Deciding on supplemental 'Medigap' insurance
July 1, 2019
Perhaps your 65th birthday is approaching, signaling that you are approaching your Initial Enrollment Period to sign up for Medicare. Meanwhile, you may be getting postcards and other mail informing you that you need to sign up for Supplemental Medicare or Medigap. You may also be getting phone calls with the same message – that you should purchase a plan right away! What is that all about?
There are some people who may not want or need a Medigap plan. For instance, if you will have Medicare and Medicaid, if you have retiree coverage, or if you are retiring to the lower 48 and plan on purchasing a Medicare Advantage plan, you probably don’t want to buy a Medigap plan.
In Alaska, there are four parts of Medicare that you should consider. Part A, B, D and Medigap.
Coverages, deductibles and co-pays
As a very brief overview, Medicare Part A helps cover the cost of in-patient costs in the hospital, in-patient costs in a skilled nursing facility, it pays if you need a “skilled” level of home health care if you are determined to be homebound, and it covers hospice care if it is determined that you have six months or less (in all probability) to live and choose to have palliative or comfort care rather than seek to cure conditions.
Part B covers many out-patient services such as provider visits, out-patient surgery, ER visits, out-patient diagnostic tests including labs and x-rays, out-patient physical, occupational and speech-language therapy, durable medical equipment such as wheelchairs, walkers, CPAP machines, oxygen, diabetic testing supplies and more. Part B also covers a number of preventive screenings and vaccinations, most of which are covered at 100%.
It sounds pretty comprehensive, but even though Medicare Parts A and B cover such a wide variety of products and services, it is not 100% coverage – there are gaps.
Take for example the Part A deductible. When you are admitted into the hospital, a “benefit period” opens. Each benefit period has a deductible for which you are responsible. This year that deductible is $1,364. The benefit period stays intact the entire time you are in the hospital and for 60 days after you are discharged. If you are re-admitted back into the hospital within those 60 days, you are still in the same benefit period and no new deductible is charged.
However, if 60 days elapses and then you are re-admitted, you are in a new benefit period and a new deductible is charged. So, theoretically, there can be more than one benefit period each year. After that deductible has been charged, the first 60 days you are in the hospital, Medicare picks up 100% of your costs including your semi-private room, nursing services, food, durable medical equipment, medications, procedures, etc. You have no co-pays during this time. However, if you stay hospitalized longer than 60 days, day 61 through 90, you begin to pay a co-pay of $341 per day in 2019. Days 91 through 150, that co-pay raises to $682 per day. Those days are considered “Life-time Reserve” days and can only be used one time. After day 150, you are responsible for all costs.
There are other co-pays as well. If you are transferred to a skilled nursing facility after spending three days in the hospital, Medicare will pay 100% for the first 20 days. However, for days 21 through 100, you will be charged a co-pay of $170.50 per day. After day 100, you will be responsible for all costs. Medicare has a monthly premium which you are responsible to pay. Then there is an annual deductible. This year the deductible is $185. After the deductible has been met, Medicare pays 80% of your medically necessary products and services. You are responsible for 20%.
Plans that cover the gaps
All of these costs that Medicare Part A and Part B do not cover are referred to as gaps. Hence we call the coverage that picks up those costs “Medigap” insurance.
There are 10 different Medigap plans available in Alaska and 13 companies that are licensed to sell Medigap plans in our state. All of the plans are designated by a letter of the alphabet, hence we have Plan A, B, C, etc. all the way to plan N. There are a few letters missing; E, H, I and J. These plans are no longer available for purchase, but those who have them are still able to enjoy their benefits. Not every company offers every plan, but all must offer Plan A, the basic coverage, and then Plan C or F.
Timing is important
There is an advantage to enrolling in a Medigap plan in a timely manner. When you are 65, have Medicare Part A and B, you have a six-month window called the Open Enrollment Period for Medigap. During this time frame, you have a guaranteed issue right. This means that you can purchase any plan you like from any company that sells it and they cannot deny your application, they cannot charge you more than anyone else of your age and your gender. And if you have had health insurance up to this time, they cannot make you wait for coverage or do medical underwriting. After the Open Enrollment Period is over, these privileges may not be available.
Follow these steps
There are four steps to getting a Medigap plan:
1) Review the plans available and determine which best fit your interest.
2) Compare the cost of that plan or plans with the companies that offer them to determine who will give you the best pricing option.
3) Research the performance of that company’s service by calling the plan, calling the Division of Insurance for the State of Alaska, checking with the Better Business Bureau (BBB) for their rating, and asking other Medicare beneficiaries what their experience has been.
4) Call the toll-free number for the plan and ask to enroll.
Medigap plans can make a significant difference in your out of pocket expenses and ensure that you don’t end up with unpleasant surprises in the way of medical costs. If you would like more information about Supplemental Medicare or Medigap plans, call the Alaska Medicare Information Office at 1-800-478-6065 or check out their website at http://www.medicare.alaska.gov, where you will find some excellent publications that will walk you through the Medigap maze.
Nila Morgan is a Certified Medicare Counselor who works at the Anchorage Senior Activity Center.