Buying Medigap, Medicare’s Supplement Insurance
Plans E, H, I, and J are no longer for sale, but you can keep these plans if you already have one.
*Plan F also offers a high-deductible plan. If you choose this option, this means you must pay for Medicare-covered costs up to the deductible amount of $2,110 in 2013 before your Medigap plan pays anything.
**For Plans K and L, after you meet your out-of-pocket yearly limit ($4,800 for K and $2,400 for L) and your yearly Part B deductible ($147 in 2013), the Medigap plan pays 100% of covered services for the rest of the calendar year.
***Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to a $50 copayment for emergency room visits that don t result in an inpatient admission.
(Chart and information courtesy of the 2013 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare. )
HOW MEDIGAP POLICIES ARE PRICED
The cost of your Medigap policy (the average monthly premium in 2010 was $178) depends on a number of factors such as where you live, your gender and whether the company offers discounts. Examples of discounts include being a non-smoker, buying a joint policy with your spouse, paying the premium yearly and paying electronically (EFT).
In addition, Medigap policies are rated to determine price. These are the three ratings:
1) Community-rated (or no-age-rated) plans are the same no matter how old you are. Example: Mr. Jones is 65. Mr. Copeland is 73. Both pay the same premium amount regardless of age.
2) Issue-age-rated plans are priced based on your age at the time of purchase so younger buyers will likely pay lower premiums. Example: Mrs. Rico is 65 and buys a policy for $140 a month. Mr. Green is 71 and buys a policy for $181 a month.
3) Attained-age-rated plans cost less to begin with but will increase automatically with age. Example: Mr. Newlin, who is 67, buys a policy for $126 a month. At age 69, his premium goes up to $137. At age 70, his premium goes up to $145. Mrs. Price, who is 72, buys a policy for $143 a month. At age 73, her policy goes up to $151. At age 75, her policy goes up to $162.
Keep in mind that all three of these plans can be affected by inflation. And there can be huge differences in premiums for the same plan between different insurance carriers.
A high-deductible plan is another factor that will affect your premium. These are sold under Plan F and require you to pay the first $2,070 before Medicare pays anything. The deductible amount can change every change.
The advantage of a high-deductible plan is that your premium will be significantly lower.
As you begin searching for a Medigap policy, you may run into a Medicare Select policy. This is a type of policy sold in some states that requires you to use hospitals and doctors that are within a network. These are generally cheaper than other Medigap policies. But if you choose to use doctors out of the network, you may pay some or all what Medicare doesn t pay.
KNOW YOUR GUARANTEED ISSUE RIGHTS
Guaranteed issue rights are when insurance companies must offer you certain Medigap policies even if you have pre-existing conditions. In these circumstances, an insurance company must:
- Sell you a Medigap policy
- Cover all your pre-existing conditions
- Not charge you more for a Medigap policy regardless of current or past health issues
According to Medicare, in many cases, you have a guaranteed issue right when you have other health coverage that changes in some way, such as when you lose or drop the other health care coverage. In other cases you have a trial right to try a Medicare Advantage Plan and still buy a Medigap policy if you change your mind.
To find out more about guaranteed issue rights and to see example situations, go to medicare.gov .
EXAMPLES OF COMPANIES THAT SELL MEDIGAP
The insurance carriers will vary depending on your location and the plan you choose. These are some examples I found for my zip code in the state of Colorado.
- Aetna Life Insurance
- Humana Insurance Company
- Liberty National Life Insurance
- AARP Healthcare Options
- Anthem Blue Cross Blue Shield
- Colonial Penn Life Insurance
- Mutual of Omaha
DOES MEDIGAP COVER PRESCRIPTION DRUGS?
Some Medigap polices sold in the past covered prescription drugs, but as of January 1, 2006, Medigap can no longer include prescription drug coverage.
MEDIGAP AND TRAVEL INSURANCE
One feature of Medigap Plans C, D, E, F, G, H, I, J, M, and N is travel insurance. These plans pay 80% of billed charges for emergency care outside the U.S. after a $250 yearly deductible is met. The lifetime coverage limit is $50,000.
WHAT DOESN T MEDIGAP COVER?
Long-term care such as nursing homes and assisted living, dental care, vision, hearing aids, glasses or private duty nursing.
WHEN CAN I BUY MEDIGAP?
The open enrollment period begins the first day of the month in which you are 65 or older AND enrolled in Medicare Part B. You also should buy coverage during this period because insurance companies can t use medical underwriters to evaluate your health. This means that even if you have a pre-existing condition, the insurer can t refuse to sell you coverage or charge you more than someone with no health problems.*
*Note that a pre-existing condition, as defined by Medicare, is a health problem you have before the date a new insurance policy starts. Some Medigap policies can refuse to cover your out-of-pocket costs for these pre-existing health problems for up to 6 months.
This is called a pre-existing condition waiting period. After 6 months, the Medigap policy will cover the pre-existing condition.
If you are already covered through you or your spouse s employer, you may decide to wait to enroll in Part B.
However, don t miss the open enrollment period or don t drop Part B and decide to get it later. It will hurt financially. The late enrollment penalty is an extra 10% for each 12-month period.
GET HELP WITH MEDICARE AND MEDIGAP
Trying to understand all the health insurance options with Medicare, Medicare Advantage, and Medigap can leave your head spinning. Fortunately, there are people who can help.
The State Health Insurance Assistance Program (SHIP) was set up to offer counseling on the phone or in person to those who need assistance with all aspects of Medicare. Find a SHIP counselor in your area.
You can also call 1-800-MEDICARE.
SOME QUESTIONS TO ASK WHEN SHOPPING FOR MEDIGAP
- Are you licensed in my state to sell Medigap?
- Do you sell Medigap Plan (whichever plan letter you re interested in)?
- Do you use a medical underwriter for this particular policy?
- Do you have a waiting period for pre-existing conditions? If yes, how long?
- How do you price this policy? Community rating? Issue-age rating? Attained-age rating?
- What would my premium be for my age?
- Has the premium increased over the last five years? If so, by how much?
- Do you offer any discounts? (e.g. non-smoker, paying for the entire year)
SHOP FOR MEDIGAP
To find Medigap policies in your area, go to Medicare s Medigap Policy Search .
Give Us Your Comments About This Page. This area is not for asking for help .
Jim Madre On May 15, 2017
Can I cancel my Medigap Insurance? They don’t pay 20% on hardly any of my claims and charge outrageous premiums. I’m sick of them and feel like I’m wasting money. Am I the only senior that feels this way?