Medicare Supplemental Insurance policies (also known as Medigap policies) are sold by private insurance carriers in order to complement Original Medicare or Medicare Advantage and offer coverage for other treatments and services not approved by Medicare. These policies are regulated by federal and state governments, and must be offered in standardized form. Eleven plans can be offered, but all carriers must offer at least the standard benefit Plan A.
The benefits are standardized so as to be comparable between Plans A, B, C, D, F, F+ (High Deductible), G, K, L, M and N. Plan A or the basic supplemental insurance policy must:
- Be guaranteed renewable (except for non-payment of premiums)
- Provide co-insurance for hospitalization for days 61-100 (prior to that there is no co-insurance
- Provide a lifetime reserve benefit of 365 days of hospitalization coverage in excess of 150 days.
- Cover the cost of the first three pints of blood that is not replaced.
- Pay the 20% co-pay of the Medicare approved charges for Part B after the annual deductible.
- Provide coverage of hospice care co-pays for prescription drugs and respite care.
- have no waiting list for pre-existing conditions for first time enrollees aged 65 and over; and no more than a six-month waiting period, regardless of other circumstances.
- Have a 30-day fully refundable premium.
Except for Plans K and L, policies are usually intended to cover deductibles, co-insurance, excesses, and foreign travel. Plans K and L cover percentages of standardized services. The two plans pay 50% and 75% respectively of the following services including Part A and B deductibles, Part B co-insurance and excesses, skilled nursing co-pays, and foreign travel. They also have out of pocket annual limits of $4,940 and $2,400 in 2014, respectively.
The following table summarizes Plans A-N coverage:
|•||•||•||•||•||•||•||50%*||75%*||•||Pays 100% of the Part B
coinsurance except up
to $20 copayment for
office visits and up to
$50 for emergency
|Part B Excess of
* Except for Part A hospitalization and Part B preventive services, which are covered at 100%.
+ High Deductible is $2,200 in 2017
Because Medicare Supplements are standardized, cost and reputation of the insurance company are two factors to be considered before deciding to buy. Insurance companies price plans according to several factors, including the individual’s age, projected rate of inflation, and resultant increases in medical costs. In addition to cost comparisons, purchasers should consider the financial stability of the insurance company and the integrity of the sales representative.
Steps to take before choosing a Medicare Supplement
- Review ‘Choosing a MediGap Policy’, the guide prepared by the federal Centers for Medicare and Medicaid Services (CMS) at this website.
- Research the Insurance Company
- Check with an independent company such as Standard and Poor, or Weiss Research Inc, for financial ratings. Call your local library or the Colorado Division of Insurance (1-800-930-3745) for a referral.
- Ask your physician(s) bookkeeping department how efficiently the company processes claims.
- Does the insurance company have an arrangement with Medicare to automatically receive and pay claims not covered by Medicare?
- Make a point to review the company’s billing procedures and make certain they are acceptable to your way of doing business.
- Don’t do business with an insurance agent (or company representative) who:
- Is unable to explain the policy and answer all questions to your satisfaction.
- Doesn’t remind you of the ‘free look’ period, when you can cancel the policy and get a full premium refund.
- Acts impatient or tries to rush you into making a commitment.
- Comparison shopping will likely precipitate telephone contacts from people you are not familiar with. Never give any information over the phone. Make it a rule to only provide identifiable information in writing on official documents and applications.
The Colorado Department of Insurance prepares a listing of the costs of Medicare Supplements for comparison shopping and is available here.
To talk with a counselor about Medicare Supplements, call 303-333-3482.