Medigap: Replacement for your Original Medicare?
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As you get older, healthcare becomes more important than ever. We all know that as we age, we need to start worrying about these things, but it’s not a fun topic to think about.
If you or a loved one is getting up there in age, now is the time to begin thinking about what you’ll do when the time comes. You’ve probably heard of Medicare insurance (see our guide to understanding Medicare/Medigap), but do you really know a lot about it? Many people don’t know the ins and outs, and don’t start looking until they need it. By then you don’t have a lot of time to research your decisions, you just have to make them.
If you’re looking for more information on Medicare and Medigap (it’s not too early to prepare for 2013), you have to learn sometime and then why not now? Read on for everything you need to know (Medigap is explained a bit farther down).
What is Medicare?
This is the most basic of questions, but many people aren’t exactly sure what it entails.
The simplest definition of Medicare for 2012 (and now 2013) is that it is healthcare coverage for those who are 65 or older (that doesn’t cover everything), or those who are under 65 with certain disabilities. It is also available to people of any age with End Stage Renal Disease (See our page on Medicare for more info or just keep reading).
Different Parts of Medicare
Of course, it’s not that simple. There are different parts of Medicare, and it helps to understand them all in order to make sure your needs are met.
Part A - This is hospital insurance. This covers hospital costs, including inpatient care. It will also cover costs associated with a staying in a skilled nursing facility, hospice care or home health care. Hospital care can be one of the most expensive parts of care, so it’s important that these costs are covered.
Part B which is for Medical care. This is the part that covers doctor’s services, hospital outpatient care, home health care and durable Medicare equipment (like wheel chairs and Prosthetic devices). It will also cover most preventive services so that you can go to the doctor and manage your health. Only 80 percent of approved services will be covered once your annual deductible ($140 in 2012) is met (certain Medicare supplements will handle the rest). Medication administration can be covered if it’s done during an office visit. Click here for our guide to learn about Medicare Part A and B coverage changes for deductibles/co-pays for 2012.
Part D. This part of your Medicare will help to cover the cost of prescription drugs. It is run by Medicare approved private insurance companies and can also help lower your prescription costs to help keep your future costs down.
Medicare Advantage Plans Explained
These are health plans that are run by Medicare approved private insurance companies. Your HMO or PPO are considered Advantage Plans. These are also sometimes called “Medicare Part C”, and will include parts A and B, and Part D for an extra cost.
So you have two choices when it comes to Medicare, Original Medicare or a Medicare Advantage Plan. To decide which one is best for you, you need to first figure out if you need prescription drugs. If so, you may be best suited for Original Medicare since Part D is not always included in a Medicare Advantage Plan.
If you go for a Medicare Advantage Plan, you can add prescription drug coverage, but you can’t add a Medigap policy.
For more information on Medigap policies, you may call 1-800-633-4227 and ask for a free copy of the publication “Choosing a Medigap Policy: A Guide to Health Insurance for People With Medicare.” You may also call your State Health Insurance Assistance Program (SHIP) and your State Insurance Department. Phone numbers for these Departments and Programs in each State can be found in that publication. Original at the official CMS website.
How you can Save the Most with you Medicare Coverage and Benefits
All about Medigap/Supplemental Insurance
Okay, so now your next question probably is “What is Medigap?”
A Medigap policy is also known as Medicare supplemental insurance. This is basically a private policy that will supplement an Original Medicare policy.
There are some things that aren’t paid through a regular Medicare policy, such as copayments, coinsurance, or deductibles. By having both Original Medicare and Medigap coverage, your Medicare will cover everything that is included in the policy, while the Medigap will take over from there, leaving you with little, if any, out of pocket costs.
You may be wondering what the difference between a Medicare Advantage Plan and Medigap is, and the answer is simple. A Medicare Advantage Plan is a way to get Medicare benefits, while the Medigap policy only supplements an Original Medicare policy. For this reason, you can’t add a Medigap policy onto a Medicare Advantage Plan. Also, Medicare doesn’t pay for any of the costs associated with obtaining a Medigap policy. Buying a Medigap plan will make your Original Medicare policy the secondary insurance which might help you out in covering some costs as a retiree.
If you do decide you need a Medigap policy, it helps to know that you are protected by both state and Federal laws, and your policy must be labeled “Medicare Supplement Insurance” very clearly.
An insurance company that sells Medigap policies that are standardized, and these policies must be identified by letters A through N. These policies must all offer the same benefits, and it doesn’t matter which insurance company sell them. The only difference between Medigap policies with the same letters is the insurance company that sells them.
There are a few states, such as Massachusetts, Wisconsin, and Minnesota, where the policies are standardized in different ways, and if you are in one of these states you should contact your insurance company for more information. In other states, you might be able to buy a different type of Medigap insurance that is called Medicare SELECT. These medicare supplemental plans are standardized and if you choose these, you should know that you may be required to see specific providers that could very well cost less than other plans.
What Does Medigap Cover?
Before we go over coverage specifics about Medigap, there are some things you should know about your policy.
An insurance company that sells Medigap coverage must make Plan A available. For another type of Medigap plan, they must offer one or the other between Medicare Plan C or Plan F. Depending on which state you live in, these policies may or may not be available.
If you have purchases a Medicare Plan D or Plan G on or before June 1, 2010, it will be different than what is available now.
If you have Medigap Plans E, H, I, or J, you are eligible to keep it, but these supplemental plans with Medicare are not being sold any more.
Read on for more information on the Medigap and Medicare supplement benefits and which plans they are offered under to determine which type of Medigap insurance will most meet your needs.
Insurance companies can only sell you a “standardized” Medigap policy. Medigap policies must follow Federal and state laws. These laws protect you. The front of a Medigap policy must clearly identify it as “Medicare Supplement Insurance.” Some more insightful info from CMS.
- Part A Coinsurance - This includes hospital costs up to 365 days longer than you have when your Medicare benefits are used up. This benefit is offered in all Medigap plans.
- Part B Coinsurance and Copayment - This benefit is offered in all plans, but for plans K and L, only a portion of the costs are paid. For K, it is 50%; for L, it is 75%. Also for Part N, it pays all of the Part B coinsurance, but in some cases a copayment of $20 an office visit, and in some cases for an emergency room visit that does not require an inpatient visit, it will pay up to $50.
- Blood - The first 3 pints of blood are covered under all Medicare plans, although Parts K and L only pay a portion. For K, it is 50%; for L, it is 75%.
- Part A Hospice Care - Your Coinsurance or Copayment will be paid in full under all plans except for K and L in which a portion will be paid. For K, it is 50%; for L, it is 75%.
- Skilled Nursing Facility Care - Your coinsurance for skilled nursing facility care will be paid for in full under Medicare plans C, D, F, G, M, and N. For K and L it is a reduced rate. For K, it is 50%; for L, it is 75%.
- Part A Deductible - Your Medicare Part A deductible will be paid in full under plans B, C, D, F, G, and N. For K and L, and M, a portion is paid. For K, it is 50%; for L, it is 75%, M is 50%.
- Part B Deductible - The only Medigap plans that offer full coverage for your Medicare Part B deductible are Plans C and F.
- Part B Excess Charges - If you have excess charges as part of your Part B Medicare plan, they are only covered under Medigap plans F and G.
- Foreign Travel Emergencies - If you are a frequent international traveler and have travel emergencies, they are covered under Plans C, D, F, G, M and N.
Note About Plan F
A high deductible plan is available in certain states (Medicare.gov would let you know if there is one), where it is available it can me more cost effective depending on your age. What this means for you is that you’re going to be responsible for all medical costs until the $2,000 deductible is met but you can potentially save more then that on premiums.
Mostmedicare.com guide to Plan F
Medigap Does Not Cover Everything
The only way to get additional medical coverage as a senior is through Medigap plus LTC but that will be covered later on), not everything will be covered, it will depend on which plan of the 11* you decide on going with. Certain types of expenses will not be covered at all
They usually are not going to cover long-term care, such as a nursing home. They also don’t cover things like vision or dental care (it’s all explained on this page), hearing aids and eyeglasses. Private nursing care is another that requires a specific type of insurance (which is long term care) that needs to be purchased much before you turn 64/65.
If you have questions about what your policy does or doesn’t cover, it is best to contact your insurance company. Enter your zip code below to compare medigap plans in your area and have a licensed broker that represents every company contact you:
There are many types of polices on the market that are not Medigap policies and will have different coverage and benefits. The following are not Medigap policies:
- Veteran’s benefits which are obviously designed for Veterans. Medigap can work in addition to it.
- Employer or Union plans, and this includes the Federal Employees Health Benefits Program.
- Indian health care plans, and this includes tribal and Indian Health plans.
- TRICARE – for military health plans and Medicaid.
- Advantage Plans, such as HMOs, PPOs, or private fee for service plans.
Before Buying a Medigap Policy
There are some things that you’ll want to know before deciding if you need to buy a Medigap policy.
First of all, you must have Part A and B in order to buy a Medigap policy. If you have a Medicare Advantage Plans, you cannot get Medigap coverage, although you can apply for it. In order for the plan to be approved however, your Medicare Advantage Plan must be cancelled.
If you currently have Plans E, H, or I, you can continue to use them, but you can no longer buy them, as they are not for sale any longer.
You’ll pay your monthly premium for Part B to Medicare, but you’ll pay for your Medigap insurance through your private insurance company.
Your Medigap policy will only cover you. If your spouse needs a policy, he or she will have to buy one. Medigap only covers one person per policy.
Medicare supplemental insurance is available from any licensed insurance company in your state, so if you would like more information on purchasing one, you should contact your insurance provider.
Your Medigap policy is renewable even if you have health problems and this is a guarantee. As long as you are paying your premiums and your policy is current, your health insurance company cannot cancel your policy.
Any Medigap policies that have been bought after January 1, 2006 cannot by law contain prescription drug benefits.
When To Buy Medigap in 2012 to be ready for 2013 – Medicare Eligibility
Now that you know the details, you may be wondering when and if you should buy a Medigap policy.
The time to buy your policy is during your open enrollment period, which generally lasts 6 months from the time you become eligible. If you are under 65, you may have additional options in some states, although you’ll have to check with your healthcare provider. Every year, around October/November (it’s always a bit different) there is an enrollment period that all Medicare recipients are eligible for and during this period underwriting can not be used, this is in addition to the period that you have when you first enrolled into Medicare.
It’s also important to note that during your open enrollment period, your insurance cannot use what is known as medical underwriting. This means that they cannot refuse to allow you to buy a Medigap policy, and they cannot make you wait for your coverage to start. They also cannot charge you more for you policy either.
If you have a pre-existing condition however, your insurance company can make you wait for coverage. They can refuse any out of pocket expenses for a period of up to six months. When the six months is up, however your policy will have to cover pre-existing conditions.
The best place to start would be to talk to your insurance company to find out what will be covered and the time frames that you would have to wait for any pre-existing conditions to be covered.
Buy Supplemental Insurance for your Medicare When You Can
It is important to buy your 2012 Medigap policy when you are first eligible during your open enrollment. If you wait and do it outside of this time frame, the insurance company can and most likely will use medical underwriting to determine the costs for your Medigap plan. This will almost always cost you more money in the long run.
If you wait until after your enrollment period is over, there is no guarantee that your insurance company will sell you a Medigap policy if you do not meet the requirements.
Because of these things, it is very important to buy your policy during your open enrollment period.
How To Buy Medigap
Now that you have some basic information on Medigap coverage as a retiree, you may be wondering what the next step is. If you’ve decided that you need coverage, and would like to proceed, the first step is to decide which benefits you need.
It’s important to not only consider your current health care needs, but also what you anticipate in the future when trying to decide which type of coverage you need, use the quote engine at Medicare.gov to start comparing plans. It is extremely important to make the right decision because you may not be able to change your Medigap policy in the future.
If you have any questions, it is important to discuss your options with both your primary health care provider and your insurance company (or get in touch with a licensed broker) so that you can make a decision that will benefit you both now and in the future.
Next, you’ll need to find out which insurance companies in your state sell Medigap policies for 2012. There are plenty of online resources in which to find this information, and if you are having trouble, your doctor or current insurance company may be able to help you or point you in the right direction.
After you have found several insurance companies (browse through the insurers on the right hand side) who offer what you need, you’ll need to compare costs. You should not take this step lightly as once you start your research, you’ll be surprised at the cost difference with Medicare. Remember not to base your decision entirely on costs however, since it is more important that you get the coverage you need.
Before you buy a Medicare policy, you should discuss your final decision with someone you trust, such as a close friend or family member. Someone who has had experience in the past buying this type of policy may be able to help you more than you think. Do not let anyone pressure you into buying a policy you are unsure of. If you feel uncomfortable at all, you should not buy the policy.
Medicare and Medigap are a necessity for many people and seniors alike. Having the right policy can be a lifesaver, but if you don’t know what you are doing it can be very easy to buy the wrong thing.
It’s a very confusing subject, and one that many people don’t always think about until the last minute. If you know that you will need it in the future, but don’t know a lot about it, you should take the time to do your research now, while you can take your time to figure out exactly what you need. Buying the wrong thing could be quite costly as well as stressful. Take the time to do your research now. You owe it to yourself.
NEXT: More information on Medicare advantage plans – Take a Look at Part C from a Glance with our official guide