Steps to Buying Medicare Supplement Insurance Plans
You may have heard that a Medicare Supplement (Medigap) insurance plan can help you pay for Original Medicare’s out-of-pocket costs, such as copayments, coinsurance and deductibles. Following the below steps may help you as shop for and enroll in a Medicare Supplement insurance plan.
Step 1: Qualify to buy a Medicare Supplement insurance plan
Medicare Supplement insurance plans are not available to everyone. The first requirement is to be enrolled in Medicare Part A and Part B. When you become eligible for Medicare, you may have the choice to stay with Original Medicare (Part A and Part B) or go with a Medicare Advantage plan that covers your Medicare hospital and medical benefits (except for hospice care, which Part A still covers). Many Medicare Advantage plans also offer additional benefits, such as routine dental care. If you have Medicare Advantage, you can’t be sold a Medicare Supplement insurance plan.
The second requirement is to be 65 or older in some states. Federal law doesn’t require insurance companies to sell Medicare Supplement insurance plans to people under 65. However, some states require insurance companies to sell Medicare Supplement insurance plans to people under 65 who have qualified for Medicare through disability or disease. There may be a more limited selection of plans available to people under 65 than to people 65 and older.
Step 2: Compare Medicare Supplement insurance plan benefits
Medicare plans cover a range of benefits, with some plans providing more coverage than others. Most states offer up to 10 Medicare Supplement insurance plans, as well as a high-deductible option for Plan F. The plans are identified as A, B, C, D, F, G, K, L, M and N. All plans cover Medicare Part A coinsurance and hospital costs (up to an additional 365 days after Medicare benefits are used) at 100%. Beyond this one benefit, the plans differ in that they cover different amounts of a standard set of Medicare out-of-pocket costs.
Medicare Supplement insurance Plan A (not to be confused with Medicare Part A) is the least comprehensive, covering only:
- Medicare Part A coinsurance
- Medicare Part B coinsurance or copayment
- Blood (first 3 pints)
- Part A hospice care coinsurance or copayment
Plan F is the most comprehensive, covering everything Plan A covers as well as five additional benefits:
- Skilled nursing facility care coinsurance
- Part A deductible
- Part B deductible
- Part B excess charges
- Foreign travel medical emergencies at 80% (up to plan limits)
Keep in mind that more comprehensive plans may have higher premiums.
Step 3: Understand Medicare Supplement insurance plan pricing
Medicare Supplement insurance plans are standardized in most states, meaning that plans of the same letter offered by different companies must cover the same basic benefits. However, pricing for the same plan may differ from company to company. Insurance companies use three ways to price Medicare Supplement insurance plans:
- Community-rated or “no-age-rated“: The premium is not based on your age.
- Issue-age-rated or “entry-age-rated“: The premium is based on the age that you buy the policy and is lower for younger people.
- Attained-age-rated: The premium is based on your current age and goes up as you get older.
Compare prices for your plan from different companies as the premiums could differ greatly.
Step 4: Buy the Medicare Supplement insurance plan
If you have Original Medicare and you are 65 or older, you may be able to apply for a Medicare Supplement insurance plan at any time. However, whether a company accepts your application may depend on when you apply.
In some cases, the insurance company may use medical underwriting to evaluate your application. Medical underwriting is the process in which your past or current health conditions could be used to charge you a higher premium or even deny you coverage.
To avoid medical underwriting, apply for Medicare Supplement insurance plan during your Open Enrollment Period. Your Medicare Supplement Open Enrollment Period lasts for 6 months and beings on the first day of the month that you’re both and 65 or older and enrolled in Medicare Part B. During this period, the insurance company can’t use your health problems to refuse you a Medicare Supplement insurance plan or charge you more than someone with no health problems. The other time when you will not be subjected to medical underwriting is if you have guaranteed-issue rights. Guaranteed issue is only given under certain circumstances, like if you already have Medicare Supplement and your insurance company goes bankrupt or you have Medicare Advantage and want to switch to Original Medicare within the first year of enrolling in the Medicare Advantage plan.
Think carefully about which benefits you want from a Medicare Supplement insurance plan during your Open Enrollment Period. Because of medical underwriting, you may not be able to switch later.
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