Medigap Insurance Plans
While becoming eligible for original Medicare is a sort of milestone, it does come with a downside. Medicare covers a good amount of the costs of the beneficiaries’ health expenses. Even though the expenses it does cover helps greatly reduce what you would pay without insurance, you are still left with the out-of-pocket costs that are left behind. That is where Medigap coverage comes in.
Deductibles are not the only expense that beneficiaries of Medicare find themselves worrying about. They also have to cover co-payments and co-insurance. That isn’t even everything you could be charged for. You could face additional expenses if you are traveling outside the United States.
However, there is an answer to the expenses that would normally be overly costly for the budget of many Medicare recipients. This is where Medigap insurance plans come into play. It is also known as Medicare Supplement insurance. Medigap insurance is designed to cover the gaps left behind by original Medicare, lessening the out-of-pocket costs for the beneficiary.
Where Do You Get Medigap?
You can get a Medigap policy from any number of private health insurance providers, regardless of state. There was a report by America’s Health Insurance Plans in 2019 that states in 2017, Medigap enrollment was up from 11.6 mils to 13.5 million.
Medigap policies are standardized, a letter from A-N, and are required by federal law to be the same regardless of provider. This means that no two companies will have a Plan A that is different. You get the same coverage with one provider as you do another, the only difference between providers is their premiums. It should be noted that Plans C and F are available no longer to individuals who are just now becoming eligible for Medigap. The only exception to the standardized laws is in the states of Wisconsin, Minnesota, and Massachusetts. Their standardized Plans are different.
Some Medigap coverages aren’t offered in every state. You may also be eligible for Medicare SELECT, depending on the state you live in. This is a Medigap plan that requires policyholders to use specified hospitals and/or doctors. All of the 10 Medigap insurance plans are available as a SELECT plan. They generally come with lower costs, but you are working on a limited network that offsets those costs. Unless it is an emergency, your SELECT plan will not cover the out-of-pocket Medicare costs if you go out of the network.
While no insurance provider is required to offer every single Medigap plan, if they do offer these plans, they are required to, at the very least, offer Plan A. If it is a newly eligible enrollee, Plans D, or G must be offered. Plans C and F are only available to enrollees that were eligible before 2020.
Does Medigap Have Gaps?
While Medigap is designed to cover the gaps left behind from original Medicare, it doesn’t cover what Medicare doesn’t cover. This means, there are still gaps that can come with a cost depending on the nature of healthcare. Some of the expenses NOT covered by Medigap insurance plans are Long-Term Care (Nursing Home), Dental, Vision, Eyeglasses, Hearing Aids, Prescription Drugs, and Private-Duty Nursing Care. Medigap plans have changed over the years. If you have older plans, the changes might not affect you any.
There are types of coverage not compatible with Medigap policies, Such as:
Medicare Advantage Plans
Indian Health Services
Medicare Prescription Drug Plans
Though you may be able to find a discount if you and your spouse are on the same Medigap plan, the policies are only for individuals. That means there are no couples/family plans. So if you and your spouse have eligibility for Medigap coverage, you will both need to have your own individual plan.
Medicare Supplement Plans 2021
Is There Coverage for Part B Deductible Available to New Beneficiaries?
Put simply, only two Medigap plans were designed to cover the deductible of Part B; Plan F and Plan C. However, as of 2020, these two plans will no longer be available. If you were eligible prior to 2020, you might still purchase these plans. But in 2015, it was a law signed in that takes the availability of these plans away from new beneficiaries.
As stated before, if you were eligible before January 1st, 2020, you could still possibly purchase Plans C and F. There is likely to be medical underwriting, though. Also, if you were already a beneficiary of Plans F or C, you get to keep that coverage.
The reason why the two Plans’ availability became limited is that there was a need to eliminate first-dollar coverage under these Medigap Plans. This is an attempt to prevent the over-utilization of the healthcare system. This means that there will still be out-of-pocket costs for beneficiaries, as opposed to having all their costs covered for them by Medicare and Medigap. This sums up to one simple fact, if you are eligible past the beginning of 2020, you are only able to find Medigap plans that cover virtually all the gaps. You will still be faced with Part B deductible. That is if they need outpatient care.
The Deductible of Part B, as of 2020, is $198. This deductible is a per-year charge.
How Are Medigap Prices Set?
The Medigap policy costs will vary from provider to provider. They all set their rates in different ways, these are the methods that are used:
- Community-No Age-Rated- The pricing that is placed on policies that use this method do not change based on age. This means whether you are 65 or 85, the premiums are the same. However, they are still subject to change. They stay the same amount, changing for all beneficiaries. There are only 8 states that have requirements for all 10 plans to be rated this way.
- Issue-age-rated- The premiums that are set on policies using this method are based on how old the beneficiary is at the time of purchase. The older they are when they purchase the plan, the higher their premium will be. The difference only continues for as long as they have that particular plan. The trick is to enroll when you first become eligible. This will ensure that your premium is always at its lowest.
- Attained-age-rated- As for the premiums of this method, they increase gradually as the insured ages. They are considered the least expensive, at first. They get a higher premium the older you get, as well as different factors, including medical cost trends and inflation. These plans are also ideally best enrolled when you first become eligible.
Unlike with Medicare D, Advantage, and Original Medicare, there isn’t an annual OEP (Open Enrollment Period). You only have guaranteed issue during the window you get when you enroll in Medicare Part B, or when you turn 65. The beginning of your 65th birth month to be specific. There are other limited special enrollment periods also.
You could face higher premiums if you don’t take advantage of the initial enrollment period. You could also risk being denied altogether. Your pre-existing conditions can determine this, medical underwriting does exist.
How Do You Pay Less for Medigap?
If you want to pay less for your Medigap coverage, then the first thing you need to do is enroll as soon as you are eligible. This will give you guaranteed issue rights, which will eliminate any rate hikes based on medical history.
Another way you can save is possible discounts. Some insurers do offer discounts for Non-smokers, women, annual payments, and married people. There is also a state-offered insurance assistance program. This provides information on Medigap insurance, as well as qualified insurers. Make sure you are checking the website to your state for more information on your state’s health insurance assistance program.
When Should I Purchase Medigap Policies?
After you are enrolled in Medicare Part A and B, the ideal time to apply for Medigap is the first day of your 65th birth month. Enrollment in Part A and B is required for Medigap plans. This period of time is known as the Initial Enrollment Period (IEP). It will last for the following 6 months. Federal law states that coverage, during this window, is guaranteed.
If you are under 65 and eligible for Medicare because you are disabled, most states offer some form of IEP. Though it tends to come with a pricier premium. Make sure you are doing research on the healthcare regulations of your state.
If you wait until after the IEP, you are going to risk facing denial of your application or an increase premium rate that is based on medical underwriting. There is not a federal requirement of Medigap Plans to have guaranteed-issue outside the IEP. There are some extremely limited enrollment periods that are considered special. Each state can have its own set of regulations in regards to Medigap Plans. For example:
- New York & Connecticut- Medigap plans, regardless of enrollment time, can not be medically underwritten.
- Massachusetts- There is an Annual Open Enrollment Period from February 1st through March 31st.
- Maine- Regardless of the medical history of the applicant, there must be one month a year designated to offer a guaranteed issue for Plan A.
- Missouri- As long as the plans are the same, the Anniversary Rule that Missouri has allows a switch from one Medigap insurer to a new one. There is guaranteed-issue for this window, and it extends for 30 days prior, and following, the anniversary of when you first purchased the plan.
- California & Oregon- Once a year, for 30 days, enrollees are allowed to switch to other Medigap plans that hold lesser or equal benefits. This switch is exempt from medical underwriting.
- Washington State- Under the stipulation that you have had coverage for at the least 90 days, those who have been enrolled in one Medigap plan are able to switch to another one at any time. The plan you can switch between is based on the plan you have. Plan A is limited to other Plan A.
In order to check out your state’s specific regulations in regards to Medigap, just check with the Department of Insurance. It is always important to start your Medigap enrollment with a little research on the different providers and the different regulations that your state, or any state you may be moving to, has in place.
Your coverage is not something that an insurer can make you wait on unless it is on a pre-existing condition. You could also refuse the out-of-pocket costs for that particular pre-existing condition for almost 6 months during a waiting period. However, with credible coverage or guaranteed issue protections for Medigap, you are able to avoid the waiting period altogether. That is if it doesn’t just shorten that wait time instead.