As you may know, Original Medicare Part B covers 80 percent of the cost of most health care needs. But what about the remaining 20 percent, or even the other out-of-pocket costs like deductibles or copayments? This is where supplemental insurance plans, also known as Medigaps, help to bridge the difference in costs. For some who already have other health insurance, such as for some company retirees, you are already adequately covered. For others, Medigaps can really help.
Understanding Medigaps
Medigaps are health insurance policies that offer standardized benefits to work with Original Medicare, Parts A & B. These policies are sold by private insurance companies. If you have a Medigap, it pays part or all of certain remaining costs after Original Medicare pays first. Medigaps are designed to cover outstanding deductibles, coinsurance and copayments. If you have a Medigap, you may have very little to no out-of-pocket costs for an inpatient hospital stay or outpatient doctors’ visits if your providers accept Medicare assignment depending on the plan. There are ten different Medigap policies to choose from: A, B, C, D, F, G, K, L, M and N. Each policy offers a different set of standardized benefits, meaning that policies with the same letter offer the same benefits. However, premiums vary from company to company.
Buying a Medigap policy in Alaska
Here in Alaska, the state Division of Insurance publishes an annual Consumer Guide for Medigap policies. The guide is effective for policies issued after June 1 of each year, and the guide is an excellent resource to begin comparing Medigap policies and the various insurance companies which sell these policies. Every new Medicare recipient who is age 65 or older has a guaranteed right to buy a Medicare supplement policy during a six-month “open enrollment.” A company cannot reject you for any policy it sells, and it cannot charge you more than anyone else your age. Your open enrollment period starts when you are age 65 or older and enroll in Medicare Part A & B for the first time. It ends six months later. During this time, you have a guaranteed issue right. If you apply for a policy after this open enrollment period, companies may refuse to provide you coverage because of a pre-existing health condition.
A waiting period may apply before benefits are paid for pre-existing conditions; the maximum waiting period a company can require is six months. You may avoid a waiting period for pre-existing conditions in these situations:
You are in your initial or special open enrollment period, and you apply for your Medicare supplement within 63 days of the end of previous health insurance coverage.
You lose health care benefits in certain situations, and you apply for the Medicare supplement policy within 63 days of the end of your previous coverage.
You apply for a Medicare supplement policy to replace one you have had for at least six months, and no gap occurs between the end of the old policy and the beginning of the new policy.
Choosing a Medigap policy
You should think about your monthly budget, expenses, and health care needs when considering if a Medigap is the right choice for you and if so, which policy best meets your needs. The Consumer Guide issued by the State of Alaska contains three pages of questions for you to consider when reviewing the policies offered for sale by a variety of health insurance companies. Contact details, either by telephone or over the internet, are listed for these companies within the Consumer Guide. Basic price (monthly premium) comparison charts are displayed, noting the offered policies (listed by one of the ten letters) for men and women, in five-year age brackets.
Illegal Medigap marketing practices
When comparing or enrolling in Medigap plans, it is important to know that plans, plan representatives, agents, and brokers must follow federal guidelines when marketing to you. Medicare made these guidelines to protect consumers. Here are some red flags to look out for:
An insurance company representative knowingly provides you with misleading policy information.
You feel forced, pressured or threatened to purchase or recommend a Medigap policy.
You are contacted by someone who does not disclose to you that they are trying to sell you a Medigap.
For any Medicare related questions, please feel free to contact the State of Alaska Medicare Information Office at (800) 478-6065 or (907) 269-3680; our office is also known as the State Health Insurance Assistance Program (SHIP), the Senior Medicare Patrol (SMP), and the Medicare Improvements for Patients and Providers (MIPPA) program.
Sean McPhilamy is a volunteer and Certified Medicare Counselor with the Alaska Medicare Information Office.
