Anyone who shops for “Medigap” insurance to supplement Medicare’s traditional coverage can expect to see some changes in the policies.
Many people on Medicare buy these private insurance policies to pay some of the out-of-pocket expenses that Medicare doesn’t. As their name suggests, the policies fill many of the “gaps” for deductibles, co-payments, co-insurance and other charges not covered.
A Medigap policy can protect you from high out-of-pocket costs. Under traditional Medicare’s coverage, for example, you pay a $1,100 deductible for the first 60 days you are in the hospital and a fee for each day after that. Medigap can pay for some of those charges.
The new federal standards for Medigap won’t affect you if you already have supplemental insurance. Your coverage will continue as long as you pay your premiums. But the changes do apply to policies that take effect June 1 or later.
For the tens of millions of baby boomers who are about to reach 65 and join Medicare, the updated standards will be especially important.
The best time to buy a Medigap plan is within six months of turning 65 and enrolling in Medicare’s Part B insurance. Part B covers doctor visits and other outpatient care. During that time, insurers can’t refuse to sell you a plan, or charge you more, because of a pre-existing health problem.
If you wait, your options may be more limited.
To help you understand what you’re buying, the government standardized the Medigap benefits years ago and labeled each kind of plan with a letter. As of June 1, there are 11 standardized Medigap plans, including one high-deductible alternative.
All insurance companies selling Plan A, for instance, must offer the same package of benefits. But there can be big differences in the premiums the companies charge for the same coverage. So you should always check with more than one insurer.
Congress worked with state insurance commissioners to modernize and streamline the Medigap insurance market. As a result, four plans are being eliminated this year, two new ones are being introduced, and several existing plans have changed some benefits.
Among those reforms:
• All plans now have a hospice benefit, covering all or part of the coinsurance charge that traditional Medicare has required for prescription drugs and respite care.
• The preventive care benefit has been removed from Medigap plans, since traditional Medicare now covers more tests and screening procedures.
• The two new plans, M and N, offer lower premiums in return for higher cost-sharing. Plan M, for example, pays half of the hospital deductible but not the outpatient deductible.
• Plans E, H, I and J have been shelved because traditional Medicare’s recent improvements in coverage have made them unnecessary or too similar to other plans.
Not everyone should consider buying a Medigap policy. You don’t need to supplement your Medicare coverage if you’re on Medicaid or enrolled in a private Medicare Advantage plan or a group health plan through an employer or former employer, like the government or military.
Also, Medigap insurance doesn’t plug all the holes. It’s not a way to pay for long-term custodial care, dental care, eyeglasses, hearing aids or private-duty nursing. And new Medigap policyholders need to buy separate prescription drug coverage under Medicare’s Part D if they want it.
Still, for many people, adding a Medigap plan to traditional Medicare coverage can make out-of-pocket health care expenses more predictable and easier to budget.
If you’re interested in supplemental insurance, here are four steps to follow:
First, decide which benefits you want and which standardized Medigap plan meets your needs. For an overview of benefits, visit www.Medicare.gov or call 1-800-633-4227 and request a free copy of the Medicare publication, “Choosing a Medigap Policy.”
Next, find out which companies sell Medigap policies in your state. Visit www.Medicare.gov for a comparison of supplemental plans. Or call your State Health Insurance Assistance Program (1-800-252-9240 in Texas) or your State Insurance Department (1-800-252-3439).
Then, call the insurers that interest you. Compare premiums, since they differ company by company. But also understand that premiums may be based on your age or where you live. Check the companies’ financial strength by consulting independent ratings services like A.M. Best and Standard & Poor’s. Your State Insurance Department may also keep a record of complaints against companies.
Finally, pick the policy that best fits your individual needs. Read your policy as soon as you receive it. If you’re not satisfied, you can return it within 30 days and get your money back with no questions asked. Otherwise, you can keep your insurance as long as you pay the premiums.