at home recovery, and prescription drugs.

Additional Benefits of Medigap Plans

As mentioned earlier, as you progress from Medigap Plan A through Plan J, you can expect to pay higher premiums for the additional medical benefits covered by each insurance plan.  To get a better feel for the types of coverage available as supplemental health care insurance, the following list explains some of the additional benefits offered by these Medigap plans (policies purchased before June 1, 2010):

• Medicare Part A - Medigap Plans B through J covers the hospital deductible in each benefit period.
• Medicare Part B - Medigap Plans C, F, and J pay the deductible each year for doctor fees and other medical services.  Medigap Plans F, I and J pay 100% of the excess charges that occur when a doctor doesn't "accept assignment."  Medigap Plan G pays 80% of these excess charges.
• At-Home Care - Medigap Plans D, G, I, and J help cover some payments for services such as bathing and dressing, if you're already receiving skilled home health care that is covered by Medicare.
• Skilled Nursing Home Care - Medicare pays for skilled nursing home costs for the first 20 days of a benefit period.  Medigap Plans C through J pays your share of the bill for day 21 through day 100.
• Preventative Care - Medigap Plans E and J offer preventative care benefits such as routine physicals.
• Travel Care - Medicare normally does not cover any health care services you might receive while traveling outside the United States.  Medigap Plans C through J will cover some emergency health care costs outside the United States.

Cost of Medicare Supplemental Insurance

The cost of Medicare supplemental insurance policies can vary widely.  Although the coverage is standardized, there can be a large difference in the cost that each health care insurance company will charge for the exact same coverage.  For example, some companies may base the insurance cost on your age upon enrollment.  Other companies may change premiums annually to reflect your current age.

The best time to enroll in a Medigap plan is during your open enrollment period.  Open enrollment lasts for six months, and starts on the first day of the month in which you are both age 65 or older and enrolled in Medicare Part B.  Once your six-month Medigap open enrollment period starts, it can't be changed.

Finally, the advantages of purchasing Medigap insurance during the open enrollment period include:

• An insurance company cannot deny you insurance coverage.
• The insurance company cannot place conditions on a policy.
• The insurance company cannot charge you more for a policy because of past or present health problems.

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