Why do I need a Medicare Supplement Plan?
The answer to this question depends on one factor. Do you know you will always have enough money to cover all medical costs NOT covered by Medicare, such as deductibles and copayments? If you are not sure the answer is yes, or if you do not want to risk it, you should explore your options for supplementing Medicare.
Medicare Parts A and B provide insurance coverage for health-related expenses, but they don't cover all of the health care costs you may have.
A Medicare Supplement plan, also called Medigap, is a private insurance policy that can help pay for some of the health care costs that Medicare doesn't cover. This can include out-of-pocket expenses such as copayments, coinsurance, and deductibles.
What does Medicare Supplement Insurance Cover?
Medicare does not pay for everything. Medicare beneficiaries also pay a portion of their medical expenses, which includes deductibles, copayments, services not covered by Medicare, and excess charges when doctors do not accept the assignment. Medicare Supplement Insurance policies help cover these deductibles, excess doctor fees, and copays.
However, it's misleading to say that it covers items that original Medicare doesn't. With the exceptions of some plans which include emergency coverage overseas, Medigap plans typically don't cover services that original Medicare doesn't cover. For example, Medicare won't pay for skilled nursing care unless you were admitted to the hospital as an inpatient for three days. In this situation, your Medigap plan won't cover it either.
But if you were admitted as an inpatient, then your Medigap plan will cover the copay amounts of the Medicare-covered stay.
Some insurance companies include gym memberships in their plan, but these benefits are typically not guaranteed. Many policyholders of a popular Medicare Supplement provider found this out when the insurance company yanked Silver Sneakers from their plan. After a large outcry, they replaced it with a different gym membership plan.
Does the company have to sell a Medicare Supplement Plan to me?
This depends on what you purchase. There is a time period when a company must sell a Medicare Supplement policy to you. This six-month period is called “Open Enrollment.” Open Enrollment begins when you are 65 or older and enroll in Medicare Part B.
During this Open Enrollment period, a company must sell you a Medicare supplement policy, regardless of your health. The insurance company cannot refuse to cover pre-existing conditions during this time period either. This is the best time to obtain a Medigap plan.
When do I need to sign up for Medicare?
It's best to start six months before you turn age 65. There are multiple deadlines to juggle, so it's important to know which enrollment deadlines apply to you. This is important to avoid costly fines and gaps in coverage.
Begin by checking on your eligibility. Most people should sign up for Medicare Part A (hospitals) and Part B (doctors) in the seven-month window that starts three months before the month you turn 65 to three months following your 65th birthday.
How much do Medicare Supplement Plans cost?
Each insurance company sets its own rates. To get an idea of what a Medicare Supplement Plan costs in your area, go to https://medicarequick.com/medigap-quote/
This quoting tool won't ask for your personal information, and you'll get to see the quote right away. Quotes are for non-smokers.
However, to see the company names or to enroll, you'll need to contact our office (after all we make our living by helping you enroll in a plan). We can also provide additional information such as company ratings, customer service, etc.
What do I need to know when comparing plans?
The benefits from plan to plan are the same for every insurance company (some may offer innovative benefits). Every Medigap policy must follow federal and state laws designed to protect you, and it must be clearly identified as “Medicare Supplement Insurance.” Insurance companies can sell you only a “standardized” policy identified in most states by letters.
All of these standardized policies offer the same basic benefits, but some offer additional benefits, so you can choose which one meets your needs. In Massachusetts, Minnesota, and Wisconsin, Medigap policies are standardized differently than in other states.
The difference is in the company, the quality of service, and the price. Additionally, you'll want to compare the financial strength ratings and how often the rates are raised. Finally, you should ask your broker about the customer service levels of the company. After all, you may be marrying this company for the rest of your life. The reason is that after your open enrollment period, insurance companies are not required to accept you into their plan if you have medical conditions.
There are some “Innovative” or “Extra” plans that were sold in some states, such as California, that include extra benefits such as vision and hearing in their plans. It appeared as though some of the companies were trying to avoid the California birthday rule because they were not allowing transfers into their plan as required by law. California updated their laws in 2020 to require insurance companies to treat their Innovative and Extra plans the same as non-innovative and extra plans. Some insurance companies stopped offering these plans after these rules were put into place.
In general, compare the benefits that are required by law, and disregard any ancillary benefits when choosing a plan. After all, you are purchasing your plan to cover health costs, not a gym membership.
How do I know if I'm eligible?
To buy a Medicare Supplement plan, you must be enrolled in Medicare Parts A & B, you must live in the state where the policy is offered, and be age 65 or over or, in some states, under age 65 with a disability or end-stage renal disease.
Other than that, once your open enrollment period is passed, you must be able to pass the insurance company's medical underwriting guidelines, unless you have a Guaranteed Issue situation.
Will Medicare accept my Power of Attorney if something happens to me?
Medicare Supplement Plans will accept your Power of Attorney, but Medicare won't. Medicare requires a beneficiary’s written permission to use or provide personal medical information. You can look at the privacy notice in the “Medicare & You” handbook
Then when needed, the representative is authorized to talk with Medicare, research and choose Medicare coverage, handle claims, even file an appeal.
You can also call 1-800-Medicare while you are still competent and give consent, for a specific period of time, or indefinitely.
You have the right to revoke this authorization at any time.
Most importantly, for those no longer able to give consent, their personal representative can complete the form and attach a duly executed power of attorney. Of course, all this takes time, so if you have given someone a POA, you might want to take care of this now.
What are Medicare Supplement alternatives?
If you don't want a Medigap plan, you have an alternative.
Available from private, Medicare-approved insurance companies, Medicare Advantage policies (Part C) are marketed to people by private insurance companies and brokers.
Often, they may have zero premium (but you still must pay for your Part B premium) or a lower one compared to premiums for Medigap and prescription drug insurance policies.
Medicare Advantage plans cover hospitals and doctors and often also include prescription drug coverage, and some include services not covered by Medicare. A little more than one-third of Medicare beneficiaries choose one of these plans, depending on your area.
Most Medicare Advantage plans operate as a health maintenance organization (HMO) or preferred provider organization (PPO) insurance. HMOs limit members to using the doctors and hospitals in their networks. PPOs generally let members get care outside the plan's network, but members may have to pay more for such care.
Most plans require prior authorization for specialist care or procedures, and they might not cover care given outside of the network's geographical area.
If you'd like to check out the basic differences between Medicare Supplement and Medicare Advantage Plans, watch this 15 minute Medicare Class