What is Medicare Supplemental Insurance?
Medicare Supplemental Insurance is a health insurance policy that is sold by private insurance companies to supplement the Medicare policy. This type of coverage, commonly known as Medigap, covers the cost of medical services outside of Medicare Part A and Part B Plans. It extends to gaps not covered by Original Medicare, including co-pays, coinsurance, and deductibles.
- Medicare Supplement Insurance (Medigap) is a medical insurance policy sold by private insurance companies to supplement a medical insurance policy.
- It covers common loopholes in Medicare standard insurance plans.
- The insured pays the premium for the Medigap policy directly to the insurance provider each month;
- Medigap coverage is not the same as Medicare Part C, which is also known as a Medicare Advantage plan;
How Medicare Supplemental Insurance Works
Medicare Supplemental Coverage covers common gaps in Medicare standard insurance plans. Those applying for Maddie Gap Insurance must enroll in Medicare Parts A and B. Medicare plans supplement but does not replace primary health insurance. 1 There are 10 Medigap plans, from Plan A to Plan N.2 _
The Medigap Open Enrollment Period (OEP) is 6 months from the first day of an individual’s 65th birthday. These plans may also open enrollment within six months of enrolling in Part B coverage. 3 ;
The insured pays the premiums for the private health insurance policy directly to the insurance provider each month. These premiums are higher than the premiums for Medicare Parts A, B, and D. This means Medigap patients will pay one premium for Part B and another for plans offered by private companies. While private insurers offer Medigap plans, the federal government requires companies to standardize policy coverage. This standardization means that Provider Z’s Medigap Plan C offers the same coverage as Provider Y’s Plan C. 2
All Medigap plans must cover pre-existing conditions after a six-month waiting period. However, those who have continuous health insurance for 6 months before enrolling can avoid this and get coverage immediately. 3
special attention items
Most Medigap policies receive Medicare Part B claim information directly from the Medicare plan. The private insurance company then remits the difference directly to the healthcare provider. Some plans submit payments to hospitals based on Medicare Part A claim information, but this is less common. Medicare requires that if the patient asks the insurance company to do so, the policy should pay directly to the enrolling physician.
The Centers for Medicare and Medicaid Services (CMS) warns potential buyers of Medigap policies to be aware of fraud. Common scams include high-pressure sales tactics, the sale of duplicate policies, or the sale of policies when insurers realize an individual has coverage from an incompatible government program, such as Medicaid or Medicare Advantage.
Some states also regulate the types of Medigap policies sold within their borders. Although Medigap policies are related to health insurance, they only come from private insurance companies. Anyone buying a supplemental plan should keep in mind that it is illegal for a private insurance company to misreport a Medigap policy as a federal plan.
Medicare Supplement and Medicare Part C
Medigap Plan C and Medicare Part C may be confused, but they are not the same thing. Medicare Part C is also called a Medicare Advantage plan. Like Medigap plans, Medicare Advantage (MA) plans come from private providers. These plans include and replace Medicare Parts A, B, and often Part D, but not end-of-life care. 5 6 Medicare Advantage plans typically include:
- Deductibles for Part A and Part B Insurance
- Coinsurance; paid to hospitals and hospice
- Up to 365 additional days of hospitalization after the original Medicare Parts A and B coverage is exhausted
- Part B coinsurance and coinsurance
- Skilled Nursing Facility Coinsurance
- Three pints of blood used in medical procedures
- 80% of the approved fee for foreign travel emergency insurance
Out-of-pocket costs for Medicare Advantage plans depend on many factors, including whether the plan charges a monthly premium or any monthly premium that covers Medicare Part B. Some plans do both. 7 MA plans come in one of four structures: a Health Maintenance Organization & (HMO), Preferred Provider Organization (PPO) plan, Private Fee Services (PFFS) plan, or Special Needs Plan (SNP). The federal government prohibits private insurers from selling Medigap policies to individuals enrolled in Medicare Advantage. Individuals must reside in the plan’s service area and have Medicare Parts A and B to qualify. These plans come from government-approved private providers.
Medigap plans do not cover physician fees over what is acceptable for Medicare, which must be paid by the patient. Supplemental coverage for dental, vision and eyewear, hearing aids, and private care often varies by provider. Some providers may also offer additional benefits for long-term care and prescription drug coverage.
Physician fees above Medicare acceptable rates are not covered by the Medigap plan and must be paid by the patient.
For anyone considering Medicare Part C and Medigap plans, it’s important to carefully research the various options available to find a solution to the best Medicare Advantage plans possible.
Other parts of health insurance
Medicare Part A coverage includes hospital care, skilled nursing facility or nursing home care, hospice care, and home health services. However, the plan does not cover all nursing home services, such as if a patient only needs simple custodial care.
Part A coverage is free for most people because they contribute to Medicare through payroll taxes. However, anyone filing less than thirty-fourths of their Medicare taxes is required to pay an annual premium. Monthly premiums, which are renewed annually, range from $259 to $471 in 2021, depending on an individual’s quarterly coverage eligibility. 8 The Medigap program will assist with these out-of-pocket costs.
While the premiums for most Medicare enrollees may be free, they must pay certain out-of-pocket costs. The 2021 deductible for inpatient hospitalizations is $1,484 and covers the first 60 days of hospitalization. Coinsurance kicks in after day 61, after which the patient pays $371 per day for days 61 through 90 in the hospital. 9
Part B combined with Part A is called Original Medicare. 10 Part B is optional in most cases. It helps pay for routine medical care such as doctor visits, durable medical equipment, home health services, outpatient services, ambulance services, physical therapy, and many other medical needs. Year 11 fees are calculated based on earnings in the years before enrolment.
Like Part A coverage, Medicare adjusts premiums and deductibles annually. Party B’s standard monthly premium for 2021 is $148.50 with an annual deductible of $203. 9 Premiums increased for those deemed to have higher incomes.
Part D coverage provides prescription drug benefits for registered persons. Actual costs to individual participants tend to vary based on several factors:
- type of plan
- the drugs they use
- pharmacy of their choice
These plans come from government-approved private providers. Anyone enrolled in Medicare Part D cannot get prescription drug coverage from the Medigap plan. Medicare renews the maximum deductible each year. The average monthly premium for Part D coverage in 2021 is based on income and can range from an additional $12.50 to an additional $77.10 on income over $88,000. 12 Medigap plans will help cover these out-of-pocket costs.