Medicare Supplemental Insurance - Medigap

Traditional Medicare Plans Parts A & B don’t cover every medical bill; like many insurance plans there are annual deductibles and co-payments for most services. To help offset these costs, it is possible to purchase a supplemental policy (also known as a Medigap policy). Both federal and state laws regulate these policies which are provided by private insurance companies. There are twelve federally standardized options for medigap policies, unless the beneficiary lives in Wisconsin, Massachusetts, or Minnesota (these three states have their own standards for medigap policies). It is important to understand that while the coverage provided under the policies themselves are standardized, the cost of premiums are not. It’s a good idea to shop around for the best price for a policy that meets the specific needs of the senior.

Most health insurance companies provide some type of medigap policy. If the beneficiary has healthcare coverage through a retirement plan, his coverage was probably converted to a Medicare supplement when he became eligible for Medicare. Supplemental policies can be confusing, and I’ve seen beneficiaries who have two or three different supplemental policies to their Medicare plan. This doesn’t make sense – it’s expensive and only one plan would actually pay for services while the others would collect monthly premiums without providing any benefits. It’s not ethical for a medigap policy provider to knowingly sign up a client who already has a policy, unless the beneficiary is willing to drop the coverage under the first plan. However, as mentioned previously, the sales person may not know, may not understand, or may not care that the customer already has coverage and will sell the policy anyway.

Medigap policies make sense for beneficiaries who have chronic conditions – but they may not appear to make sense for someone who is fairly healthy and has the ability to pay privately for the deductibles and co-payments. Problems arise when a person with no supplemental policy suddenly becomes sick and is faced with huge out of pocket expenses – a supplemental policy will cover ongoing bills but won’t pay the past bills retroactively.

Insurance agents often encourage a client to buy the policy that pays the highest commission to the agent. Even if the premiums cause an obvious financial hardship for the clients, agents aren’t required to provide information about state or federal programs that might help cover medical costs and most agents aren’t even aware that such programs exist. Seniors who have used the same insurance company for many years usually remain loyal to that company rather than to shop around for a better product. This attitude can cost thousands of dollars as they overpay for a product that doesn’t benefit them a whole lot, if at all.

How to Choose a Medigap Policy using www.Medicare.gov

• On the right of the screen, click on Health & Drug Plans.
• To the right, click on Find and Compare Medigap Policies
• On the next screen, titled Find & Compare Medigap Policies, fill in the requested information (Zip Code, Age Range & Health Status); click Continue.
• Follow the prompts from there.

It’s a good idea to review your coverage every year to ensure the policy that you’ve chosen fits your needs. Make sure that you don’t change policies without carefully considering the benefits of your current policy: Medicare beneficiaries who are under the age of 65 and have coverage from an insurance policy through a previous employer will want to carefully research the information about supplements available in the area. Dropping coverage under an existing policy might create a problem because, most of the time, if you drop that coverage the company won’t allow you to get it back at a later date. This is also true for beneficiaries whose medigap policy is part of a retirement package. It’s a good idea to compare your retirement policy with those available in the community, because you may be able to find a less expensive option that covers more costs.