Editor's Note: As of Sept. 5, the original story has been updated to reflect the most recent Medigap data and terms.
1. Is there an open enrollment period for Medigap policies?
Yes, an open enrollment period for selecting Medigap policies guarantees that, for six months immediately following the effective date of enrolling in Medicare Part B, a person age 65 or older cannot be denied Medigap insurance or charged higher premiums because of health problems.
No matter how a person enrolls in Medicare Medical Insurance — whether by automatic notification or through an initial, special or general enrollment period — a person is covered by the guarantees if both of the following are true:
2. Does a Medicaid recipient need Medigap insurance?
Low-income people who are eligible for Medicaid usually do not need additional insurance. Medicaid pays for certain health care benefits beyond those covered by Medicare, such as long-term nursing home care. In many cases it is illegal to sell a Medigap policy to someone who is receiving Medicaid. If a person purchases Medigap insurance and later becomes eligible for Medicaid, he can ask that the Medigap insurance benefits and premiums be suspended for up to two years while he is covered by Medicaid. If the person becomes ineligible for Medicaid benefits during the two years, the Medigap policy is automatically reinstated, provided the person gives proper notice and begins paying premiums again.
3. Are there federal standards for Medigap policies?
Yes, Congress has established federal standards for Medigap policies. Most states have adopted regulations limiting the sale of Medigap insurance to no more than 10 standard policies. One of the 10 is a basic policy offering a “core package” of benefits (Plan A). The 10 standardized plans are identified as follows: A, B, C, D, F, G, K, L, M, and N. (Note: As of June 1, 2010, Plans E, H, I, and J are longer sold. Plans M and N became available June 1, 2010.) As noted earlier, Plan A is the core package. Plans B, C, D, F, G, M, and N each have a different combination of benefits, but they all include the core package. Plans K and L do not include the core benefit package; they instead offer catastrophic coverage. The basic policy, offering the core package of benefits, is available in all states. The availability of other plans varies from state to state.
The core package of benefits which policies A through G, M, and N must contain includes the following benefits:
4. What additional benefits can be offered in the standard Medigap plans?
The following additional benefits above the basic core benefits can be covered:
- The entire $1,184 Hospital Insurance deductible.
- The $148.00 a day coinsurance for days 21-100 of skilled nursing home care under Hospital Insurance.
- The $147 Medical Insurance deductible.
- 80% of the “balance billing” paid by Medical Insurance beneficiaries whose doctors do not accept assignment.
- 100% of lawful balance billing.
- 80% of the Medicare-eligible costs of medically necessary emergency care when the insured is traveling outside the United States.
- “Innovative benefits” that are appropriate, cost-effective, and consistent with the goal of simplifying Medigap insurance — with prior approval by the state insurance commissioner.
- 50% of outpatient prescription drug costs, subject to a $250 deductible with an annual maximum of $1,250 (“basic prescription drug benefit”). (This benefits is no longer available to new customers, as of Jan. 1, 2006.)
- 50% of outpatient prescription drug costs, with a $250 deductible and a $3,000 annual maximum (“extended prescription drug benefit”). (This benefits is no longer available to new customers, as of Jan. 1, 2006.)
5. What benefits are provided in each of the standard Medigap plans and the high deductible Medigap plans?
The Medigap plans offer the following benefits:
Plan A is the basic core benefit package (see Q3).
6. What are Medicare SELECT policies?
The difference between Medicare SELECT and regular Medigap insurance is that a Medicare SELECT policy may (except in emergencies) limit Medigap benefits to items and services provided by certain selected health care professionals or may pay only partial benefits when the patient gets health care from other health care professionals.
7. Should a person purchase the most comprehensive policy if he or she can afford the premiums?
Not necessarily. A person must determine which benefits he or she is likely to need before purchasing a Medigap policy. Often, a person does not need the most comprehensive policy.
For example, Plan A is the least expensive policy and offers the basic core package of benefits. Plans F and G might be considered if a person uses nonparticipating doctors — those who charge more than the amount approved by Medicare; however, excess charges are limited to 115% of what Medicare pays. If the doctors charge no more than the amount approved by Medicare, less expensive policies such as Plan C or Plan D may be appropriate. Plan D also includes important benefits not covered by Plan A, such as coverage of custodial care at home following an illness or injury and the cost of coinsurance for skilled nursing home care.
8. What Medigap insurance protections are there for those enrolled in the Medicare Advantage program?
For many years Medicare law allowed for Medicare-covered services to be furnished to individuals through HMOs that contracted with Medicare. Medicare Advantage expands the types of health plans that can contract with Medicare to enroll beneficiaries.
A person who currently has a Medigap policy may enroll in a Medicare Advantage plan and can keep the Medigap policy after enrollment. Keeping the Medigap policy may give a person time to determine whether to stay in the Medicare Advantage plan or return to the original Medicare plan with Medigap insurance. However, expenses paid for by the Medicare Advantage plan will not be reimbursed by the Medigap insurer. Eventually the person should drop Medigap coverage if satisfied with the Medicare Advantage plan.
9. Are there rules for selling Medigap insurance?
Yes, both state and federal laws govern sales of Medigap insurance. Companies or agents selling Medigap insurance must avoid certain illegal practices.
It is unlawful to sell or issue Medigap insurance to an individual entitled to benefits under Hospital Insurance (Part A) or enrolled under Medical Insurance (Part B). Additionally, it is unlawful to sell or issue: (1) a health insurance policy with knowledge that the policy duplicates health benefits the individual is otherwise entitled to under Medicare or Medicaid; (2) a Medigap policy with knowledge that the individual is entitled to benefits under another Medigap policy; or (3) a health insurance policy, other than a Medigap policy, with knowledge that the policy duplicates health benefits to which the individual is otherwise entitled.