Do You Need Medicare Supplement Insurance Coverage?

Medicare Supplement Insurance, often called Medigap, is health care insurance you can purchase to help offset out-of-pocket costs that Medicare doesn't cover. Indeed, Medicare Part B, which covers specific doctors' services, outpatient care, medical supplies and preventive services, has gaps in its coverage.

Medicare Coverage Options

Medicare is federal health insurance for individuals age 65 and older, certain younger people with disabilities and those with End-Stage Renal Disease (ESRD). It has three parts that cover specific services:

• Medicare Part A covers inpatient hospital stays, skilled nursing facility care, hospice care and some home health care.
• Medicare Part B (sometimes called Original Medicare) covers specific doctors' services, outpatient care, medical supplies and preventive services.
• Medicare Part D helps cover the cost of prescription drugs, including many vaccines.

Medicare Advantage plans, sometimes called Medicare Part C, are offered by private insurance companies. These plans offer benefits beyond what the government provides under Medicare Part B.

Medigap Coverage

The premiums for Medicare Part B depend on your modified adjusted gross income (MAGI) and are taken out of your monthly Social Security payments. Medicare Part B, however, doesn't cover 100% of health care expenses. For example, Medicare Part B pays 80% of the cost for most outpatient care and services, while you pay the remaining 20%.

To cover the 20% out-of-pocket costs, you can purchase a Medigap policy from a private health insurance company. A Medigap policy requires you to pay a monthly premium in addition to the premium you pay for Medicare Part B.

Here are a few things to know about Medigap:

• It only covers one person. If you and your spouse both want Medigap, you must buy separate policies.
• Although all Medigap policies include basic benefits, none include prescription drug coverage. That's covered only by Medicare Part D.
• Medigap policies are guaranteed renewable even if you have health issues. Your private insurance company cannot cancel your policy if you pay the premium and the information on your application is accurate.

Note, too, that Medigap policies generally don't cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing.

Medigap Enrollment Details

To be eligible to purchase a Medigap plan, you must be 65 years old or older, enrolled in Medicare Parts A and B, and live in the state where the policy you want is offered. In some states, if you have a disability or ESRD, you can buy a Medigap policy if you're under the age of 65.

Medigap policies can be bought at any time, but the best time is during the six-month Medicare Supplement Open Enrollment. The enrollment period begins the first month you turn age 65.

The advantage of buying a Medigap policy during the six-month enrollment period is that you can choose any plan sold in your state without answering questions regarding your health. Insurance companies can't deny you a Medigap policy even if you have health problems during that six-month period.

In addition, they have to offer you the same policy price as they would to an individual in good health. If you apply for a Medigap policy after the open enrollment period expires, insurance companies aren't required to sell you the policy unless you're eligible for a "guaranteed issue right."

Shop Around

Because Medigap policies can vary in price from insurance company to insurance company, make sure you compare the same policy among different sellers. Contact us for additional details regarding your health insurance needs.