Medicare Supplement Plans

Original Medicare pays for many, but not all, healthcare services and supplies. Medicare Supplement Insurance policies, sold by private insurance companies, can help pay you share of some of the healthcare cost that Original Medicare doesn’t cover, like co-payments, coinsurance, and deductibles. Medicare Supplement Insurance policies are also called Medigap policies.

Some Medigap policies also offer coverage for services that Original Medicare doesn’t cover, like medical care when you travel outside of the United States. If you have original Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare approved amount for covered healthcare cost. Then, your Medigap policy pays its share. You pay premiums for a Medigap policy.

A Medigap policy is different from a Medicare Advantage Plan (like an HMO or PPO). Medicare Advantage Plans are ways to get your Medicare benefits. It’s generally illegal for an insurance company to sell a Medigap policy to anyone who is still enrolled in a Medicare Advantage plan.

If you have Medigap and switch to enroll in in a Medicare Advantage Plan for the first time, you have the right to change your mind and you’ll have special rights under federal law to buy a Medigap policy if you return to Original Medicare 12 months after you enrolled in the Medicare Advantage Plan.

What policies are available?

Every Medigap policy must follow federal and state laws designed to protect you, and the policy must be clearly identified as “Medicare Supplement Insurance.” Insurance Companies can sell you only a “standardized” Medigap policy, identified in most states by letters A-N. In Massachusetts, Minnesota, and Wisconsin. Medigap policies are standardized in a different way. For more information, contact an agent for assistance.

All standardized policies offer the same basic benefits, no matter which insurance company sells it, but some offer additional benefits so you can choose which one meets your needs. Plans E, H, I, and J are no longer available to buy, but, if you already have one of those policies, you can generally keep it. Contact your insurance company for more information. In some states, you may be able to buy another type of Medigap policy called Medicare SELECT.

Medicare SELECT plans are standardized Medigap policies that require you to use specific hospitals and, in some cases, specific doctors or other health care providers to get full supplemental coverage (except in an emergency). If you have Medigap and switch to a Medicare SELECT policy, you have the right under federal law to change your mind within 12 months and switch to a standard Medigap policy.

Starting January 1, 2020, Medigap plans sold to people new to Medicare weren’t allowed to cover the Part B deductible. Because of this, Plans C and F are no longer available to people new to Medicare on or after January 1, 2020 (those who turned 65 on or after January 1, 2020, and those who get Medicare Part A (Hospital Insurance) on or after January 1, 2020.) If you had one of these plans (or the high deductible version of Plan F) before January 1, 2020, you can keep it. If you were eligible for Medicare before January 1, 2020 but not yet enrolled, you may be able to buy Plan C or Plan F.

Standardized Medigap policies aren’t required to cover long-term care (like care in a nursing home), vision or dental care, hearing aids, eyeglasses, and private-duty nursing.

Remember these important facts

• You must have Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) to buy a Medigap policy.

• You pay the private insurance company a monthly premium for your Medigap policy in addition to the monthly Part B premium that you pay to Medicare. Contact the insurance company to find out how to pay your Medigap premium.

• A Medigap policy covers only one person. Spouses must buy separate policies.

• Although some Medigap policies sold in the past covered prescription drugs, Medigap policies sold after January 1, 2006, aren’t allowed to include such coverage. If you want prescription drug coverage, you can join a Medicare Prescription Drug Plan (Part D) offered by private companies approved by Medicare.

• It’s important to compare Medigap policies since the costs can vary and premiums may go up as you get older. Some states impose limits on how insurance companies’ “price” or set Medigap premiums.

• The best time to buy a Medigap policy is during your Medigap Open Enrollment Period, when you have the right to buy any Medigap policy offered in your state. This 6-month period begins on the first day of the month in which you’re 65 or older and enrolled in Part B. Some states require Medigap insurance companies to sell Medigap policies to people under age 65. Check with your State Insurance Department to learn about what rights you might have under state law.

  • This chart shows basic information about the different benefits that Medigap policies cover. If a percentage appears, the Medigap plan covers that percentage of the benefit, and you must pay the rest.

* Plans F and G also offer a high-deductible plan in some states. With this option, you must pay for Medicare-covered costs (coinsurance, copayments, and deductibles) up to the deductible amount of $2,340 in 2020 before your policy pays anything. (Plans C and F won’t be available to people who are newly eligible for Medicare on or after January 1, 2020.) **For Plans K and L, after you meet your out-of-pocket yearly limit and your yearly Part B deductible ($198 in 2020), the Medigap plan pays 100% of covered services for the rest of the calendar year. *** Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to a $50 copayment for emergency room visits that don’t result in an inpatient admission. This chart shows basic information about the different benefits that Medigap policies cover. If a percentage appears, the Medigap plan covers that percentage of the benefit, and you must pay the rest.

What Medigap policies don’t cover

Generally, Medigap policies don’t cover long-term care (like non-skilled care you get in a nursing home), vision or dental care, hearing aids, eyeglasses, or private‑duty nursing.

What do I need to know if I want to buy a Medigap policy?

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 Medigap policy before your coverage ends. The Medigap insurer can sell it to you as long as you’re leaving the Plan. Ask that the new Medigap policy start when your Medicare Advantage Plan enrollment ends, so you’ll have continuous coverage.

You pay the private insurance company a premium for your Medigap policy in addition to the monthly Part B premium you pay to Medicare.

A Medigap policy only covers one person. If you and your spouse both want Medigap coverage, you each will have to buy separate Medigap policies.

When you have your Medigap Open Enrollment Period, you can buy a Medigap policy from any insurance company that’s licensed in your state.

Any standardized Medigap policy is guaranteed renewable even if you have health problems. This means the insurance company can’t cancel your Medigap 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 Medigap policies sold in the past covered prescription drugs, Medigap policies 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.

How do insurance companies set prices for Medigap policies?

Each insurance company decides how it’ll set the price, or premium, for its Medigap policies. The way they set the price affects how much you pay now and in the future. Medigap policies can be priced or “rated” in 3 ways:

1. Community-rated (also called “no-age-rated”)

2. Issue-age-rated (also called “entry-age-rated”)

3. Attained-age-rated

Each of these ways of pricing Medigap policies is described in the chart. The examples show how your age affects your premiums, and why it’s important to look at how much the Medigap policy will cost you now and in the future. The amounts in the examples aren’t actual costs. Other factors like where you live, medical underwriting, and discounts can also affect the amount of your premium.

How do insurance companies set prices for Medigap policies?

Type of Pricing  How it’s pricedWhat this pricing may mean for youExamples
Community Rated  (also called “no-age rated”)  Generally, the same premium is charged to everyone who has the Medigap policy, regardless of age or gender.Your premium isn’t based on your age. Premiums may go up because of inflation and other factors but not because of your age.Mr. Smith is 65. He buys a Medigap policy and pays a $165 monthly premium.
________ _______ ________ _______ _______ _______

Mrs. Perez is 72. She buys the same Medigap policy as Mr. Smith. She also pays a $165 monthly premium.
Issue Age -Rated (Also called “entry age-rated”)The premium is based on the age you are when you buy (are “issued”) the Medigap policy.  Premiums are lower for people who buy at a younger age and won’t change as you get older. Premiums may go up because of inflation and other factors but not because of your age.Mr. Han is 65. He buys a Medigap policy and pays a $145 monthly premium.

________ _______ ________ _______ _______ _______
 
Mrs. Wright is 72. She buys the same Medigap policy as Mr. Han. Since she is older when she buys it, her monthly premium is $175.
Attained-Age-RatedThe premium is based on your current age (the age you’ve “attained”), so your premium goes up as you get older.    Premiums are low for younger buyers but go up as you get older. They may be the least expensive at first, but they can eventually become the most expensive. Premiums may also go up because of inflation and other factors.    Mrs. Anderson is 65. She buys a Medigap policy and pays a $120 monthly premium. Her premium will go up each year:  • At 66, her premium goes up to $126. • At 67, her premium goes up to $132.
________ _______ ________ _______ _______ _______

Mr. Dodd is 72. He buys the same Medigap policy as Mrs. Anderson. He pays a $165 monthly premium. His premium is higher than Mrs. Anderson’s because it’s based on his current age. Mr. Dodd’s premium will go up each year: • At 73, his premium goes up to $171. • At 74, his premium goes up to $177.