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Medigap Policies (Medicare Supplement Insurance) - Overview

A Medigap policy is health insurance sold by private insurance companies to fill the "gaps" in Original Medicare Plan coverage. Medigap policies help pay some of the health care costs that the Original Medicare Plan doesn't cover. If you get your health care from the Original Medicare Plan, you use your red, white, and blue Medicare card. The card tells you if you have Medicare Part A, Medicare Part B, or both. You don't need Medicare Part B to be in the Original Medicare Plan. However, you generally must have Medicare Part A and Part B to buy a Medigap policy.

The Original Medicare Plan pays for many health care services and supplies, but it doesn't pay all of your health care costs. There are costs that you must pay, like coinsurance, copayments, and deductibles. These costs are called "gaps" in Medicare coverage.

You might want to consider buying a Medigap policy to cover these gaps in Medicare coverage. Some Medigap policies also cover benefits that Medicare doesn't cover, like Medicare Part B excess charges and emergency health care while traveling outside the United States. A Medigap policy may help you save on out-of-pocket costs. If you buy a Medigap policy, you will have to pay a monthly premium to the private insurance company that sells you the Medigap policy.

Medigap policies only help pay for claims paid through Original Medicare.

NOTE: Prescription Drug Coverage -- The new Federal law that provided for Medicare to start offering prescription drug coverage on January 1, 2006, also made changes that affected Medigap policies that include prescription drug coverage:
• As of January 1, 2006 you can't buy a new Medigap policy covering prescription drugs.
• If the Medigap policy that you have now covers prescription drugs, you should have received detailed information in the mail from your Medigap insurance company about your drug options.
• You need to decide by May 15, 2006 which drug option meets your needs. For help making your decision, visit http://www.medicare.gov/ on the web, or call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048.

NOTE: Terminology -- Much of the specialized terminology used in this topic and in conjunction with Medigap policies and Medicare is defined in the Medigap Policies (Medicare Supplement Insurance) - Glossary topic.

You may read the remainder of this topic in sequence, or jump to a specific section by clicking one of the links below:

·          What is a Medigap policy?

·          Who can buy a Medigap policy?

·          Medigap policies for people under age 65 and eligible for Medicare because of a disability or End-Stage Renal Disease (ESRD)

·          Medigap policies for people age 65 or older and eligible for Medicare because of a disability or End-Stage Renal Disease (ESRD)

·          Right to suspend a Medigap policy for people with Medicare who have a disability

·          Additional Information

·          See Also Topics

What is a Medigap policy?

A Medigap policy is health insurance sold by private insurance companies to fill the "gaps" in Original Medicare Plan coverage. Medigap policies help pay some of the health care costs that the Original Medicare Plan doesn't cover. If you are in the Original Medicare Plan and have a Medigap policy, then Medicare and your Medigap policy will both pay their shares of covered health care costs.

Insurance companies can only sell you a "standardized" Medigap policy. These Medigap policies must all have specific benefits so you can compare them easily. Since 1992, there have been 10 standardized Medigap policies called Medigap Plans "A" through "J." In 2005, two new standardized Medigap policies became available, called Medigap Plans "K" and "L." You may be able to choose from up to 12 different standardized Medigap policies (Medigap Plans A through L).

Medigap policies must follow Federal and state laws. These laws protect you. The front of a Medigap policy must clearly identify it as "Medicare Supplement Insurance." Each Medigap Plan, A through L, has a different set of basic and extra benefits.

It's important to compare Medigap policies, because costs can vary. The benefits in any Medigap Plan A through L are the same for any insurance company. (For example, the benefits in one insurance company's Medigap Plan C are the same as any other insurance company's Medigap Plan C.) Generally, the difference between Medigap policies sold by different insurance companies might be:

·          how the insurance company sets its own premiums

·          if the Medigap policy is sold as Medicare SELECT (limiting your choices of health care providers), and

·          whether there is a pre-existing condition waiting period.

Also, insurance companies that sell Medigap policies don't have to offer every Medigap policy (Medigap Plans A through L). Each insurance company decides which Medigap policies it wants to sell.

In most cases, as long as you pay your premium, your Medigap policy is guaranteed renewable. This means it is automatically renewed each year. Your coverage will continue year after year as long as you pay your premium.

If you and your spouse both want Medigap coverage, you each must buy separate Medigap policies. Your Medigap policy won't cover any health care costs for your spouse.

A Medigap policy only works with the Original Medicare Plan. If you join a Medicare Advantage Plan or other Medicare Health Plan, your Medigap policy can't pay any deductibles, copayments, or other cost-sharing under your Medicare Advantage Plan or other Medicare Health Plan. Therefore, you may want to drop your Medigap policy if you join a Medicare Advantage Plan or other Medicare Health Plan. However, you have a legal right to keep the Medigap policy.

Who can buy a Medigap policy?

To buy a Medigap policy, you generally must have Medicare Part A and Part B. You are guaranteed the right to buy a Medigap policy if you are:

·          in your Medigap open enrollment period, or

·          covered under a Medigap protection.

If you are under age 65 and you are disabled or have End-Stage Renal Disease (ESRD), you might not be able to buy a Medigap policy until you turn age 65.

Medigap policies for people under age 65 and eligible for Medicare because of a disability or End-Stage Renal Disease (ESRD)

You may have Medicare before age 65 due to:

·          a disability, or

·          ESRD (permanent kidney failure requiring dialysis or a kidney transplant).

If you are a person with Medicare under age 65 and are disabled or have ESRD, you might not be able to buy the Medigap policy you want (or any Medigap policy) until you turn age 65. Federal law doesn't require insurance companies to sell Medigap policies to people under age 65.

However, some states require Medigap insurance companies to sell you a Medigap policy, at certain times (during a limited Medigap open enrollment period), even if you are under age 65.

These states are listed below. If you have questions, you should call your State Health Insurance Assistance Program.

As of December 2008, the following states required insurance companies to offer at least one kind of Medigap policy to people with Medicare under age 65:

* Medigap policy not available to people with ESRD under age 65.

** Medigap policy only available to people with ESRD under age 65.

Even if your state isn't on this list, some insurance companies may voluntarily sell Medigap policies to some people under age 65. Whether or not your state requires insurance companies to sell to you, Medigap policies sold to people under age 65 may cost you more than policies sold to people over age 65. However, some states require that people under age 65 who are buying a Medigap policy are given the best price available during the Medigap open enrollment period.

Remember, if you live in a state that has a Medigap open enrollment period for people under age 65, you will still get another Medigap open enrollment period when you turn age 65. You may have other choices of Medigap policies or be able to get a lower premium at that time.

Also, if you join a Medicare Advantage Plan or other Medicare Health Plan and your coverage ends, you may have the right to buy a Medigap policy. If you have questions, you should call your State Health Insurance Assistance Program.

Medigap policies for people age 65 or older and eligible for Medicare because of a disability or End-Stage Renal Disease (ESRD)

The first six months after you turn age 65 and are enrolled in Medicare Part B is when you are in your Medigap open enrollment period. It doesn't matter that you have had Medicare Part B before you turned age 65. During this time:

·          you can buy any Medigap policy from any insurance company, and

·          insurance companies can't refuse to sell you a Medigap policy due to a disability or other health problem, or charge you a higher premium (based on health status) than they charge other people who are 65 years old.

When you buy a Medigap policy during your Medigap open enrollment period, the insurance company must shorten the waiting period for pre-existing conditions by the amount of creditable coverage you have. If you had Medicare (Part A and/or Part B) for more than six months before you turned 65 years old, and didn't have a break in coverage of 63 or more days, you won't have a pre-existing condition waiting period because Medicare counts as creditable coverage.

Right to suspend a Medigap policy for people with Medicare who have a disability

If you are under age 65, have Medicare, have a Medigap policy, and have employer group health plan coverage, you have a right to put your Medigap policy on hold ("suspend"). If you want to suspend your Medigap policy, you should call your Medigap insurance company. Your Medigap coverage will stop, and you don't have to pay the monthly premium while you are enrolled in your or your spouse's employer group health plan. If you want your Medigap policy back (reinstated), you will have to pay a monthly premium. You won't have to pay more when you start your Medigap policy again than you would otherwise have to pay if you had not suspended your policy.

If, for any reason, you lose your employer group health plan coverage, you can get your Medigap policy back. Within 90 days of losing your employer group health plan coverage, you must notify your Medigap insurance company that you want your Medigap policy back. If your Medigap policy included prescription drug coverage, you can still get your Medigap policy back but without the prescription drug coverage.

Your Medigap benefits and premiums will start again on the day your employer group health plan coverage stops. The Medigap policy must have the same benefits and premiums it would have had if you had never suspended your coverage. Your Medigap insurance company can't refuse to cover care for any pre-existing conditions (health problems) you have. So, if you are disabled and working, you can enjoy the benefits of your employer's insurance while knowing that you will be able to get your Medigap policy back when you need it.

Additional Information

This topic provides a brief overview of Medigap policies. Substantially more comprehensive information may be found in CMS publication #02110, Choosing a Medigap Policy: A Guide to Health Insurance for People With Medicare, available online at:
http://www.medicare.gov/Publications/Pubs/pdf/02110.pdf

Much of the specialized terminology used in conjunction with Medigap policies and Medicare is defined in the Medigap Policies (Medicare Supplement Insurance) - Glossary topic.

See also:

Medicare - Overview

Medicare Part D Prescription Drug Coverage - Overview

Medigap Policies (Medicare Supplement Insurance) - Glossary

Source

CMS publication #02110, Choosing a Medigap Policy: A Guide to Health Insurance for People With Medicare, available online at:
http://www.medicare.gov/Publications/Pubs/pdf/02110.pdf

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