I was having a conversation about retirement health insurance with an acquaintance of mine who just retired. He’s a former corporate executive—an analytical person—who’s always done his homework to avoid as many surprises as possible in the business world. He’s done the same thing with healthcare and decided that a Medigap policy is best to handle that part of his health plan during retirement.
With all the ads on television for Medicare Advantage plans, Medigap policies often take a back seat, even though they can be a perfect fit for some, just like my recently retired friend. If you are considering Medigap, here are some things to know.
First, you can only purchase a Medigap plan if you have already enrolled in Medicare Part A and Part B. The Initial Enrollment Period for Medicare is a 7-month window that begins 3 months before you turn 65, the month of your 65th birthday, and three months after the month you turn 65. If you don’t sign up when eligible you could get hit with delayed enrollment penalties that will apply to your Medicare cost for the rest of your life.
If you have group health insurance coverage through a current employer or through your spouse’s current employer, you can delay enrolling in Medicare penalty-free. In that situation, you will sign up for Medicare during a special enrollment period that extends up to eight months after your employer coverage ends.
Medigap policies have a separate six-month open enrollment period which starts the month you turn 65 or when you enroll in Medicare if you’re older than 65. During open enrollment, you can buy any Medigap policy sold in your state, even if you have health problems, for the same price as people with good health. If you purchase Medigap after that, you may be subject to underwriting, which may reject you because of pre-existing conditions or rate you, meaning you’ll pay a higher premium for your Medigap policy.
Medigap, also known as Medicare Supplement Insurance, is sold by private insurance companies and helps pay the 20% of healthcare costs not covered by Part A and Part B Medicare, especially things like copayments, coinsurance, and deductibles. However, Medigap policies don’t include coverage for long-term care, vision, dental or hearing. For those, you have to buy separate policies. Also, Medigap plans cover only one person. For married couples, each spouse has to buy their own policy.
With a Medigap policy, you are not restricted to Medicare-approved doctors only. You have a wider selection. But you will pay a higher premium for that privilege than if you had a Medicare Advantage Plan, which usually offers more benefits and lower cost because you must use in-network providers. People with Medicare Advantage Plans are prohibited from purchasing Medigap policies.
If you choose a Medigap plan and later decide to switch to Original Medicare or a Medicare Advantage plan, you can only move during the Open Enrollment Period which occurs every year from October 15 through December 7. Keep in mind, switching from Original Medicare or Medicare Advantage to a Medigap plan sometime after you were first eligible does not guarantee your acceptance into Medigap.
There are 10 standardized Medigap plans to choose from, A, B, C, D, F, G, K, L, M and N. Policy A in one state would offer the same benefits as policy A in another state, although the premiums may be different, and all 10 policies are not required to be offered in every state.
Right now, Medigap F plans are the most popular and comprehensive, but they will be eliminated in 2020. After that, new enrollees who like the comprehensive coverage of Plan F should consider buying Plan G, which provides most of the same benefits but does not include the Medicare Part B deductible.
How do you make sense of it all? Medicare.gov has guidelines about comparing Medigap plans and how to shop for them.
Source: alhambrapartners.comFollow us: