Medicare Supplemental Health Insurance Policies (Medigap)

Medicare pays for many costs associated with health care, but it does not pay for all of them. Medicare Supplemental Health Insurance Policies, called “Medigap” or “MedSup” are health insurance policies sold by private insurance companies to fill the “gaps” in the Original Medicare Plan. Since January 1992, insurance companies were limited to selling the ten standardized Medicare supplement plans. If you are enrolled in a Medicare Advantage (Part C) plan, Medicare Supplement policies will not pay benefits and are not needed.

A company does not have to sell every plan, but every Medicare supplement company must sell “Plan A” (Basic Benefits only). Benefits in each plan are identical with every company offering the product. For example, all Plan G’s offer identical benefits. Benefits to these standardized plans cannot be added or modified by the insurance company.

Premium prices for the identical plans, however, may vary. Depending on the insurance provider and other factors such as age and deductible. Call the Senior Health Insurance Information Program (SHIIP) at (800) 351-4664 for a free guide that explains Medicare supplement insurance – Iowa Medicare Supplement & Premium Comparison Guide or go online to review and print the guide at www.shiip.iowa.gov. SHIIP provides free and unbiased counseling on matters of Medicare, Medicare supplemental insurance, long-term care insurance, and other types of health insurance sold to people on Medicare. The State of Iowa Insurance Division provides the SHIIP program. SHIIP has a chart listing the Ten Standard Medicare Supplement Plans.

All Medigap policies must provide at least the following core benefits found in Plan A:

• Daily coinsurance for days 61 to 90 of a hospital stay;
   
• Daily coinsurance for days 91-150 of a hospital stay (lifetime reserve days);
   
• All hospital approved costs from day 151 through 365.
   
• The cost of the first three pints of blood not covered by Medicare.
   
• The 20 percent coinsurance for Part B medical charges;
   
• Hospice and respite care expenses

The other policies provide different combinations of the following benefits: coinsurance for days 21 to 100 in a skilled nursing facility; Part A and Part B deductibles; and foreign travel emergencies. The higher-letter plans are generally more comprehensive than the lower-letter plans. These plans allow purchasers to choose the combination that is right for them. Of course, the more Medigap coverage you purchase, the more you will pay in premiums.

Open Enrollment

Every Medicare recipient who is age 65 or older has a guaranteed right to buy a Medicare supplement policy during “open enrollment.” The company must accept you for any policy it sells, and it cannot charge you more than anyone else your age. Your open enrollment period starts when you are age 65 or older and enroll in Medicare Part B for the first time, and it ends six months later. Disabled and end-stage renal disease Medicare beneficiaries receive the same six-month open enrollment period upon attaining age 65. If you apply for a policy after the open enrollment period, some companies may refuse coverage because of health reasons.

Pre-existing Conditions

A waiting period can apply before benefits are paid for pre-existing conditions even when you buy a policy during open enrollment.  The maximum waiting period is six months.  A new pre-existing condition waiting period is not allowed when you replace one Medicare supplement with another (and you hold the first policy for at least 6 months). You may avoid a waiting period for pre-existing conditions if you are in your open enrollment period and you apply for your Medicare supplement within 63 days of the end of previous health insurance coverage.

If you change Medicare supplement plans and the new plan has coverage not included in the previous coverage, a six-month waiting period may apply for the added benefits. Ask your insurance provider.

In some situations, you have a guaranteed issue right to buy a Medigap policy because you lost certain kinds of health coverage. You should keep a copy of any letters, notices, and claim denials you get. Be sure to keep anything that has your name on it. Also, keep the postmarked envelope these papers come in. You may need to send a copy of some or all of these papers with your application for a Medigap policy to prove you lost coverage and have the right to these protections. Contact SHIIP for assistance.

Some insurance companies may offer Guarantee Issue Outside of Open Enrollment. Guarantee issue means an insurance company does not consider existing health conditions when issuing insurance coverage. However, such policies may have a higher premium and require a waiting period for pre-existing health conditions. Check with the insurance company about special rules and conditions for coverage.

Considerations Before You Select a Medigap Plan

• What insurance coverage do you currently have?
   
• Do you need or want private health insurance in addition to Medicare?
   
• Do you have an employer-sponsored retiree health plan? Call SHIIP at (800) 351-4664 or visit the SHIIP website at www.shiip.iowa.gov for the Getting Ready to Retire fact sheet.
   
• Do you receive Medicaid benefits?
   
• If you are married, does your spouse need a Medigap policy?
   
• Do you want coverage for specific benefits, such as routine physical exams or prescriptions?
   
• How important is the choice of physician? Medicare Select is a type of Medigap policy that requires use of hospitals and physicians within its network to be eligible for full benefit.
   
• Did you comparison-shop for the best premium? To help you locate and compare Medigap programs available in Iowa, review the Iowa Medicare Supplement & Premium Comparison Guide from SHIIP.

Medicaid Recipients

Low-income people who are Medicaid eligible usually do not need additional insurance because they may qualify for certain health care benefits beyond those covered by Medicare. If you become eligible for Medicaid, you may be able to suspend your Medigap insurance policy for up to two years. A Medigap insurance policy purchased on or after November 5, 1991, provides for suspension if you request it within 90 days of your entitlement to Medicaid. Should you become ineligible for Medicaid benefits during that two-year period, your Medigap policy will be reinstated if you give proper notice (90 days from the date Medicaid coverage ends) and begin paying premiums again.

If You Can’t Afford a Medigap Policy

If you don’t qualify for Medicaid and can’t afford a Medigap policy, you may be able to get help paying for the costs of Medicare.

There are three Medicare assistance programs, called Medicare Savings Plans:

Qualified Medicare Beneficiary (QMB): The QMB program pays for Medicare Part A premiums, Medicare Part B premiums and deductibles, and coinsurance and deductibles for Part A and Part B.

Specified Low-income Medicare Beneficiary (SLMB):  The SLMB program pays for Medicare Part B Premiums.

Qualifying Individual (QI-1) Program: The QI-1 program is an expansion of the SLMB program that you must apply for each year. It pays for Medicare’s Part B Premium.

To qualify for these programs, you must be eligible for Medicare Part A (even if you are not enrolled) and have limited income and resources. Qualification for these programs is dependent upon income, assets and circumstances. Because these qualifications vary over time, contact your local Department of Human Services for assistance.

Consumer Tips in the Purchase of a Medicare Supplement (Medigap) Policy

• Assess your own health profile and decide what benefits and services you are most likely to need.
   
• Purchase ONE good Medicare supplemental policy. You are paying for unnecessary duplication if you own more than one. If you have a spouse, your Medigap policy may not cover the health care costs for your spouse. Check it out.
   
• Do not be pressured into buying a policy.
   
• You are not insured by a new Medicare supplement policy on the day you apply for it. Generally, it takes at least 30 days to be approved.
   
• A policy should be delivered within a reasonable time after application (usually 30-60 days).
   
• Consider carefully whether you want to drop one policy and purchase another. Do not cancel a policy until you have been accepted by the new insurer and have a policy in hand.
   
• Do not pay with cash. Pay by check, money order or bank draft payable to the insurance company, not the agent. Completely fill in the check before giving it to the agent.
   
• You have a 30-day free look period from the time you receive a policy to review it and get a premium refund if you decide not to take the coverage.
   
• Any Medicare supplement sold in Iowa after December 1, 1990, must be guaranteed renewable. That means the company cannot drop you as a policyholder unless you fail to pay the premium.
   
• Complete the application carefully and truthfully. Read the health information recorded by the agent before signing the application. If you leave out medical information requested, the insurer could deny coverage for that condition or cancel your policy.

Employer Health Insurance

An employer may offer a retiree health plan that will pay after Medicare.  These group insurance plans do not need to comply with the regulations governing Medicare supplement plans.