Skeptic Wiki

When is the best time to purchase a Medicare Supplemental Insurance Policy?

The best time to buy a Medigap plan is during their Open Enrollment. During Open Enrollment you cannot be turned down or charged more because of any pre-existing health conditions. If you are 65 or older, your Open Enrollment period begins when you first enroll in Medicare Part B. If you are under 65, your Open Enrollment starts when you turn 65, and it lasts for 6 months.

If you miss the Open Enrollment period, you might find that you are not able to buy the policy that you want later. Your only option may be to take whatever policy and insurance company is willing to sell you. Insurers have greater freedom to deny applications or to charge a higher premium outside of the Open Enrollment.

What is covered in a Medigap Policy?

By law, there are only 10 standardized plans which can be offered as Medigap plans. The exception to that is Massachusetts, Minnesota, and Wisconsin, which have developed their own standardized plans. You will find plans A-D, F, G, and K-N. Former plans E, H, I, and J have been replaced and discontinued.

Each Medigap plan offers a different set of benefits and builds on the previous plan. In other words, everything covered in Plan B is also covered in Plan C, but Plan C has some additional coverage options. All plans cover certain out-of-pocket costs such as Medicare coinsurance amounts, Medicare Part A and Part B deductibles, and foreign travel emergency costs.

Are all of the Medicare supplemental insurance policies equal?

Although Medicare supplemental plans are sold through private insurance companies at varying, they’re standardized and regulated by state and federal law. A Plan F purchased through an insurance company in New York will offer the same coverage as its counterpart Texas Medicare supplement.

While the plans are identical, the insurance companies are not. Just like any other business, each insurance company is going to offer a different level of service and support. You will want to do some research into the reputation and financial strength of any insurance company you may choose to do business with. You will want to make your decision based on price and quality of service. You can use a site like Choosing a Medigap to help you quickly and easily select a Medicare supplemental insurance plan that is offered in your area.

Does everyone who qualifies need a Medigap?

The answer is no. It is illegal for an insurance company to sell you a Medigap policy that substantially duplicates any existing coverage you already have. If you participate in a Medicare managed plan or private fee-for-service plan, you qualify for Medicaid, or you have group coverage through your spouse, you probably will not need a Medigap policy.

If you elect to work past the age of 65 and have an employer-sponsored health insurance plan, you will not need a Medigap policy. In this situation, you may still want to enroll in Medicare Part A (it’s free). Once you enroll in Part B, your Open Enrollment period begins, so you will want to hold off enrolling in Part B. Remember, if you do not purchase a Medigap policy during Open Enrollment, you may later be denied coverage or find yourself paying much higher premiums for identical coverage. It is probably best to wait until your employer coverage ends before enrolling in Medicare Part B.

Lastly, if your employer has a health plan that provides coverage after you retire, you may not need a Medigap policy. Your employer’s plan may cover costs that Medicare does not. You will want to talk to your HR department about your coverage.

The government is involved, so why in the world do I want one of these Medicare supplemental plans? They could not even do that Clash for Clunkers program right, but I’m supposed to trust them with my health insurance?

Well let’s talk about it a little bit.

Where Did Medigaps Come From?

Medicare was born out of the desire to help senior citizens acquire health insurance at a reasonable price. If you think about it, most people make use of health insurance in their senior years much more frequently than in their younger days. The government, in one of its rare moments of clarity, realized that without regulation, insurance companies would charge seniors much higher premiums for healthcare. In fact, the premiums would most likely be so high that few seniors would be able to afford it.

While Medicare does indeed help to solve this problem, it does not provide extensive insurance coverage. There are still many times with Medicare alone that an insured individual would have to pay out of pocket costs for healthcare.

Realizing that many seniors are not financially in a position to cover a considerable lump sum payment for health services, in another rare moment of clarity, the government instituted Medicare supplemental insurance plans. These plans are designed to cover the gaps in coverage left by Medicare alone, hence the term they are often known by, Medigaps.

Ok, So What Else Do I Need To Know?

First of all, there are 10 different Medicare supplemental plans. Insurers can only offer these 10 plans. Some offer all 10. Others offer less. That is up to the insurer.

What the insurer cannot change, is the coverage options. Medicare supplemental plan A at XYZ company is exactly the same as Medicare supplemental plan A at ABC company. The only thing they can change is the price at which they offer the plans. This is an enormous benefit to consumers. When shopping for Medigaps, unlike most insurance coverage, they can truly compare apples to apples, and grapes to grapes, and steak to steak… damnit I’m getting hungry. Ok, getting back on track… Consumers only need to make a buying decision based on price and who they want to do business with. The coverage is identical.

Don’t feel like reading anymore? Here is a video that summarizes Medigaps.

The plans range from A to F. On the smaller end, Plan A covers a few of the gaps left by Medicare, while on the extreme other end, Plan F covers every one of the gaps.

The cost of each plan will be based on the age, gender, overall health, and location of the individual to be insured. Anyone just turning 65 or going on Medicare Part B for the first time can enter into a plan during the Open Enrollment. Open enrollment means that for 6 months, individuals have the opportunity to enroll in a Medicare supplemental insurance plan without having to go through a health examination. Anyone with a serious health condition or lifestyle that normally would result in an increased premium for their health insurance, for example smokers, can enroll during this period and pay the exact same rates that any other insured individual would pay.

A few other facts from Medicare’s official website:

-Medigap policies generally do not cover long-term care, vision care, dental care, hearing aids, glasses, or private-duty nursing.

-Medigap policies only cover one person. There are no family plans. If you and your spouse both wish to have Medigap coverage, you each will need to buy a policy separately.

-Any insurance company that is licensed to sell them in your state can issue you a Medigap policy.

-You must have Medicare Part A and Part B to enroll in a Medigap policy.

For more information about Medicare supplemental insurance, contact your insurance agent to discuss your needs.