MEDIGAP INSURANCE
There are a variety of insurance policies available to supplement or complement Medicare coverage. These policies help pay for medical expenses, services and supplies that Medicare covers only partially or not at all. The basic types of coverage include:
| » | Medigap policies that pay some of the amounts that Medicare does not pay for covered services and which may pay for certain services not covered by Medicare |
| » | Managed care plans such as health maintenance organizations (HMOs) from which you purchase health care services directly for a fixed monthly premium |
| » | Continuation or conversion of an employer-provided or other policy you have when you reach 65 |
| » | Nursing home or long-term care policies, which pay cash amounts for each day of covered nursing home or at home care |
| » | Hospital indemnity policies, which pay cash amounts for each day of inpatient hospital services |
| » | Specified disease policies, which pay only when you need treatment for the insured disease |
Medigap
Medigap insurance, which most beneficiaries buy because it is specifically designed to supplement Medicare’s benefits, is regulated by federal and state law and must be clearly identified as Medicare supplement insurance. It provides specific benefits that help fill the gaps in your Medicare coverage. Other kinds of insurance may help you with out-of- pocket health care costs but they do not qualify as Medigap plans. Standard Medigap plans To make it easier for consumers to comparison shop for Medigap insurance, nearly all states, U.S. territories and the District of Columbia limit the number of different Medigap policies that can be sold in any of those jurisdictions to no more than 10 standard Medigap plans. The plans, which are described beginning on page 12, were developed by the National Association of Insurance Commissioners and incorporated into state and federal law. They have letter designations ranging from "A" through "J," with Plan A being the "basic" benefit package. Each of the other 9 plans includes the basic package plus a different combination of additional benefits. The plans cover specific expenses either not covered or not fully covered by Medicare, with "A" being the most basic policy and "J" the most comprehensive. Insurance companies are not permitted to change the combination of benefits or the letter designations of any of the plans. Each state must allow the sale of Plan A and all Medigap insurers must make Plan A available if they are going to sell any Medigap plans in a state. While not required to offer any of the other 9 plans, most insurers offer several plans to pick from, and some offer all 10. They can independently decide which of the 9 optional plans they will sell as long as the plans they select have been approved for sale in the state in which they are to be sold. Some states have limited the number of plans available in the state. For example, Delaware does not permit the sale of Plans C, F, G and H and Vermont prohibits the sale of Plans F, G and I. Residents of Minnesota, Massachusetts and Wisconsin will find that their Medigap plans are different from those sold in other states. This is because these states had alternative Medigap standardization programs in effect before the federal legislation standardizing Medigap was enacted. Therefore, these states were not required to change their Medigap plans. If you live in Minnesota, Massachusetts or Wisconsin, contact your state insurance department to find out what Medigap coverage is available. The only areas where standardization is not in effect are Guam, American Samoa and the Commonwealth of the Northern Mariana Islands.
Innovative benefits
Besides the standardized benefit plans, federal law permits states to allow an insurer to add "new and innovative benefits" to a standardized plan. Any such new or innovative benefits must be cost-effective, not otherwise available in the marketplace, and offered in a manner that is consistent with the goal of simplification. Check with your state insurance department to find out whether such benefits are available in your state.
Comparing Medigap plans
Medigap insurers must use the same format, language and definitions in describing the benefits of each of the Medigap plans. They are also required to use a uniform chart and outline of coverage to summarize the benefits. As you shop for a Medigap policy, keep in mind that each company’s products are alike, so they are competing on service, reliability and price. Compare benefits and premiums and be satisfied that the insurer is reputable before buying.
What Medigap plans cover
Medigap policies pay most, if not all, Medicare coinsurance amounts and may provide coverage for Medicare’s deductibles. Some of the 10 standard plans pay for services not covered by Medicare such as outpatient prescription drugs, preventive screening, and emergency medical care while traveling outside the United States. Coverage is also provided in some plans for provider charges in excess of Medicare’s approved amount and for at home personal care services. Some of the benefits have dollar limits. For example, the at home recovery benefit available in some plans pays up to $40 per visit for up to seven visits a week and can be used up to 8 weeks after your Medicare-covered home health care visits stop. The maximum benefit is $1,600 per calendar year. To qualify for the at home recovery benefit, you must receive Medicare-covered home health care services after an illness, injury or surgery and the services covered by the Medigap policy must be ordered by your doctor.
Both the basic and the extended outpatient prescription drug benefits also have payout limits. Under basic coverage, you are responsible for a $250 deductible each calendar year, after which the policy covers 50 percent of outpatient prescription drug charges up to a maximum of $1,250 in benefits per calendar year. The extended prescription drug benefit also pays 50 percent of your drug bills up to a maximum of $3,000 per year after you pay the first $250.
The preventive screening benefit pays a maximum of $120 per year for physician-ordered health care screenings. The foreign travel emergency benefit covers 80 percent of the costs of emergency medical care begun during the first 2 months of each trip outside the United States after you pay the $250 annual deductible. There is a lifetime maximum benefit of $50,000.
Unlike some types of health coverage that restrict where and from whom you can receive care, Medigap policies generally pay the same supplemental benefits regardless of your choice of health care provider. If Medicare pays for a service, wherever provided, the standard Medigap policy must pay its regular share of benefits. The only exception was Medicare SELECT an experimental program.
Open Enrollment
State and federal laws guarantee that for a period of 6 months from the date you are both enrolled in Medicare Part B and age 65 or older, you have a right to buy the Medigap policy of your choice regardless of any health problems you may have. If, however, your birthday falls on the first day of the month, your Part B coverage (if you buy it) begins on the first day of the previous month, while you are still 64. Your Medigap open enrollment period would also begin at that time. During this 6-month open enrollment period, you can buy any Medigap policy sold by any insurer doing Medigap business in your state. The company cannot deny or condition the issuance or effectiveness, or discriminate in the pricing of a policy because of your medical history, health status or claims experience. The company can, however, impose the same preexisting condition restrictions that it applies to Medigap policies sold outside the open enrollment period. Your Medicare card shows the effective dates for your Part A and/or Part B coverage. To figure whether you are in your Medigap open enrollment period, add 6 months to the effective date of your Part B coverage. If the date is in the future and you are at least 65, you are eligible for open enrollment. If the date is in the past, you are generally not eligible. (If you were entitled to Medicare before age 65, see the following section on open enrollment and the disabled.) If you are covered under an employer group health plan when you become eligible for Part B at age 65, carefully consider your options. Once you enroll in Part B, the 6-month Medigap open enrollment period starts and cannot be extended or repeated. If you are covered under an employer plan that is primary to Medicare in paying your medical bills, you will not need a Medigap plan until you are no longer covered under the employer plan. If you begin buying Part B as a supplement to your employer plan while it is the primary payer, you will trigger your Medigap open enrollment period when it is of little use to you. You may, therefore, want to wait to buy Part B until you are ready to make optimum use of your Medigap open enrollment period. Also keep in mind that if you have already triggered your Medigap open enrollment period at age 65, you cannot get another one by dropping Part B and reenrolling during a special enrollment period after you are no longer covered under the employer plan.
Information from the Health Care Financing Administration