What is medigap insurance and who's eligible?
A medigap insurance policy covers many medical costs that Medicare insurance may not pay for. If you're near or already age 65, you probably know that Medicare ends up paying for only about half of all medical costs. Part of this slack is taken up by Medicare Part D prescription drug plans , which pay some of the high cost of medicines. And some people fill coverage gaps by leaving traditional Medicare and joining a Medicare Part C Medicare Advantage managed care plan .
You or someone you're caring for may be part of the majority, though, that stays in traditional Medicare Part A and Part B. If so, you may want to investigate buying a medigap supplemental insurance policy, with 10 types of plans to choose from.
More about medigap insurance
Not everyone is allowed to buy any medigap policy at any time. Whether you can buy a particular policy, and under what terms, depends on when you apply and what other coverage you've had. Understanding these restrictions can help you take full advantage of the medigap policies available to you.
Medigap insurance policies fill part of the gaps in medical costs that Medicare Part A and Medicare Part B don't pay. The types of medigap policies that can be sold are regulated by the federal government, but the policies themselves are sold by private insurance companies. If you're enrolled in Medicare Part A and Part B, you'll find that both Part A and Part B have deductibles, copayments, and uncovered expenses that you're personally responsible for. A medigap policy pays some or all of these costs.
If you're enrolled in a Medicare Part C "Medicare Advantage" managed care plan and want to keep that plan, you do not need a medigap insurance policy.
What medigap insurance policies is someone eligible for at age 65?
Most people enroll in Medicare at age 65. Within six months of first signing up for Medicare Part B, you have "guaranteed enrollment" in a medigap policy. This means that you can buy any medigap policy offered in the state where you live, in any of 10 plan categories.
An insurance company must sell you the policy of your choice without any medical screening, regardless of your medical history. The company isn't permitted to place any extra limits on the coverage offered. And you must be offered the policy for the same monthly premium as everyone else buying the same policy when first eligible for Medicare.
Medigap and managed care
Can someone who enrolled in a Medicare Part C Medicare Advantage plan switch to a managed care plan?
If you joined a Medicare Part C " Medicare Advantage" managed care plan when you were first eligible for Medicare at age 65 but you leave that plan within a year, you can buy any medigap policy offered in your state, without any medical screening, limits on coverage, or higher premiums. In other words, you return to the same position you would have been in had you bought a policy within the first six months of turning 65.
Is a person who's been dropped by a Medicare Part C Medicare Advantage plan now able to buy a medigap policy?
With unfortunate frequency over the past few years, some Medicare Part C Medicare Advantage managed care plans have decided to quit doing business in certain geographic areas. When they do, they're allowed to simply drop all the people who were enrolled in the plan. If that happens to you, within 63 days of the end of your Medicare Part C plan you can enroll in any medigap Plan A, B, C, or F policy sold in your state.
You're guaranteed enrollment in any one of these policies you choose, without any medical screening and regardless of your medical history. You're eligible for the same terms and conditions as anyone else buying the policy for the first time. And your monthly premium will be the same as that of anyone else of your age who already has the policy.
If you originally had a medigap policy and dropped it to join a Medicare Part C Medicare Advantage plan that has now dro pped you, you have the right to buy the same medigap policy you used to have, regardless of the plan type.
Can someone who didn't buy a medigap insurance policy or enroll in a Medicare Part C plan at age 65 buy a medigap policy now?
If you didn't buy a medigap policy within the first six months of enrolling in Medicare Part B and you weren't enrolled in a Medicare managed care plan that dropped you, you can still buy a medigap policy. But now the insurance companies have all the leverage -- Medicare regulations do very little to help you. An individual insurance company can decide whether it wants to sell you a particular policy (though if they do, it has to be one of the 10 standard plans) and under what terms.
For example, the insurance company can require you to undergo medical screening. Based on your age or health history, the company might offer to sell you some policies but not others. It might also place limits on coverage, such as six months of exclusion before coverage begins for certain conditions. The company can also charge a higher premium than for other people with the same policy, and it can include policy provisions that increase premiums faster or more abruptly than for other policy holders.
Medigap coverage if someone moves or wants to switch policies
If a person moves, will a medigap insurance policy still cover medical costs?
Medigap policies are sold state by state. Not all policies are available in every state, and the same policies may cost more or less in different places. If you buy a medigap policy in one state but then moves to another, the insurance company must continue to honor the policy. This is true even if the company doesn't sell that same policy in the state where you now live. However, the company does have the right to raise premiums for the policy if the cost of medical care is higher in the state where you moved.
The insurance company can't just charge whatever it wants, though. It must apply for a premium increase with the department of insurance in the state where you now live. The department of insurance will likely grant a premium hike to the level of similar policies sold in the state.
If you're enrolled in a Medicare Part C Medicare Advantage plan but move outside that plan's service area, the plan doesn't have to continue covering you. You'll need to look for a new managed care plan that serves the area where you now lives, or you can return to traditional Medicare Part A and Part B. If you do return to traditional Medicare Part A and Part B, you're guaranteed the right to buy any Plan A, B, C, or F medigap policy offered in the state where you now live. You can buy any one of these policies without any medical screening, regardless of your medical history, and for the same premium as anyone else your age who bought the same policy at age 65.
Can someone switch to a different medigap policy?
You mi ght learn of a medigap insurance policy that seems better for you than the one you now have. Unless you're still within six months of when you first enrolled in Medicare Part B, however, an insurance company isn't required to sell you that policy. The company may first require you to undergo a medical screening, which could include examination of your health history and a physical exam by an insurance company doctor; if the company doesn't like what it finds, it could reject you.
Or the medigap insurance company could place a preexisting illness exclusion on the new policy that wouldn't provide you with coverage for up to six months for any condition you've been treated for within the previous six months. The company can also charge a higher premium than it does for people buying the same policy when first enrolling in Medicare at age 65.