Medicare open enrollment is here! In our October 15th post, we discussed Medicare Parts A, B, C & D. Do you know there are Medicare Supplement or Medigap policies available to help cover the costs of what Medicare does not cover? The terms Medicare Supplement and Medigap are used interchangeably and are the same policies. Do you need a Medigap policy? Do you have coverage available through your former employer in retirement?
Medicare Parts A and B pay many of the costs for health care services and supplies, but not all. Medigap policies help fill the “gaps” in Medicare Parts A & B. Private insurance companies sell them. Medigap policies will pay health care costs like copayments, coinsurance, and deductibles. Medicare pays its share of the expenses, the Medicare-approved amount, and your Medigap policy then pays its share.
There are 8 different supplement plan types available. Each plan is labeled with a different letter that corresponds with a certain level of primary benefits. Plans have the same standardized benefits for each lettered plan regardless of the insurance carrier. What each plan covers is regulated and standardized by the Federal and State governments.
You must have Medicare Parts A and B to purchase a Medigap policy. If you have a Medicare Part C, you do not need a supplement plan. You will pay the insurance company a premium for your Medigap policy. Medigap plans costs run from $250 – $600 per quarter depending on which plan you choose and which insurance carrier you use. This premium is in addition to your Medicare Part B premium.
Medigap Plan F is the most popular plan because it offers the most coverage. If you became eligible for Medicare after January 1, 2020, Medigap Plan F is no longer available to you. Medigap Plan G is almost identical to Plan F. The difference is that Plan G does not cover your annual Medicare Part B deductible of $185, where Plan F does. If you had Plan F before January 1, 2020, it remains available to you.
Medigap plans A-N all cover Medicare Parts A & B coinsurance, first 3 pints of blood, and Medicare preventive care Part B coinsurance. The difference in plans is what else they may cover. Some cover skilled nursing facility care coinsurance and some provide coverage for Medicare Part A deductible. Plans C cover the Medicare Part B deductible while the Plans G covers Medicare Part B excess charges. Plans K or L provide Hospice care coinsurance or copayment coverage. Plans E, F, H, I, and J are no longer sold but remain available for existing policyholders.
Medicare Parts A & B will not cover expenses when someone travels outside the U.S. If you travel internationally, you want to make sure you purchase a plan that covers foreign travel emergency costs.
Plans through your employer are not Medigap plans. When you sign up for Medicare at 65 and you are still employed, Medicare becomes your primary insurance. Your employer plan becomes your secondary insurance. Medicare is billed first and then the employer’s plan is billed second. Speak with your benefits department to determine what happens with your insurance if you are Medicare-eligible, but your spouse is younger and is not. If your spouse is covered by your employer plan and becomes eligible for Medicare before you, does that change your work insurance plan?
Once you retire from work, your employer may offer you retiree insurance benefits. These retiree plans pay for the same types of expenses that a Medigap policy covers and means you do not need a Medigap policy. Your retiree benefits should be compared to a Medigap policy. Compare what benefits are provided, the premium cost, and if the employer will provide any reimbursement. Your employer plan may be a better option, or it may be more beneficial to purchase a Medigap policy.
There are a few things to look at when comparing Medigap policies. Is the company licensed in your state? Insurance companies usually offer some, but not all, Medigap plans. Make sure the company you are reviewing sells the plan you want. Does the company use medical underwriting for their Medigap policies? Does the policy you are reviewing have a waiting period for pre-existing conditions? Is the premium cost based on individual age? If it is, you want to know how often the premium increases for your age. Has the premium for the Medigap policy you are looking at increased in the last three years due to inflation or other reasons? If it has, how much has it increased? Does the company offer any discounts or additional benefits? Make sure when comparing Medigap policies with two different companies, you compare the same Medigap policies (Medigap Plan G to Medigap Plan G).
Open enrollment ends on December 7th. If you need help determining if you have the right Medicare supplemental coverage or are just looking to see if there is a more cost-effective option out there, give Planning with Purpose a call. We would be happy to help you navigate your options and choices for both Medigap plans or Medicare Advantage plans.