Medicare Supplements

What is a Medicare supplement?

A Medicare Supplement Insurance plan, or Medigap policy, is health
insurance sold by private insurance companies to help pay for some of the health care costs that Original Medicare doesn’t cover, like coinsurance, copayments, or deductibles.

What does a Medicare supplement cover?

In general, Original Medicare will cover roughly 80% of your hospital, medical and doctor fees, leaving you to cover the remaining 20% through coinsurance, copayments and deductibles.  If you have Original Medicare and a Medicare supplement plan, Medicare will pay its share of the Medicare-approved amounts for covered health care costs, then your Medigap policy pays its share leaving you with much less out-of-pocket exposure.  In very simple terms, in regards to any given service or procedure, if Medicare covers it, your Medicare supplement plan will too.

What are the different Medicare supplement plans?

There are ten different Medicare supplement plans to choose from, labeled by letter: A, B, C, D, F, G, K, L, M, and N.  The plans are standardized by Medicare and all companies must follow the standardized guidelines.  No matter which insurance company you purchase your Medicare supplement from, the benefits are exactly the same from company to company.  The only difference is most often price.

How does a Medicare supplement work?

After you are given the necessary healthcare, your service provider (doctor or hospital) will bill Medicare. Once billed, Medicare will then pay its portion (80%) and then your Medicare supplement plan will pay its portion. Depending on which Medicare Supplement plan you have, it will either cover all or a portion of the 20% coinsurance gap remaining.  Since all Medicare supplement plans are standardized, it doesn’t matter which insurance company you purchased the Medicare supplement plan from; they all work the exact same way. The provider bills Medicare, Medicare pays, then your supplement pays.

What is not covered by a Medicare supplement?

Generally, Medicare supplements plans do not cover long-term care, retail prescription drugs, vision or dental care, hearing aids, eyeglasses, or private‑duty nursing.  As mentioned above, if it’s covered by Medicare first, then it’s also covered by your Medicare supplement plan.

Types of coverage that are NOT Medicare supplement:

  • Medicare Advantage Plans (also known as Part C), like an HMO or PPO
  • Medicare Prescription Drug Plans (Part D)
  • Medicaid
  • Employer or union plans, including the Federal Employees Health
    Benefits Program (FEHBP)
  • Veterans’ benefits
  • Long-term care insurance policies
  • Indian Health Service, Tribal, and Urban Indian Health plans
  • Qualified Health Plans sold in the Health Insurance Marketplace

What do I need to know if I want to buy a Medicare supplement plan?

  • You must have Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance).
  • If you have a Medicare Advantage Plan (like an HMO or PPO) but are planning to return to Original Medicare, you can apply for a Medicare supplement before your coverage ends. The Medicare supplement insurer can sell it to you as long as you’re leaving the Plan. Ask that the new Medicare supplement start when your Medicare Advantage Plan enrollment ends, so you’ll have continuous coverage.
  • You pay the private insurance company a premium for your Medicare supplement in addition to the monthly Part B premium you pay to Medicare.
  • A Medicare supplement policy only covers one person. If you and your spouse both want Medigap coverage, you each will have to buy separate Medicare supplement plans.
  • When you have your Medicare supplement Open Enrollment Period, you can buy a Medicare supplement plan from any insurance company that’s licensed in your state.
  • Any standardized Medicare supplement is guaranteed renewable even if you have health problems. This means the insurance company can’t cancel your policy as long as you stay enrolled and pay the premium.
  • Different insurance companies may charge different premiums for the same exact policy. As you shop for a policy, be sure you’re comparing the same policy (for example, compare Plan A from one company with Plan A from another company).
  • Some states may have laws that may give you additional protections.
    Although some Medicare supplement plans sold in the past covered prescription drugs, Medicare supplements sold after January 1, 2006, aren’t allowed to include prescription drug coverage. If you want prescription drug coverage, you can join a Medicare Prescription Drug Plan (Part D) offered by private companies approved by Medicare.

When is the best time to buy a Medicare supplement plan?

The best time to buy a Medicare supplement plan is during your Medigap Open Enrollment Period. This period lasts for 6 months and begins on the first day of the month in which you’re both 65 or older and enrolled in Medicare Part B. Some states have additional Open Enrollment Periods including those for people under 65. During this period, an insurance company can’t use medical underwriting to decide whether to accept your application. This means the insurance company can’t do any of these because of your health problems:

  • Refuse to sell you any Medigap policy it offers
  • Charge you more for a Medigap policy than they charge someone with no
    health problems
  • Make you wait for coverage to start (except as explained below)

While the insurance company can’t make you wait for your coverage to start, it may be able to make you wait for coverage related to a pre-existing condition.
A pre-existing condition is a health problem you have before the date a new
insurance policy starts. In some cases, the Medicare supplement insurance company can refuse to cover your out-of-pocket costs for these pre-existing health problems for up to 6 months. This is called a “pre-existing condition waiting period.”

After 6 months, the Medicare supplement will cover the pre-existing condition.
Coverage for a pre-existing condition can only be excluded if the condition was
treated or diagnosed within 6 months before the coverage starts under the Medicare supplement plan. This is called the “look-back period.” Remember, for Medicare‑covered services, Original Medicare will still cover the condition, even if the Medicare supplement won’t, but you’re responsible for the Medicare coinsurance or copayment.

Creditable Coverage

It’s possible to avoid or shorten your waiting period for a pre-existing
condition if:

  • You buy a Medigap policy during your Medicare Open Enrollment Period.
  • You’re replacing certain kinds of health coverage that counts as “creditable

Prior creditable coverage is generally any other health coverage you recently
had before applying for a Medicare supplement. If you’ve had at least 6 months of continuous prior creditable coverage, the Medicare supplement insurance company can’t make you wait before it covers your pre-existing conditions.

There are many types of health care coverage that may count as creditable
coverage for Medicare supplement plans, but they’ll only count if you didn’t have a break in coverage for more than 63 days.

Your Medicare supplement insurance company can tell you if your previous coverage will count as creditable coverage for this purpose. You can also call your State Health Insurance Assistance Program.

If you buy a Medicare supplement when you have a guaranteed issue right (also called “Medigap protection”), the insurance company can’t use a pre‑existing condition waiting period. 

Note: If you’re under 65 and have Medicare because of a disability or
End-Stage Renal Disease (ESRD), you might not be able to buy the Medicare supplement plan you want, or any Medicare supplement, until you turn 65. Federal law generally doesn’t require insurance companies to sell Medicare supplements to people under 65. However, some states require Medigap insurance companies to sell you a Medicare supplement, even if you’re under 65.

Why is it important to buy a Medicare supplement when I’m first eligible?

When you’re first eligible, you have the right to buy any Medicare supplement plan offered in your state. In addition, you generally will get better prices and
more choices among policies. It’s very important to understand your Medigap
Open Enrollment Period. Outside of Medigap Open Enrollment, insurance companies are generally allowed to use medical underwriting to decide whether to accept your application and how much to charge you for your Medicare supplement plan. However, if you apply during your Medigap Open
Enrollment Period, you can buy any Medicare supplement plan the company sells, even if you have health problems, for the same price as people with good health. 

If you apply for Medicare supplement coverage after your Open Enrollment Period, there’s no guarantee that an insurance company will sell you a Medicare supplement if you don’t meet the medical underwriting requirements, unless you’re eligible for guaranteed issue rights (Medigap protections) available in limited situations.

It’s also important to understand that your Medigap rights may depend on when you choose to enroll in Medicare Part B. If you’re 65 or older, your Medigap Open Enrollment Period begins when you enroll in Part B, and it can’t be changed or repeated. After your Medigap Open Enrollment Period ends, you may be denied coverage or charged more for a Medicare supplement plan due to past or present health problems.

In most cases, it makes sense to enroll in Part B and buy a Medicare supplement when you’re first eligible for Medicare, because you might otherwise have to pay a Part B late enrollment penalty and might miss your 6-month Medigap Open Enrollment Period. However, there are exceptions if you have employer coverage.

Employer Coverage

If you have group health coverage through an employer or union, because either you or your spouse is currently working, you may want to wait to enroll in Part B. Benefits based on current employment often provide coverage similar to Part B, so you wouldn’t want to pay for Part B before you need it, and your Medigap Open Enrollment Period might expire before a Medicare supplement would be useful. When the employer coverage ends, you’ll get a chance to enroll in Part B without a late enrollment penalty which means your Medigap Open Enrollment Period will start when you’re ready to take advantage of it. If you or your spouse is still working and you have coverage through an employer, contact your employer or union benefits administrator to find out how your insurance works with Medicare.

For more information about available Medicare supplement plans in your area, contact one of our licensed agents at 855-GO-AVILA, or simply click the request button below.