Medigap coverage can save you money
August 1, 2018
Although Medicare Part A and Part B cover a wide variety of services and products when you are in the hospital or being seen as an outpatient, there are still cost sharing “gaps”. These include deductibles, coinsurance costs, and copayments. These additional costs can wreak havoc with your finances. Medicare Supplemental Insurance Policies, also known as Medigap policies, are designed to follow behind Medicare Parts A and B to “fill in these gaps” that are left after Part A and Part B have paid on your claims. These Medigap plans are overseen by the Division of Insurance for each state, however they are subject to federal regulations. Each state can add their additional Medigap rules.
These are standardized policies that pay for part or all (depending on the plan you choose) of the Medicare cost-sharing amounts that you owe. They are private insurance policies that you can purchase after you have both Parts A and B of Medicare, also known as Original Medicare. They are designed to work with Original Medicare only and cannot be used with Medicare Advantage Plans, also known as Part C of Medicare. Most Alaskans have Original Medicare since there are no publicly offered Medicare Advantage plans available in this state. You also will probably not want or need to purchase a Medigap plan if you are already covered by a private insurance policy through a retirement benefit.
There are currently 10 standardized Medigap plans: A, B, C, D, F, G, K, L, M, and N. Note that these are referred to Plan A, Plan B etc., not to be confused with Part A, Part B, Part D of Medicare. You may find someone who tells you that they have Plan E, H, I, or J. These are plans that were available before June 1, 2010, and are no longer sold. Plan F will not be sold starting January 1, 2020; however, those who have plan F will be able to keep that coverage. The term standardized means that the benefits for each plan remain the same no matter which company you choose. However, insurance companies can charge different premiums for the same plan, so it is wise to shop around. In Alaska, there are currently 14 companies that offer Medigap policies plus Alaska Comprehensive Health Insurance Association (ACHIA) which assists Alaskans who are otherwise unable to get insurance. Please note that not every company offers every Medigap plan available.
As stated earlier, you can purchase a Medigap plan once you have Medicare Part A and Part B. When you are at least 65 years of age, have Medicare Part A and Part B, you will have an Initial Enrollment Period for Medigap. This is a six month window in which you will have a guaranteed issue right, which means that you have the right to purchase the Medigap plan of your choice from any company you choose and they cannot deny you coverage and they must give you the best available rate, regardless of your health. There are other times when you may have a guaranteed issue right, like when you lose other supplemental insurance or if you choose to switch back to Original Medicare from a Medicare Advantage plan. It is best to call the State of Alaska, Medicare Information Office at 1-800-478-6065 for guidance if you think you may be eligible.
In the state of Alaska, insurance companies are not required to offer Medigap policies to those under the age of 65, even if they have both Medicare Part A and Part B. There are a few companies that do offer
Medigap coverage to this group, but there are limited policies and they can be quite expensive. The good news for those under 65 is that they will get a new Initial enrollment period when they turn 65 and will at that time have a guaranteed issue right of purchase.
Some costs are covered by all Medigap plans. These include Part A hospital coinsurance. All policies must cover the coinsurance costs from days 61 to 150, plus an additional 365 days at 100 percent.
All Medigap plans must cover the Part B coinsurance. That is the 20 percent that is left after Medicare Part B pays 80 percent for medically necessary outpatient services such as diagnostic tests, durable medical equipment, and provider visits. It will also pick up the co-insurance left after any preventive services, although most preventive services are paid at 100 percent. An example would be diabetes self-management training. Some Medigap plans cover this amount in full and other plans cover a portion of the 20 percent.
All Medigap plans must cover the first three pints of blood if you need a transfusion when in the hospital. And Medigap plans will pay for hospice care coinsurance or co-pays. These are usually related to respite care or hospice-related medications.
Some Medigap plans cover all or part of the following costs:
Part A Skilled nursing facility coinsurance, which this year is 167.50 per day for days 21 to 100.
Part A deductible, the amount you pay out of pocket at the beginning of your hospital stay. This year that is $1,340 per benefit period.
Part B deductible – the amount you pay for Part B services you owe before Part B begins to pay. This year that amount is $183.
Part B Excess charge: This charge can be required by certain providers who do not accept the Medicare approved amount and can be up to 15 percent more than what Medicare will pay on Part B services.
Foreign Travel. Medicare typically does not cover services that are received outside of the U.S., however there are six Medigap plans that will cover emergency care when you are abroad. There certain restrictions to the coverage such as requiring a deductible, will cover 80 percent of the costs, and the need must arise within the first two months of travel.
Even with a Medigap plan there may still be costs that you will have to pick up, such as services and products excluded from Medicare coverage. Routine dental and vision care would be in this category.
The process of choosing the right Medigap plan for you can be a bit of a journey. You will want to determine the best plan for you based on your health history and your finances. The State of Alaska, Medicare Information Office stands ready to assist Medicare beneficiaries. If you are interested in pursuing Medigap coverage, call the toll-free in Alaska number: 1-800-478-6065 and make an appointment. They can walk you through the process and provide some excellent publications to support you in making the best choice of plan.
Nila Morgan is a Certified Medicare Counselor who works at the Anchorage Senior Activity Center.