What are Supplemental Plans?

What are Supplemental Plans?

 Supplemental Plans, commonly referred to as “Medigap” Coverage are health insurance policies that work in-conjunction with Original Medicare. They are administered by Private Insurance Companies and are regulated by the Centers for Medicare/Medicaid Services (CMS).

Medigap Plans are broken into 11 different types of plans, A thru N that each cover specific types of coverage. Plan A will offer less coverage than Plan N, but please note that not all plans are offered to new Medicare beneficiaries. Currently, the most robust offering is Plan G, as it covers everything available to Medigap Plans except for the Part B Deductible.

Please note that the coverage within each type of plan is the exact same across the country, with the exception of 3 states (MA, WI, MN), the only difference is the cost and the rate of inflation at which a plan may grow.

So, a Medigap Plan A policy will be the same in terms of what is covered in Arkansas as it is in Rhode Island. The only difference may be the premium in any given year.

What are those gaps?

 Original Medicare (Part A and Part B) has out of pocket costs that are considered to be “gaps” within that coverage.

Examples of those “gaps” within Part A are:

Deductibles: $1,408 per incident in 2020. Please note that is possible for a Medicare beneficiary to have multiple incidents within any given year.

Co-pays: Within Part A the Co-pay is specific to Hospital Stays, Skilled Nursing and Hospice.

Hospital stays: Medicare covers the first 60 days of any qualified Medicare stay in a hospital after the current year’s deductible has been met.

  • Between days 61 – 90 there is a co pay of $352 per day per stay while Medicare covers all other costs.
  • 91-150, the co-insurance is $704 per day per stay. These are “lifetime” days and there are only 60 available. Once exhausted there is no coverage after the 90th day in a hospital.
  • All costs for each day beyond 150 days are covered by the beneficiary.

All Medigap Plans cover these costs and extend coverage through the year.

Skilled Nursing (Rehab):

  • Days 1–20: $0 for each benefit period .
  • Days 21–100: $176 coinsurance per day of each benefit period.
  • Days 101 and beyond: all costs.

Certain Medigap Plans will cover most of this cost. According to Senior65 a Medigap Plan may save a person over $12,100.00 if this care is needed within a given year.

Hospice: There may be, according to CMS, a 5% excess charge for physician care.

Certain Medigap Plans will cover all of this cost.

Part B Gaps:

Co-pay: Typically, 20% for most services.

Most Medigap Plans will cover this cost.

Excess charge: 15% specifically for physician costs.

Only the Medigap Plan G will cover this cost.

Other Gaps:

Foreign Travel: Original Medicare will not cover any health costs while incurred out of the country.

Certain Medigap Plans will cover 80% of this cost.

Blood: Medicare does NOT cover blood.

Most Medigap Plans will provide coverage for the cost of 3 pints of blood.

What are the costs associated with a MediGap Plan?

Premiums: Determined by the private insurance provider that is administering the plan. Though benefits are identical within all Medigap plans, premiums widely vary from company to company, year to year, as well as state to state.

Calculating premiums: 3 ways that Medigap Plan premiums are calculated:

  1. Issue Age: The premium is based on the amount when first purchased. The premium may or may not increase each year. Premiums only increase due to inflation; they never increase due to age.
  2. Attained Age: The premium is based on current age at time of policy being purchased. The premium will continue to increase each year.
  3. Community Rating: Everyone pays the same premium regardless of age. * states provide this coverage: AR, CT, MA, ME, MN, NY, VT, WA.

Enrollment into Supplemental Plans:

 Supplemental Plans (Medigap) are available only to those who are enrolled in Original Medicare (part A and B).It is illegal to own a Medicare Advantage Plan (Part C) and a Medigap Plan at the same time.

Availability starts when Part B coverage is obtained. A beneficiary has a 6-month guaranteed issue opportunity, meaning they cannot be denied or rated for coverage. They must be accepted by the carrier.

Once the 6-month time frame ends, they may be subject to being rated or even denied by the carrier when trying to purchase a plan.

After the 6-month guaranteed issue expires a beneficiary can only purchase a Medigap Plan during open enrollment which is October 15 to December 7 of any year. The effective date of the policy will start on January 1 of the next year.

Please note: That a change of residency, from one state to another, will trigger the Special Enrollment Period and a person can enroll into any Medigap Plan that they so choose at any period, but they will still be subject to the terms and conditions of the private health insurer.

Medigap Plans:

Medigap Benefits Medigap Plans
A B C D F* G* K L M N
Part A coinsurance and hospital costs Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Part B coinsurance or copayment Yes Yes Yes Yes Yes Yes 50% 75% Yes Yes***
Blood (first 3 pints) Yes Yes Yes Yes Yes Yes 50% 75% Yes Yes
Part A hospice care coinsurance or copay Yes Yes Yes Yes Yes Yes 50% 75% Yes Yes
Skilled nursing facility care coinsurance No No Yes Yes Yes Yes 50% 75% Yes Yes
Part A deductible No Yes Yes Yes Yes Yes 50% 75% 50% Yes
Part B deductible No No Yes No Yes No No No No No
Part B excess charge No No No No Yes Yes No No No No
Foreign travel exchange (up to plan limits) No No 80% 80% 80% 80% No No 80% 80%
Out-of-pocket limit in 2020** N/A N/A N/A N/A N/A N/A $5,880 $2,940 N/A N/A

Medigap Plan C and F are not available to new Medicare beneficiaries staring in 2020.

* Plans F and G also offer a high-deductible plan in some states. With this option, you must pay for Medicare-covered costs (coinsurance, copayments, and deductibles) up to the deductible amount of $2,340 in 2020 before your policy pays anything. (Plans C and F aren’t available to people who are newly eligible for Medicare on or after January 1, 2020.)

** For Plans K and L, after you meet your out-of-pocket yearly limit and your yearly Part B deductible ($198 in 2020), the Medigap plan pays 100% of covered services for the rest of the calendar year.

*** Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to a $50 copayment for emergency room visits that don’t result in inpatient admission.

If you live in Massachusetts, Minnesota or Wisconsin Medigap Policies have a different set of standards.

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