While Medicare pays for a lot of health care services, there are still many it does not cover. The Traditional Medicare Plan does not provide 100% coverage for medical expenses such as deductibles, co-payments, and co-insurance. Therefore Medigap was designed to help pay the costs that Medicare does not cover. Medigap is also referred to as ‘Medicare Supplement Insurance.’
What is Medigap and how does it work?
Medigap is additional health care insurance provided by private insurance companies to cover the gaps in the Medicare Plan. Medigap policies are regulated by Federal and State Laws in order to protect you as a beneficiary. Medigap policies have to be clearly labeled as “Medicare Supplement Insurance”, and the policies are standardized for each State.
Medigap Eligibility Requirements
Medigap coverage works only in conjunction with a Medicare Plan. Typically, you must have Medicare Part A and Part B in order to be eligible for Medigap. Acceptance of your application is guaranteed if you are 65 or older and apply within six (6) months of your initial enrollment in Plan B of Medicare. Under certain circumstances pre-existing conditions might be waived. Please ask us for specific details. As Medigap policies only cover one person per policy you and your spouse must each purchase separate policies.
In most states, you may be able to select from up to 12 different standardized policies (Medigap Plans A through L). Each plan offers a different set of basic and additional benefits and is the same for every insurance company. Each Insurance company can decide which policies they want to sell and set their own prices, so research carefully in order not to overpay.
Medicare Supplement Insurance plans no longer cover prescription drugs. You cannot have both Medicare Part D and Medigap drug coverage at the same time. If you have a Medicare Prescription Drug Plan (Part D) and a Medigap policy that covers drugs, then you need to tell your Medigap insurance provider to remove the drug coverage from your policy. While Medicare Part D coverage is more beneficial than Medigap drug coverage, you can also decide to keep your Medigap policy with prescription drug coverage instead.
Plans A through J
Plans A through J have more benefits, higher premiums, and lower out-of-pocket expenses. Basic benefits include Medicare Part A and B co-payment or co-insurance, and three pints of blood. Extra benefits may include Skilled Nursing Facility co-insurance, Medicare Part A and B deductibles, Medicare Part B excess charges, foreign travel emergency services, at-home recovery, preventive care, and some may still cover prescription drugs.
Plans K through L
Plans K through L have lower premiums and higher out-of-pocket expenses. Basic benefits include Medicare Part A hospital benefits, Medical Part A and B co-insurance or co-pay, blood, and hospice care. Extra benefits include Skilled Nursing Facility co-insurance and Medicare Part A deductibles.
Plans K and L provide for different cost-sharing for items and services than Plans A through J. With either of these plans, once you reach your annual “out-of-pocket limit,” the plan will then pay 100% of the Medicare co-payment, co-insurance and deductibles for the rest of the calendar year. The out-of-pocket limit does not include charges for any provider that exceeds Medicare-approved amounts, known as “excess charges.” The annual out-f-pocket limits for these plans in 2009 are $4620 for Plan K, and $2310 for Plan .
When selecting a Medigap plan, you should carefully compare each plan and compare different insurer quotes. Make sure you have adequate coverage that meets your needs, but you don’t want to pay more as the benefits of each plan are the same for every insurance company.
Does Medigap work with a Medicare Advantage Plan?
No. If you enroll in a Medicare Advantage Plan, your Medigap coverage will not work. You may wish to (although legally you don’t have to) cancel your Medigap policy if you choose a plan aside from the Original Medicare Plan.
For more information on Medicare Supplements and Medigap coverage, visit www.MedigapAdvisors.com.