Basics of Medicare Supplement Insurance
If you are considering purchasing a Medicare Supplement (Medigap) insurance plan to help pay Medicare out-of-pocket costs, there a few basic things you should know.
The best time to buy a Medicare Supplement insurance plan is when you’re first eligible
You can apply for a Medicare Supplement insurance plan at any time. However, you may be subjected to medical underwriting, which is where insurance companies gather information about your health history and use past or current health conditions as grounds to charge you more for a plan or reject you from a plan. Your Medicare Supplement Open Enrollment Period is a time when insurance companies cannot use medical underwriting when considering your application. Your Open Enrollment Period lasts for six months and begins when you are 65 or older and are enrolled in Medicare Part B. During your Open Enrollment Period, you can buy a Medicare Supplement insurance plan from any insurance company that is licensed in your state.
Medicare Supplement insurance plans are standardized
Medicare Supplement insurance plans are standardized, mean that that each plan of the same letter (designated A through N) must offer the same basic benefits, regardless of which insurance company sells it. The cost of plans, however, can vary among different insurance companies. Medicare Supplement plans are standardized differently in Massachusetts, Minnesota, and Wisconsin.
Insurance companies price their Medicare Supplement insurance plans differently
Medicare Supplement insurance plans come with a monthly premium and insurance companies can set their monthly premiums differently. There are three types of pricing:
- Community-rated/no-age-rated: The premium is not based on your age
- Issue-age-rated/entry-age-rated: The premium is based on the age you are when you buy the plan
- Attained-age-rated: The premium is based on your current age and goes up as you get older
There can be big cost differences among insurance companies for the same coverage, so you may want to compare prices before enrolling in a plan.
Medicare Supplement insurance plans don’t cover everything
All Medicare Supplement insurance plans cover at least 50%, and up to 100% of the following four benefits (different plans cover different amounts):
- Medicare Part A coinsurance
- Medicare Part B coinsurance or copayment
- Blood (first 3 pints)
- Part A hospice care coinsurance or copayment
Some plans cover some or all of these additional five benefits at least 50%:
- Skilled nursing facility care coinsurance
- Part A deductible
- Part B deductible
- Part B excess charges
- Foreign travel emergency medical coverage (80%, up to plan limits)
Generally, Medicare Supplement insurance plans don’t cover routine vision or dental services, hearing aids, eyeglasses, long-term care or private-duty nursing. To get coverage for any of these things you may need to get an additional health insurance plan.
You can’t combine Medicare Supplement insurance plans with certain types of health insurance
Medicare Supplement insurance plans are meant to work with Original Medicare (Part A and Part B). It may be illegal for an insurance company to sell you a Medicare Supplement insurance plan if you have another type of insurance, such as Medicare Advantage or Medicaid. If you have a Medicare Advantage plan, you can only apply for a Medicare Supplement insurance plan if you are planning to return to Original Medicare.
You don’t have to worry about your Medicare Supplement insurance plan dropping you if you develop a health problem
Most Medicare Supplement insurance plans purchased after 1992 are guaranteed renewable. This means the insurance company can only drop you under very limited circumstances, such as you stop paying your premium, you weren’t truthful on your policy application, or the company becomes bankrupt or insolvent. If your Medicare Supplement insurance company becomes bankrupt, you may be given guaranteed issue rights to buy a new plan. During the period of your guaranteed issue rights, an insurance company can’t use medical underwriting to turn down your application or charge you more for coverage.
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