Medicare Supplement Insurance

Medicare Supplement Insurance

Medicare supplement (Medigap) insurance, sold by private companies, can help pay some of the health care costs that Original Medicare doesn’t cover, like co-payments, co-insurance, and deductibles.

Some Medigap policies also offer coverage for services that Original Medicare doesn’t cover, like medical care when you travel outside the U.S. If you have Original Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for covered health care costs. Then your Medigap policy pays its share.

Every Medigap policy must follow federal and state laws designed to protect you, and the policy must be clearly identified as “Medicare Supplement Insurance.” Medigap insurance companies can only sell you a “standardized” Medigap policy, which in most states are identified by letters A through N. (In Massachusetts, Minnesota, and Wisconsin, Medigap policies are standardized in a different way.) Each standardized Medigap policy must offer the same basic benefits, no matter which insurance company sells it. Cost is usually the only difference between Medigap policies with the same letter sold by different insurance companies.

A Medigap policy is different from a Medicare Advantage Plan. Medicare Advantage is a way to get Original Medicare benefits, while a Medigap policy supplements your Original Medicare benefits.

The deductibles, co-insurance, and co-payments that you have to pay with original Medicare are discussed in detail on our Medicare Basics page, but let’s summarize them here.

What you pay with Medicare in 2015 without a Medicare Supplement plan

Part A co-insurance and other hospital costs

Daily coinsurance based on length of hospital stay:

  • Days 1-60: $0 coinsurance for each benefit period
  • Days 61-90: $304 coinsurance per day of each benefit period
  • Days 91 and beyond: $608 coinsurance per each “lifetime reserve day” after day 90 for each benefit period (up to 60 days over your lifetime)
  • Beyond lifetime reserve days: all costs

Part B coinsurance

20%

Blood “deductible”

First 3 pints of blood

Part A hospice care co-insurance

5%

Skilled nursing facility co-insurance

Daily co-insurance after 20 days based on length of stay

  • Days 1–20: $0 for each benefit period.
  • Days 21–100: $152 coinsurance per day of each benefit period.
  • Days 101 and beyond: all costs.

Part A deductible

$1410 per benefit period. Usually this means you pay it for each new hospital stay.

Part B deductible

$147 per year

Part B excess charges

The most confusing part about Medicare is the “excess charges”. Medicare supplement policies only pay for services that Medicare says are medically necessary, and payments are generally based on the Medicare-approved charge. The difference between what the doctor charges and what Medicare approves is called an “excess charge”. As long as the doctor accepts payments from Medicare electronically (called “assignment”) then she can not charge the patient these “excess charges”. If a doctor does not accept Medicare “assignment” then she can bill the patient for the “excess”. The excess can not exceed 15% of the the Medicare-approved amount, though.

Foreign Travel

Medicare does not cover foreign travel medicare expenses at all. Plans that do cover it will pay 80% after you meet a $250 deductible. Maximum benefit is $50,000.

10 Standard Medicare Supplement Plans

If you do not want to pay the above-mentioned costs then you should purchase a Medicare Supplement plan.

There are 10 standardized Medicare supplement insurance plans plus one high deductible option for Plan F. Each plan is labeled with a letter of the alphabet and offers a different combination of benefits.  Medicare supplement benefits are set by the federal government and do not change from year to year. Every like-letter plan must have identical benefits. For example, all plans identified by the letter “F” must be identical, regardless of which insurance company offers it. Prices will vary, often dramatically.Every company must offer Plan A, which are the “basic benefits”. If they offer other plans, they must offer Plan C or Plan F at least.

The 10 Standard Medicare Supplement Insurance Plans That became effective on June 1, 2010

 

To further summarize what each plan covers . . .

Plan A

  • Basic Benefits only: Medicare Part A (hospital) co-insurance plus 100% of additional 365 days, Part B (medical) co-insurance, Blood (first 3 pints), and Hospice co-insurance

Plan B

  • Basic Benefits in Plan A
  • Part A deductible

Plan C

  • Basic Benefits in Plan A
  • Part A deductible
  • Part B deductible
  • Skilled Nursing co-insurance
  • Foreign Travel

Plan D

Everything Plan C covers except the Part B deductible

 

Plan F (most comprehensive)

  • Basic Benefits in Plan A
  • Part A deductible
  • Part B deductible
  • Skilled Nursing co-insurance
  • Foreign Travel
  • Part B Excess

High Deductible Plan F

This is a Plan F that has a $2180 (2015) deductible you must meet first.

Plan G

Everything Plan F covers except the Part B deductible

Plan K

  • Part A co-insurance plus 100% of additional 365 days of hospitalization
  • All of the following at 50%:
    • Part B co-insurance
    • Blood deductible
    • Part A hospice co-insurance
    • Skilled nursing co-insurance
    • Part A deductible
  • Maximum Out of Pocket for 2015 is $4940

Plan L

  • Part A co-insurance plus 100% of additional 365 days of hospitalization
  • All of the following at 75%:
    • Part B co-insurance
    • Blood deductible
    • Part A hospice co-insurance
    • Skilled nursing co-insurance
    • Part A deductible
  • Maximum Out of Pocket for 2015 is $2470

Plan M

All the benefits of Plan C  except the Part B deductible and 50% of the Part A deductible

Plan N

All the benefits of Plan C  except the Part B deductible and a $20 co-payment for office visits

Key Facts about Medicare Supplement Insurance

• You must have Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance).

• You pay the private insurance company a monthly premium for your Medigap policy in addition to the monthly Part B premium that you pay to Medicare.

• A Medigap policy covers only one person. If you and your spouse both want Medigap coverage, you each will have to buy separate Medigap policies.

• Any standardized Medigap policy is guaranteed renewable even if you have health problems. This generally means the insurance company can’t cancel your Medigap policy as long as you pay the premium.

• It’s important to compare Medigap policies since the costs can vary and may go up as you get older.

When to Buy a Medigap

The best time to buy a Medigap policy is during your 6-month Medigap open enrollment period, because you can buy any Medigap policy sold in your state, even if you have health problems. This period automatically starts the month you’re 65 and enrolled in Medicare Part B, and once it’s over, you can’t get it again.

Medigap insurance companies are generally allowed to use medical underwriting to decide whether to accept your application and how much to charge you for the Medigap policy. However, if you apply during your Medigap open enrollment period, you can buy any Medigap policy the company sells, even if you have health problems, for the same price as people with good health.

I’m often asked if a physical exam is required to change Medigap plans. Then answer is “no”. You are never subjected to a physical exam of any kind to change plans or companies. You simply have to answer a short yes/no questionnaire.

Medicare Select

Medicare Select is a type of Medicare supplement policy that usually requires you to use doctors and hospitals in the plan’s network for your routine care. If you use out-of-network hospitals — other than in an emergency — you’ll have to pay more of the cost. If you no longer want network restrictions, the company must offer you a standard Medicare supplement policy with similar benefits. If you move out of the service area, you will have a guaranteed right to buy another Medicare supplement plan from any company.

So, whether you are new to Medicare and in your open enrollment or you would like to see how much you can lower your premium by switching to a different carrier or plan, Ask Us and he will guarantee to find you the lowest rates available.

 

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