As you can see, unless you're extremely wealthy, qualify for Medicaid, have a company medical retiree program, or choose a managed care plan under Medicare Advantage, you may need a Medicare supplemental policy to fill the gaps in traditional fee-for-service Medicare coverage. Just the 20% coinsurance alone can amount to a lot of money.
Although Medigap policies are issued by private insurers, Congress passed regulations to standardize plans and eliminate unfair marketing practices. There are 10 standardized plans from which to choose, although not all plans are available in all states. (The basic plan, Plan A, is available in all states.)
SUGGESTION: If you enroll in a managed care plan option (an HMO, PPO, or PSO) under Medicare Advantage, you do not need a Medicare supplemental plan since you may be paying twice for duplicate coverage. In fact, it is illegal for anyone to sell you a Medigap policy if you have a Medicare Advantage plan, unless you are terminating the Medicare Advantage plan and returning to traditional fee-for-service Medicare.
When Should You Purchase It?
The best time to buy a Medigap policy is as soon as your Medicare coverage begins. You cannot be refused, regardless of your health, if you purchase the policy within the first six months after you enroll in Medicare Part B. You must be issued the policy at standard rates. However, if you have a preexisting condition, coverage for that particular condition may be excluded for the first six months.
IMPORTANT NOTE: If you apply after the six-month period, you run the risk of being denied based on your health.
Which Plan Is Right for You?
There is no one plan that is right for everybody. The object is to make sure the plan you select is based on what you think you'll need and making sure you're not paying for insurance where the cost outweighs the benefit. For example, if all or most of your doctors accept on assignment, do you really need to have a plan that covers excess charges? Or, if you take prescription drugs only occasionally, does the additional added premium make sense? You still have to pay 50% of the cost of the drug.
What does make sense? You should definitely consider the Part A Deductible and the Skilled Nursing Facility Coinsurance as additional components of your policy. If you're planning to travel outside the U.S., you should consider purchasing Foreign Travel Emergency medical insurance.
Following are the Standard Medical Supplemental Insurance Plans (Medigap)
|Medicare Part A Coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up||x||x||x||x||x||x||x||x||x||x|
|Medicare Part B Coinsurance or Copayment||x||x||x||x||x||x||50%||75%||x||x***|
|Blood (First 3 Pints)||x||x||x||x||x||x||50%||75%||x||x|
|Part A Hospice Care Coinsurance or Copayment||x||x||x||x||x||x||50%||75%||x||x|
|Skilled Nursing Facility Care Coinsurance||x||x||x||x||50%||75%||x||x|
|Medicare Part A Deductible||x||x||x||x||x||50%||75%||50%||x|
|Medicare Part B Deductible||x||x|
|Medicare Part B Excess Charges||x||x|
|Foreign Travel Exchange (Up to Plan Limits)||80%||80%||80%||80%||80%||80%|
|Out of pocket limit **||$5,560||$2,780|
* Plan F also offers a high-deductible plan. If you choose this option, this means you must pay for Medicare-covered costs up to the deductible amount of $2,240 in 2019 before your Medigap plan pays anything.
** After you meet your out-of-pocket yearly limit and your yearly Part B deductible ($185 in 2019), 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.
Source: U.S. Department of Health and Human Services
SUGGESTION: Since all companies that issue Medigap policies must provide the exact same benefits per plan, it is important to compare companies based on price (which can vary widely), claims-paying ability, and service. For example, how long does it take the company to reimburse you? Some companies are much better than others in their claims turnaround time.
Be thorough when investigating different Medigap insurance providers. You can usually obtain helpful information from friends and family who already subscribe to a Medigap policy.
SUGGESTION: If you move to another state after you retire, you may need to change your Medigap plan.
Points To Remember When Shopping For a Medigap Policy