Medicare Supplement – Medigap
Original Medicare (Parts A & B) is NOT complete medical coverage. It is a good foundation, but there are gaps in the coverage. Part A has a deductible per benefit period. Part B has a deductible once a calendar year. Even when the deductibles are paid, most Medicare Part B services are only covered at 80 percent. Also, there is no safety net for catastrophic coverage. It does not have a MOOP (maximum out of pocket) leaving a Medicare beneficiary to potentially have enormous medical bills.
There is a solution for that! One can purchase additional medical insurance from a private company to supplement what Medicare does not cover. It will fill in some or almost all the gaps. It pays secondary to Medicare. Medicare is the only decision maker about whether something is medically necessary or will be covered. If Medicare pays, by law, the Medicare Supplement must pay their portion. Medigap policies only cover what Medicare Part A and Part B cover. There is no addition drug or dental coverage. With one exception, if Medicare does not pay their portion, your Supplement will NOT pay either. Medicare will not pay for medical care outside the United States. Some supplements have modest coverage for that.
If you want coverage, you need to buy a separate policy from a state- approved insurance company. There are a variety of levels of coverage. The good news is that all plans are standardized (Plans A-N) so making comparisons from one company to another is, in theory, easily accomplished. The level of benefits does not change from within a letter plan. For example, all Plans G’s have identical coverage. However, the premiums do vary by company. The premiums are NOT locked in. They can and do cost more every year because of the age of the policyholder and the fast that healthcare costs increase. The big unknown is how much and how fast the premiums will rise. This is a gamble with any company, but I recommend going with a bigger, stable, highly rated insurance company.
Many mistakenly believe that if the premium price goes too high, you can switch to another plan or company. This may be a possibility, but it is not guaranteed. You can apply for a different supplemental plan anytime of the year, but you must disclose pre-existing medical conditions. If you have a history of a major medical condition you may likely be denied a new policy. Your existing policy can not cancel you because of health conditions, but they can and do raise the premiums. They can not single you out for a rate increase, but they can get approval to do a general rate increase.
There are significant reasons to consider a Medicare Supplement Plan. The only network is Medicare. If your doctor or hospital accepts payment from Medicare, it obligated to accept payment from your secondary insurance. They are not allowed to balance bill. You essentially can go to any Medicare doctor without a referral or loss of benefits.
Some Medicare supplements come with extra perks. Some have wellness benefits such as a free Silver Sneakers membership. Some have household discounts. Others may offer nurse helplines. It is important to know what extras you have available to you.
It is not mandatory to buy a Medicare Supplement. It is an option the same as getting a Medicare Advantage Plan is an option. You cannot mix and match a supplement with a Medicare Plan C. When you turn age 65 or get Medicare Part B for the first time, you have a guaranteed right to buy a supplement regardless of your health for six months. If within the first year you want to do a trial Medicare Advantage plan, the guarantee option lasts up 12 months. Alternatively, you can move from a supplement to a Medicare Advantage plan during a valid enrollment period.