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Medigap insurance: Covering what Medicare doesn't

Open enrollment for Medicare is open for 2019 coverage.
Open enrollment for Medicare runs from Oct. 15, 2018 to Dec. 7, 2018 for plans starting Jan. 1, 2019.

Medicare offers you multiple avenues to get health insurance coverage. You can choose a Medicare Advantage plan or an Original Medicare plan. That's just the beginning. You can also sign up for a Medigap plan that will help you play out-of-pocket Medicare costs, including copays, coinsurance and deductibles. 

What is Medigap?

Medigap helps you pay for Medicare, but it's not actually health insurance.

Medicare doesn't pay for everything. You could be responsible for a percentage of your medical bills and out-of-pocket expenses. To help pay those bills, Medicare supplemental insurance, also known as Medigap, is available.

Medigap work with Original Medicare, which has two parts: A and B. Part A pays for inpatient hospital, skilled nursing facility, home health and hospice care. Part B pays for doctors' visits, outpatient hospital care, durable medical equipment and other medical services.

Private insurance companies sell Medigap policies to cover Medicare coinsurance, co-payments and deductibles that you otherwise would have to pay yourself. Depending on the policy, it could pay for costs that Original Medicare doesn't cover, such as prescription drugs. You may need to buy a separate policy or Part D drug plan for drug coverage. Note: You are likely to pay a penalty for drug coverage if you add it later, rather than when you first enroll.

How much does Medigap cost?

The answer to the Medigap cost question is complicated. Insurers may base Medigap monthly premiums by age. Some policies will not consider age, while others do and still other plans increase rates as you age. 

High-deductible Medigap plans can cost less than $100, while others like A, B and C can cost you more than $300 a month. 

Similar to any type of insurance-related plan, it's best to shop around. Figure out what plans are best for you and then get quotes from multiple insurers offering Medigap plans. 

Remember you get what you pay for, so expect to pay more Medigap plans with more out-of-pocket costs coverage. 

When can you buy a Medigap plan?

You can buy a Medigap plan during the annual open enrollment period or when you turn 65. 

You could try to buy a policy outside of the open enrollment period, but there's no guarantee that an insurer will give you a policy at that time. You may need to meet medical underwriting requirements. Some states offer Medicare SELECT, which you can read more about below. Medicare SELECT policies give you 12 months to switch to a Medigap policy. 

Most states require an insurer to offer at least one Medigap plan to non-elderly people with end-stage renal disease. Pre-existing conditions could cause an insurer to delay Medigap coverage if you buy a policy outside of open enrollment.

States vary so if you find you need to get a Medigap plan outside of open enrollment check with your state to find what's available to you. A good place to start is Medicare's Medigap page

Medigap doesn't work with Medicare Advantage

Medicare Advantage plans are an alternative to Medicare. These plans are purchased through private insurers and generally consolidate benefits found in Medicare parts A and B. You can't get a Medigap plan if you have Medicare Advantage. Medigap is only paired with Original Medicare. 

MA is sometimes called Part C and is usually an HMO or PPO, says Patricia Barry, AARP's "Ms. Medicare" columnist and author of "Medicare for Dummies, 2nd Edition." With most Medicare Advantage plans, you must use doctors, hospitals and other providers in the plan or you pay more or all of the costs. Most MA plans include prescription drug coverage, but not all, so be sure to check if you want it, Barry says.

10 Standardized Medigap Plans

Depending on where you live, you may have a choice of 10 standardized Medigap policies that the federal government has authorized. They are identified by letters: A, B, C, D, F, G, K, L, M and N.

"The point about standardization," Barry says, "is that each policy that has the same letter has the same set of benefits regardless of which insurance company sells it." However, she says, while the benefits under each letter are standard, the costs are not. "Insurance companies charge a wide variety of premiums," she says. Note: if you live in Massachusetts, Minnesota or Wisconsin, insurance companies are allowed to sell somewhat different combinations of benefits.

To find the plan that's best for your age, health and financial situation, review your choices every year during open enrollment. Medicare open enrollment runs from Oct. 15 to Dec. 7.

You don't have to do anything if you want to keep the supplemental insurance plan that you already have. However, your insurance plan is required to notify you of any changes in coverage and prices that will take effect Jan. 1 and you should review your choice to be sure it's still the best for you, Barry says.

Make sure the medications you take are still covered under your plan and whether your doctors and hospitals are still part of it. "If you don't scrutinize and compare what's available very year, you're probably not getting your best deal," Barry adds.

The Plan Finder on Medicare's website is a great resource, Barry says. Yo can enter the medications you take and their dose to see if they are part of the plan you're considering. The results will be organized by plan type and are initially sorted by lowest estimated cost to highest.

You also can use the chart below from Medicare.gov to view differences among the plans. For example, Plans A and B do not offer emergency coverage if you travel abroad. Is that important to you?

Yes means it covers 100 percent for this benefit; No means it offers no coverage for this item; and the percentage is the percent that the plan covers for each benefit. N/A is not applicable.

Medigap Benefits

Medigap Plans

A

B

C

D

F1

G

K

L

M

N

Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Part B coinsurance or copayment

Yes

Yes

Yes

Yes

Yes

Yes

50%

75%

Yes

Yes2

Blood (first 3 pints)

Yes

Yes

Yes

Yes

Yes

Yes

50%

75%

Yes

Yes

Part A hospice care coinsurance or copayment

Yes

Yes

Yes

Yes

Yes

Yes

50%

75%

Yes

Yes

Skilled nursing facility coinsurance

No

No

Yes

Yes

Yes

Yes

50%

75%

Yes

Yes

Part A deductible

No

Yes

Yes

Yes

Yes

Yes

50%

75%

50%

Yes

Part B deductible

No

No

Yes

No

Yes

No

No

No

No

No

Part B excess charges

No

No

No

No

Yes

Yes

No

No

No

No

Foreign travel exchange (up to plan limits)

No

No

80%

80%

80%

80%

No

No

80%

80%

Out-of-pocket limit3

N/A

N/A

N/A

N/A

N/A

N/A

$5,240

$2,620

N/A

N/A

1Plan F also offers a high-deductible plan.

2 Plan N pays 100 percent of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to a $50 copayment for emergency room visits that don't result in your being admitted to the hospital.)

3After you meet your out-of-pocket yearly limit and your yearly Part B deducible, the Medigap plan pays 100 percent of covered services for the rest of the calendar year.

The cost of your Medigap policy also depends on whether or not the insurance company offers discounts. Some firms offer discounts for women, non-smokers or married couples. Some also offer discounts for paying yearly, paying premiums via electronic funds transfer, or for multiple policies.

Remember that unlike other insurance plans that cover families, Medigap plans only cover individuals. Spouses must each get their own policies.

Medigap policies don't cover long-term care either. If you want long-term care, buy a separate policy and from a company that offers it.

If you need dental and vision care, look into Medicare Advantage plans as some of them include these coverages.

Something to keep in mind, Medicare won't allow Medigap plans sold to new people to cover the Part B deductible in 2020. The change means parts C and F won't add new members starting in 2020. If you have one of those plans (or the high deductible version of Plan F), you can keep th eplan. However, those eligible for Medicare who didn't enroll in those plans before Jan. 1, 2020 won't be able to buy them. So, if one of those plans interest you, make sure to get the plan before the deadline. 

Another Medigap Option: Medicare SELECT

In some states, you may have another option: Medicare SELECT. Medicare SELECT can be any of the standardized plans lettered A through L above, but these plans require that you use specific hospitals and, in some cases, specific providers to receive full benefits, unless it's an emergency.

The advantage to Medicare SELECT is that the policies are generally sold at a lower cost than other Medigap plans. "All the others you can use providers anywhere across the country for any services that Medicare covers within the U.S.," Barry says. "With Medicare SELECT, you're confined to a geographic area." Medicare still pays its share of approved charges no matter which hospital or doctor you choose.

If you don't have health insurance from an employer, the military or elsewhere, it's important to enroll in Medicare when you are first eligible, Barry says. You can sign up during the 7-month period that begins three months before the month you turn 65, includes the month you turn 65, and ends three months after the month you turn 65. You could be subject to an ongoing late enrollment penalty if you don't sign up during the eligibility period.

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