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Medicare Supplement

Medicare Supplement (Medigap) Plans

Medicare Supplement Plans, also referred to as Medigap, provide individuals additional coverage to fill in gaps from Original Medicare. These supplement plans help seniors cover out-of-pocket expenses.

 

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Original Medicare Part A and Part B has proven to be a lifesaver for many American seniors by providing coverage for health care services. Unfortunately, Medicare does not cover everything. In order to discourage waste and encourage more financial stability within Medicare, Original Medicare required enrolled seniors to participate in cost sharing through certain out-of-pocket expenses:

•Deductibles

•Copayment charges

•Coinsurance requirements

•Limits on how much Medicare will pay for certain expenses

Many low-income Americans can get help with such out-of-pocket expenses through Medicaid. For all other Medicare enrollees, Medicare Supplement plans were created by private insurers to help address these other health related costs.

Medigap supplements traditional Medicare Part A and B programs by covering many of these out-of-pocket costs, but it is not Medicare. Medicare Supplement plans are offered by private health insurance companies and regulated by the federal and state governments.

•Private Medicare Supplement Providers.Medigap insurance policies are provided by insurance companies, not by the federal government.

•Federal parameters.The federal government defines the Medigap plans that may be offered to Medicare enrollees. In most states the Medigap plans are standardized and range from Plan A to Plan N.

•State approvals.Individual states must approve insurance companies who can sell Medigap plans in their states, as well as which plans can be offered to their residents.

Required Medigap Benefits

All Medicare Supplement plans must offer a basic set of coverage:

Coinsurance requirements on preventative care with Medicare Part B. Coinsurance is typically a percentage of the fees charged for service, supplies or care. All Medigap plans cover this coinsurance, with some limits based on plan options.

Coinsurance on hospital stay with Medicare Part A. All Medicare Supplement plans cover the coinsurance on hospital costs, up to an additional 365 days after Medicare hospital benefits have run out. This is especially useful for lengthy hospitalization.

Copayment or coinsurance on Medicare Part B. Medigap plans cover 50 to 100 percent of copayment and coinsurance requirements on Medicare Part B.

Copayment or coinsurance on Medicare Part A hospice care. Medigap plans cover 50 to 100 percent of copayment and coinsurance requirements on Medicare Part A hospice care expenses.

Blood. Most hospitals get their blood at no cost from subsidized blood banks. However, if a hospital has to purchase additional blood for you, it will charge you for that blood. Medigap plans cover up to 100 percent of the cost for the first three pints of blood.

*If you live in Massachusetts, Minnesota, or Wisconsin, the Medigap policies are different.

Additional Medigap Benefits Available

In addition to the required benefits listed above, the various Medicare Supplement plans available offer some or all of the following benefits:

•Skill Nursing Facility Care Coinsurance

•Medicare Part A Deductible

•Medicare Part B Deductible

•Medicare Part B Excess Charges

•Foreign Travel Emergency (up to plan limits)

*If you live in Massachusetts, Minnesota, or Wisconsin, the Medigap policies are different.

Important Medigap Considerations

As you start shopping for Medicare Supplement plans, here are a few issues you need to keep in mind:

Only One:A Medigap policy only covers one individual, which means that if you and your spouse need coverage, you will each need to purchase a policy.

Premiums:Since you must have Medicare Parts A and B to qualify for a Medigap policy, you will have to pay monthly premiums for Part B to Medicare and monthly premiums for your Medigap policy to your private insurer.

Enrollment:The Medigap open enrollment period is generally the 6 months that starts on the first day of the month in which you are at least 65 years old and enrolled in Medicare Part B. (Some states have additional open enrollment periods including those for people under 65.) During this open enrollment period, an insurance company must sell you any Medigap policy it sells and cannot charge you more for your coverage because of health problems or make you wait for coverage to begin (except for certain pre-existing condition waiting periods that may or may not apply to you). After this open enrollment period, you may still apply for Medigap coverage, but the insurance company can refuse to cover you because of medical conditions or the insurance company may require that you pay higher premiums. There are certain situations when you are still guaranteed issuance of a Medigap policy, even after the open enrollment period.

Legislation: If you are already a member of a Medicare Advantage plan, you are not allowed to purchase a Medicare Supplement policy. You also cannot have prescription drug coverage under a Medigap policy and a Medicare Part D plan at the same time.