5 Things You Should Know About Medicare Supplement

5 Things You Should Know About Medicare Supplement Plans

Medicare Supplement plans, also known as Medigap policies, can cover some of the costs that Original Medicare coverage does not include. 

The government provides Original Medicare coverage, Part A medical and Part B hospital benefits, to all eligible individuals. However, this coverage is not all-inclusive. Anyone enrolled in the Medicare program will need to decide at some point whether the traditional coverage provided by the government is sufficient for their health needs.

For many, this coverage is not enough, and that's where private insurance plans, like Medicare Supplement plans, come in. These plans can offer coverage for health care costs not covered by Part A and Part B. To join a Medicare Supplement plan, a beneficiary must be enrolled in both Part A and Part B coverage, live in state where the plan is offered, and generally be above the age of 65.

Important facts about Medicare Supplement plans

Before deciding to add this type of insurance plan to supplement Original Medicare benefits, here are five things you should know about Medicare Supplement plans:

1. There are 10 standardized plans in 47 states, with the exception of Massachusetts, Minnesota, and Wisconsin.

In most states, there are 10 standardized types of Medicare Supplement plans labeled A through N. Each standardized plan must offer the same basic benefits, no matter which insurance company is offering it or where it is available. The only thing that will vary between plans of the same letter would be price given that these plans are offering by different insurance companies. Please note that Plan E, H, I, and J are no longer offered; however, these plans have been grandfathered, meaning that anyone who was previously enrolled can keep their plan.

On the other hand, Massachusetts, Minnesota, and Wisconsin do not have standardized plans. Instead, each state has its own unique Medicare Supplement plan offerings.

2. Standardized Medigap policies are guaranteed renewable.

Since 1990, Medicare Supplement plans have been guaranteed renewable, even if you have health conditions. This means that as long as you pay your monthly premium and the insurance company does not go bankrupt, you cannot be dropped from your plan.

3. The best time to enroll in a Medicare Supplement plan is during your Medigap Open Enrollment Period.

Your Medigap Open Enrollment Period lasts from six months and begins the first day of the month in which you are both age 65 or older and enrolled in Part B. During this time, you have guaranteed issue rights to purchase any Medicare Supplement plan available in your area. This means that insurance companies cannot use medical underwriting to use your health problems to deny enrollment, charge more for coverage, or make you wait for coverage to begin, except in the case certain pre-existing conditions. Please note that some states may have additional open enrollment periods for individuals under the age of 65.

4. Insurance companies charge a monthly premium, which can be set differently depending on the Medigap policy.

As stated before, standardized plans of the same type may still have different costs depending on which insurance company is offering the plan. Each insurance company can decide how much it wants to charge per month through one of three different pricing models. The way a price is set will determine how much you pay for coverage now and in the future, outside of inflation and other factors. Medicare Supplement premiums can be determined in three ways:

Community-rated : Also known as no-age-rated pricing, this pricing model charges the same premium to anyone who is enrolled in the plan, regardless of age. Plan premiums will not change based on age.

Issue-age-rated : Also known as entry age-rated pricing, this model prices the premium based on the age you are when you buy the plan. This plan will not change as you age.

Attained-age-rated : Premiums for these plans depend on your current age, which means that costs would increase with age. While these plans may be cheapest when you are younger, they may become the most expensive type of plan as you get older.

5. Medicare Supplement plans work with Medicare Part D plans, but not Medicare Advantage plans.

As of January 1, 2006, Medicare Supplement plans no longer offer prescription drug coverage. Thus, beneficiaries who need this coverage will need to enroll in a separate stand-alone Medicare Part D plan, also known as a Medicare Prescription Drug Plan.

On the other hand, Medigap policies do not work with Medicare Advantage (Part C) plans. These policies cannot be used to pay any deductibles, copayments, coinsurance, or premiums associated with Part C coverage. Beneficiaries who are enrolled in a Medigap policy may want to drop it if they choose to enroll in a Part C plan; however, if you drop your Medigap policy, keep in mind that you may not be able to get it back.

Before enrolling in a Medicare Supplement plan, remember to compare all available plans in your area to find the right one for you.

Medicare has neither reviewed nor endorsed this information.

5 Things You Should Know About Medicare Supplement