We have come to the final lap with Medicare. The three articles that have made up this series are in no way a complete analysis on Medicare, but hopefully this information will provide you with a good understanding of the basics of Medicare planning.
Medigap Plans (also known as Medicare Supplement)
Medigap is extra health insurance that is purchased from an insurance company to help control the costs of healthcare expenses. For a monthly premium, a Medigap policy can help pay for things such as deductibles, co-pays, and/or co-insurance of your Basic Medicare (Part A and B). Medigap can also be used for health care expenses if you travel outside the U.S. Medigap policies will not cover things like long term care, dental care, vision care, eye glasses, hearing aids, and private nursing. Medigap can be used to put a maximum cap on your annual medical expenses. This is very useful because Medicare Part A and B do not have a maximum out-of-pocket expense limit. It should be noted, that many Part C plans include some maximum out-of-pocket limit.
Medigap comes in many distinct “Parts” (Medigap Part A through N) and they are standardized. This means that the benefits of each Medigap Plan are the same regardless of the insurance provider. It is important to note that Minnesota, Wisconsin and Massachusetts have different Medigap policies.
Medigap can deny you for a pre-existing condition if you apply for a Medigap policy more than 6 months after you apply for Part B – no matter if you are still working or not. For example, you turn 65 and apply for Part B, but because you are still working you decide to not apply for Part C or Medigap. At age 68, you incur a preexisting condition and so you retire. At that point, you try to sign up for Medigap, but because of your pre-existing condition, the insurance company may deny you. Furthermore, a preexisting condition may not be covered within the first 6 months of signing up for Medigap. Note, that Part C cannot exclude you from coverage because of a preexisting condition, so it ends up being the back-up plan for many savvy people in this position.
Depending on the amount of insurance coverage you are looking to obtain, most iterations of how people get Medicare coverage is as follows:
- Medicare Part A, B, and Part D (least amount of coverage)
- Medicare Part A, B, and Part C (average amount of coverage)
- Medicare Part A, B, D, and Medigap (most amount of coverage)
In the above, Option 2 or 3 are usually the most recommended strategies because of how inexpensive a Part C (Medicare Advantage Plan) can be in comparison to a standalone Part D. To go from Option 2 to Option 3, expect much higher monthly premiums. Those who expect to need that much insurance may benefit from Medigap policy, but because of the higher premiums ($51/month to $568/month, depending on the Plan) it is not for everyone.
Now that we have gone over the basics of Medicare, what are the next steps? If you are looking to get advice or find the strategies that are specific to you, please call our office to schedule an appointment. We have been able to assist a good number of people in making well informed decisions when it comes to Medicare and their individual needs.
It is also important to note that many states offer health insurance advisors and Medicare consultants whose sole objective is helping people evaluate health plans. If you would like to discuss specific Medicare health care plans with your local Medicare office, visit www.shiptacenter.org to find a counselor in your area.