Medicare can be a rather complicated topic, one that involves many choices and options that influence the coverage offered to each beneficiary. One such option is a Medigap policy, also referred to as a Medicare Supplement Insurance policy. This policy is designed as a supplementary plan for Original Medicare. These policies must adhere to the federal and state laws that are in place to provide protection to beneficiaries, and must be identified specifically as “Medicare Supplement Insurance.” In most states, insurance companies that sell Medigap polices are only authorized to sell beneficiaries standardized Medigap policies, meaning that these policies offer the same basic set of benefits regardless of the company from which the policy is purchased. These policies are assigned identifying letters from A through N, and the only difference between policies of the same letter sold by different companies is generally the cost.
What Is Covered by a Medigap Policy?
Medigap policies are designed to help cover some of the health-care costs that are not covered by Original Medicare. These benefits are differentiated from those of a Medicare Advantage plan in that a Medicare Advantage policy is a means of accessing benefits of Original Medicare, while a Medigap policy is specifically a supplement to the benefits offered by Original Medicare.
The benefits that are offered by Medigap policies vary by the identifying letter assigned to the policy, but some benefits may include:
- co-insurance and hospital costs associated with Medicare Part A up to a full 365 days after the time that Medicare benefits are exhausted
- co-insurance or co-payment associated with Medicare Part B
- first three pints of blood required for a transfusion
- Part A hospice care co-insurance or co-payment
- co-insurance for skilled nursing facility care
- deductible for Medicare Part A
- deductible for Medicare Part B
- excess charges for Medicare Part B
- foreign travel emergency coverage up to the stated limitations on the plan
What Is Not Covered by Medigap Policies
There are certain items and services that generally do not fall under the coverage of Medigap policies, regardless of the identifying letter. These include:
long-term care such as in a nursing home
- vision care
- dental care
- hearing aids
- private duty nursing
Coverage Options That Are Not Medigap Policies
There are other forms of health-care coverage that are not Medigap policies. It is important to differentiate the different forms of coverage in order to maximize benefits available from Medicare and other programs. Types of coverage that are not Medigap policies include:
- Medicare Advantage Plans—also referred to as Medicare Part C. This includes HMO, PPO, or private Fee-for-Service plans
- Medicare Prescription Drug Plans—also referred to as Medicare Part D
- employer or union plans, including FEHBP (Federal Employees Health Benefits Program)
- benefits for veterans
- long-term care insurance policies
- Urban Indian Health, Tribal, and Indian Health Service plans
Eligibility for and Purchase of Medigap Policies
Not all Medicare beneficiaries are eligible to purchase a Medigap policy at any point. Specific guidelines must be followed regarding when and how such policies may be purchased. These guidelines include:
- A beneficiary must currently have Medicare Part A and Part B coverage to purchase a Medigap policy.
- Beneficiaries who currently have Medicare Advantage Plan coverage but wish to return to Original Medicare have the option of applying for a Medigap policy prior to the end of coverage. The beneficiary must be leaving the Advantage Plan in order for the policy to be purchased. Beneficiaries should request that the Medigap policy be enacted no later than the date at which the Medicare Advantage Plan enrollment ends to ensure uninterrupted coverage.
- A beneficiary must pay a monthly Medigap premium as well as the premium paid for Medicare Part B coverage.
- Medigap policies provide coverage for only one beneficiary. This means that if spouses wish to have Medigap coverage, both will need to purchase separate Medigap policies.
When Is the Ideal Time to Purchase a Medigap Policy?
The best time for a beneficiary to purchase a Medigap policy is during the Medigap open enrollment period for that beneficiary. The open enrollment period is the six months that begin on the first day of the month during which the beneficiary is both enrolled in Medicare Part B and 65 years old. During the open enrollment period the insurance company selling the Medigap policy cannot utilize medical underwriting, meaning that it cannot do any of the following in response to the beneficiary’s health:
- refuse to sell a Medigap policy that it offers
- charge more for the policy than a person without health problems would be charged
- impose an additional waiting period before coverage begins.