Medicare Supplement Plans
Manage Medicare's Financial Risk By Choosing a Medicare Supplement Plan
Medicare Supplement Plans / Gap Insurance
When Should I Apply For Medicare?
See my free guide at the bottom to determine the best time to apply to Medicare. This will affect your ability to obtain coverage from a Supplement Plan or Medicare Advantage Plan. These types of senior medical plans are designed to help pay for costs that original Medicare does not. Typically, Medicare only pays about 80% of your medical costs and you are responsible for the remaining 20%.
Most insurance plans have a built in stop-gap or what insurers call a “max-out-of-pocket.” This protects the customer against unlimited billing in a calendar year in the event of a catastrophic health event. A “max-out-of-pocket” is the dollar amount the customer must pay out of their own pocket through co-insurance and co-payments before the plan covers 100%. Since Medicare has no max-out-of-pocket, your 20% share of costs can potentially be financially devastating.
A Medicare Supplement Plan is simply and affordable way to eliminate this risk.
These types of plans fill in the “gap” left by Medicare, hence the name Medicare Gap Plans. Medicare will pay 80%, and your insurance carrier will pay the remaining 20%. All you pay is your monthly premium, and perhaps some other small deductibles and co-payments depending on the level of plan you purchase.
Medicare Gap Plans are optional. In a 2017 study by the Kaiser Family Foundation, it found that 29% of Medicare eligible people were covered by a Medicare Supplemental insurance plan in 2016. That represents nearly 9 million Medicare recipients electing to purchase a Gap plan. The remaining people were insured by a Union or employer coverage, Medicare Advantage Plans (Part C), Medicaid, or simply elected to have no additional coverage beyond what original Medicare provides (which I highly discourage).
Since all similar plan types must offer the same coverage, it really doesn’t matter which company issues you your policy. A plan F with Mutual of Omaha must look exactly like the plan F over at United Healthcare. This allows consumers to shop by price rather than the company selling it – all supplemental plans are universal in their coverage.
Some companies may offer small perks to selecting a plan with them, such as discounts for having a direct payment come from their checking account each month, or they may offer a free gym membership through Silver Sneakers or Silver & Fit, or the company might offer discounts if you pay annually. Regardless of which company you end up with, the only major difference from one company to the next will be price. The reason you will find different pricing structures is due to several factors within the company you select.
These pricing factors may be affected by:
- Number of current customers
- Overall health of current customer pool
- Internal organizational costs or efficiencies
- Private vs publicly traded companies that must deliver profit to shareholders
- Overall financial goals of the company underwriting your policy
The Newest Option is a High Deductible Plan G & Innovated F Plans
How Does A Medicare Supplement Plan Work?
An eligible consumer purchases an insurance plan from a major carrier based on their budget and desired level of coverage. Then, the insurance carrier works with the medical provider (doctor, hospital, testing center etc.) to pay the insured’s bill. Normally, the provider will send two separate bills to two different insurance carriers, the first being Medicare and the second being your insurance carrier. Medicare will be billed 80% and the insurance company will be billed 20% of the allowable billable Medicare rate for the visit or procedure. Medicare pays the providers and your insurance carrier pays your provider.
Who is eligible to purchase a Medicare Supplemental Insurance Plan?
Any person that is Medicare eligible or will become Medicare eligible within 90 days, and has Medicare Part A and Medicare Part B. In order to submit an application to an insurance carrier, you must know your Medicare Identification Number, which is issued by the Social Security Administration after you apply for Medicare.
Is acceptance into a Medicare supplement plan guaranteed?
It depends on who is applying and when they are applying. There are situations where a Supplement Plan insurance carrier cannot deny your application, this is called a “Guaranteed Issue” (G.I.) period, such as when your Medicare Part B becomes active. There are a few guaranteed issue situations that vary slightly by state, and if you are outside the scope of these situations, your application to be insured will be fully underwritten. This means is the insurance company will look into your health history and determine if you are too much of a financial risk to insure. Unlike the ACA / Obamacare plans, pre-existing conditions can cause you to be denied coverage for Supplemental Insurance.
When Can I Enroll Into A Medicare Supplement Plan?
Since these plans are considered a month-to-month contract between you and the insurance carrier, you can apply at any time, there is no specific month or seasons for Gap Plan enrollment periods.
What Are Some Of The Most Common Guaranteed Issue Periods?
There are quite a few guaranteed issue (GI) situations you can cite in order to avoid answering health questions. The top 5 are:
- Within 6 months of Medicare Part B going into effect at any age
- Is Medicare eligible and has a loss or voluntary termination of group coverage from an employer
- Changing from a Medicare Advantage (MA) plan to a Supplement Plan within the first 12 months of having the Advantage plan (called a MA Trial Period)
- Had a Medicare Advantage Plan and moved out of the MA service area
- Had a MA plan or Supplement Plan that terminated its contract in the person’s service area
What determines the monthly premium costs for my Medicare Supplement Plan?
The main determination is your age. As we get older we will typically cost more money to care for, and the insurance carriers monitor this very closely. The second biggest factor is whether you’re a smoker or a non-smoker, then the county you live in and lastly if you’re male or female. All of these factors make up the overall monthly costs of your plan.
Often, insurance carriers will raise the price of your plan on or around your birthday every year or every two years depending on the company you’re with. In addition to your birthday price increase, you’ll sometimes receive a notice of premium increase because of the entire age band getting a rate adjustment. This happens when the carrier determines that the entire age band is consuming more than estimated, and the carrier must raise the insurance premiums in order to cover the additional costs of the age band.
Can I lose coverage or have to pay extra if I get sick?
No, it is illegal for a Medicare Supplement plan to cancel coverage or raise your premiums simply because you’re sick or have a variety of medical conditions. The only way a carrier can remove your coverage is if you fail to pay your monthly premiums. Even then, there is usually a 30 to 60 day grace period in which they allow you to catch up on your payments. The easiest and safest way to avoid coverage being terminated is to set up an auto-draft from your bank in order to pay your monthly premiums.
Do Medicare gap insurance plans offer coverage outside of the United States?
Yes, although you won’t find Medicare outside of the US. Coverage works a little differently and it may be different from one company to the next. Most companies will pay your cost of the services you receive while abroad (in emergency and urgently needed care situations only) after you pay a deductible of $250. Once the deductible is paid, you will pay 20% of the billable costs up to the first $50,000 in coverage limits for a lifetime. Once you use up $50,000 in coverage, you are liable for all costs. If something major happens, $50,000 won’t go very far, and there have been stories of hospitals and doctors outside of the US that demand payment upon completion of the services, detaining customers until they pay, or taking and holding their passports until payment is arranged. This is why it’s critical to work with a broker and to discuss additional travel insurance prior to any travel outside of the US.
Do Medicare Supplement Plans cover my prescription medications?
No, they do not. You must purchase prescription drug coverage with a Medicare Part D plan also known as a PDP plan. You can read more about PDP Plans here. Your supplemental coverage does cover the cost of medications administered to you while in the hospital because those are typically billed under part A (Hospital) or part B (Outpatient). Learn more about Prescription Drug Plans.
I heard Medicare Supplement Plan F was cancelled, can my plan be cancelled?
This is false. Medicare Supplement Plan F is still available and isn’t going anywhere. People misunderstood the change that happened on 01/01/2020. On this date, Plan F closed to all new Medicare recipients but remains open for those grandfathered in. If you had your Medicare card and it was active by 12/31/2019, then you have the ability to enroll into a Medicare Supplement Plan F. If Part A of your card says “01/01/2020” or any date after, then you cannot qualify to enroll into Plan F.
The next most comprehensive plan is Plan G. The only different between Plans F and G is that Plan G does not cover Medicare Part B deductibles. For 2020, the Medicare Part B deductible is $198. When you have a Plan G, you simply will make small co-payments to your Doctors or outpatient service centers until you’re paid $198 out of your pocket. After that, your Plan G essential acts like a Plan F.
I work to find the best company for your needs. View all the Medicare Supplement Companies in Maryland I work with.
If I don’t have a guaranteed issue period, what type of health issues could cause my application to be denied?
It’s always good to apply, because each company has slightly different thresholds for accepting or denying an applicant. However, some broad brushstroke issues that may cause your application to be denied are:
- Active Cancers (some, not all)
- Diabetes (some, not all)
- Kidney Disease (some stages, not all)
- Chronic Pulmonary Lung Disorders (some, not all)
- Liver Disease
- Certain Heart Conditions
- Doctor advisements to have surgery that have not been completed yet
- If you were inpatient, in a nursing facility, in a wheelchair within the last 90 days
These are not a complete list of potential health conditions that may trigger a denial of coverage and some variances of the conditions above are acceptable. It’s best to discuss these with your broker to determine which insurance solution would work best for your current health situation. Additionally, certain types of medications listed in your health history will result in an automatic denial of coverage.
I always advise my clients to be upfront and honest, as simply not disclosing an ailment or medication on with your broker or on an application won’t fool the insurance carriers as these items are listed on your internal medical records. In order to apply, you must give the insurance carrier permission to review your health history where they will eventually find a missing ailment or medication.
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