Wednesday, 17 October 2012
Medicare Enrollment Information: Part 2 – Medigap
IMPORTANT EDITORIAL NOTE: In the comments, please keep to the topic of the day's post. Advantage plans don't belong here today nor drug plans. Off-topic comments will be removed to help keep the series understandable for general and new-to-Medicare readers.
With anything Medicare, it is easy to make mistakes. If you spot any, please advise me via email so I can investigate and correct wrong information within the story. If it is only in comments, many people will not see it.
This series is intended to be a useful and understandable overview (though far from complete) of the individual Medicare parts and how to navigate them based on the K.I.S.S. principle.
UNRELATED ANNOUNCEMENT: Yesterday, the Social Security Administration announced that the cost-of-living (COLA) increase for 2013 Social Security benefits will be 1.7 percent. I'll have a post about that, Social Security's political vulnerability and the election for us to discuss next week.
Medigap – or supplemental – Medicare plans are private insurance that apples only to people with traditional Medicare. That is, Part A (hospital) and Part B (medical), not Advantage plans.
WHY BUY A MEDIGAP POLICY
Traditional Medicare covers only about 80 percent of costs. Therefore, many people purchase additional coverage, a Medigap plan because those 20 percent costs can add up to thousands of dollars.
Among those costs are Part A and B deductibles, outpatient services and medical supplies, hospitalization after 60 days, skilled nursing after 20 days and the first three pints of blood.
Supplemental plans allow you to see any doctor you choose but you may be required to do the claim paperwork for physicians who do not accept Medicare.
Here are some things Medigap policies do not cover:
- Long-term care to help you bathe, dress, eat or use the bathroom
- Vision care, eyeglasses, hearing aids or dental care
- Private-duty nursing
- Prescription drugs, or any out-of-pocket costs for Part D plans
(Other ways the gap in traditional Medicare can be covered, depending on personal circumstances, are: employer or union insurance, COBRA, TRICARE for military families, Veterans benefits, Tribal health benefits and Medicaid.)
WHO CAN PURCHASE MEDICAP COVERAGE
Anyone who has Medicare Parts A and B is eligible to purchase a Medigap policy with certain restrictions.
The best time to purchase a Medigap policy is when you are 65 AND are signed up for Medicare Part B. This is the six-month “open enrollment period” for Medigap counted from the date when you first join Medicare.
If you wait beyond this six-month period, you can be required to fill out a medical questionnaire, allow the insurance company to speak with your physician and/or submit to a medical examination.
This leads us to confusion over Medigap coverage and pre-existing conditions. In some cases, an insurer can refuse to issue Medigap coverage for up to six months if a customer had a prior health problem before the start date of the policy. This is called a pre-existing condition waiting period.
If, however, you have had at least six months of "credible" coverage, you cannot be dinged for the six-month waiting period. Of course, that "credible" part is the catch but there are specific federal rules and restrictions on how that is applied. If you have had credible coverage for less than six months, the wait period can be pro-rated.
All Medigap policies are guaranteed renewable. As long as you pay the premium (and continue paying the Medicare Part B premium) your policy cannot be canceled.
CHOOSING AMONG THE 11 MEDIGAP PLANS
(Medigap policies have been standardized since 1992; however, prices can vary widely among companies and states for the same plan. Plus, Massachusetts, Minnesota and Wisconsin are “waiver states” that have different but comparable policies. Residents of those three states should contact their state insurance departments for local Medigap information.)
For those of us in the other 47 states, there are 11 standard Medigap policies designated by these letters: A, B, C, D, F, G, K, L, M and N.
E, H, I and J are still in existence but are no longer sold.
Plan F has a second, high-deductible choice.
There are basic Medigap benefits that each of these plans must cover. They are:
- Medicare Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up
- Medicare Part B coinsurance or copayment
- Blood – first three pints
- Part A hospice care coinsurance or copayment
Beyond that, any Medigap plan identified with the same letter must offer the same benefits regardless of the insurance company selling it. However, the price – that is, the premium – can vary.
And don't forget that you must continue to pay your Medicare Part B premium to maintain your Medigap policy.
Here is a chart of benefits of each of the 11 Medigap plans. Click the chart to see a larger version.
There is one additional kind of Medigap policy called Medicare SELECT. They can be any one of the standard plans and they are generally cheaper because except in emergencies, you are required to use network hospitals and in some cases, network physicians to get full benefits.
There are many rules and complications if you want to switch Medigap plans - too many to cover in this series. I mention it only because it may be easier to switch plans with SELECT but there are restrictions so as with all Medigap policies, check carefully before changing.
THE PRICE OF MEDIGAP POLICIES
Premiums vary greatly for the same plans among insurance companies and can be affected by your age and by location (rural or urban). Some companies may offer discounts for non-smokers, couples or women.
And premiums can be higher if you delay purchase past your initial six-month enrollment period.
Regarding age, companies have three ways they charge so when you are shopping for a Medigap policy, check or ask each company which of these three methods they use to help you determine which is a good policy for you:
- "No-age-related (or community-related)" means everyone is charged the same premium no matter what their age
- "Issue-age-related" means policies are priced by your age when you first purchase the policy. The cost does not go up automatically as you get older, but may increase due to inflation
- "Attained-age-related" means premiums are based on your age each year and go up as you get older. After age 70 or 75, they can cost more that other policies.
In addition, all Medigap policies can increase in price due to inflation and rising health care costs.
Purchasing a Medigap policy is an important decision for which Medicare lists four steps. They seems obvious, but they helped me focus six years ago, while I was learning so much new stuff, when I bought mine:
- Decide which plan (A-N) is best for you
- Locate companies selling that Medigap plan in your state
- Call the companies and compare costs
- Buy the Medigap policy
Once you have a Medigap policy, it cannot be canceled for any reason as long as you pay the premiums.
TO RESEARCH A MEDIGAP POLICY RIGHT NOW
If you are looking for a Medigap policy at this time, here is the medicare.gov overview page for Medigap policies. You can compare plans side-by-side similar to the chart above.
There are also links to plans for each of the “waiver states” - Massachusetts, Minnesota and Wisconsin - and for everyone else, a link to the choices in your state.
Don't forget: It is your right to purchase a Medigap policy; you cannot be rejected. It must cover all pre-existing conditions and you cannot be charged more for them.
Tomorrow we will cover Part D, the Medicare prescription drug plan.
Medicare Enrollment Information: Part 1 - The Basics
Medicare Enrollment Information: Part 3 - Prescription Drugs
Medicare Enrollment Information: Part 4 - Advantage Plans
Medicare Enrollment Information: Part 5 - Where to Get Help
At The Elder Storytelling Place today, Mickey Rogers: Revisiting the Past