Medigap Insurance

Medigap Policies
Health Screening
Waiting Period
Premiums
Basic Benefits in all A-N Plans
Modernized Medigap Plans K and L

Medigap Policies
Insurance companies sell supplemental insurance to cover part, or all, of Medicare's co- payments and deductibles. These are known as Medigap or Medicare supplement insurance policies. Some plans may include benefits for services that Medicare doesn´t pay for, such as emergency medical costs incurred while traveling outside the U.S. or excess charges when seeing a provider who does not accept Medicare assignment. A Medigap plan is guaranteed to be renewable as long as the premium is paid. It cannot be cancelled because of a person´s health condition or for any other reason other than non-payment of the premium.

By law, companies can offer only 10 Modernized Medigap benefit packages, referred to as plans A through N. The benefits of these plans are the same regardless of which company sells it. For example, Medigap Plan F has the same benefits no matter which company sells it.

A high deductible rider can also be sold with Plan F, which means that the policy will pay only after you have met the annual deductible ($2,000 in 2010). Once the deductible is met, the plan pays its benefits for the rest of that year. The annual deductible increases each year. (See attached chart for details)

A Medicare SELECT plan is a hybrid and combines a Medigap policy with a Preferred Provider Organization (PPO) plan. A PPO is a group or network of providers who have agreed to limit their charge to enrollees who utilize providers in the network. A Medicare SELECT plan covers part or all of your Medicare co- payments and deductibles if you see providers in the plan´s network. Some Medicare SELECT policies may also require you to pay a small co- payment when you visit a doctor, a feature that is not allowed in other standardized Medigap polices. If you use providers outside the network, you may have to pay most or all of the cost for the services you use.

The California Department of Insurance regulates insurance companies that sell most Medigap policies. The Department of Managed Health Care regulates Medicare SELECT policies. All Medigap plans are sold through licensed insurance agents, by sponsoring groups or through the mail. Retiree plans offered by former employers or unions do not have to conform to these standardized requirements and are not called Medigap policies, even though they may work in a similar way to supplement Medicare.

Note: If you receive full Medi-Cal benefits you do not need a Medigap policy; in fact it is illegal for companies to sell you one. If you already have a Medigap policy when you become eligible for Medi-Cal, you have the option of keeping it to see providers that don´t take Medi-Cal, or placing your policy on hold for up to twenty-four months. If you have Medi-Cal with a share of cost (SOC), you do have the option of buying a Medigap policy.

back to list

Health Screening
You may apply for a Medigap policy at any time, but companies selling Medigap plans can refuse to sell you a plan because of a past or current health condition. Insurance companies may require that you go through health screening before deciding to sell you a Medigap policy. There are certain times however when, by law, companies must sell you a Medigap plan regardless of your health condition. These times are called "Open Enrollment," which is six months following enrollment in Medicare Part B, and "Guaranteed Issue" periods, which follow specific events that result in the loss of existing coverage. For more information on the Medigap open enrollment period and guaranteed issue rights, see our fact sheet "Supplementing Medicare: Your Right to Purchase a Medigap Policy" at cahealthadvocates.org. Note: Medicare beneficiaries younger than 65- years-of-age who have Medicare because of a disability, have the right to buy a Medigap policy during the first six months after signing up for Medicare Part B, unless they have End Stage Renal Disease (ESRD). Companies are allowed to charge a higher premium for people who are not yet 65 years old. For more information, please see our fact sheet "Medicare for People with Disabilities" at cahealthadvocates.org.

back to list

Waiting Period
Some companies impose a waiting period before paying benefits for a pre-existing condition. This waiting period cannot last more than six months, and it applies only to those conditions that were treated during the six months prior to purchasing the policy. Companies may impose this waiting period when a beneficiary buys a Medigap policy during his/her open enrollment period.

Note: If you had health coverage during the six months prior to purchasing a Medigap plan, however, there will be no waiting period. If you are in a guaranteed issue period or you are buying a new Medigap policy to replace another Medigap plan, the company cannot impose any waiting period for your new policy regardless of your health condition.

back to list

Premiums
Even though Medigap policies are standardized, premiums can vary from company to company. There are three methods companies use to set their premiums: issue age, attained age, and community age rate. The issue age method bases the premium and future increases on the age of the beneficiary when the policy was first issued. The attained age method bases any premium increases on the enrollee´s current age at the time of the increase. The community age method bases the premium and any premium increases on the average age of everyone in the plan.

Some companies charge smokers a higher premium while other companies offer a variety of discounts. Very few companies charge everyone the same price, regardless of their age or marital status. Many companies charge a higher premium for a person with a disability who is younger than 65 years old, than they do for someone 65 years or older for the same policy. Most companies increase the amount of their premiums each year. It is important to compare policies and premiums from different companies before buying one. You can find information about companies selling Medigap plans in California and some sample premiums at the California Department of Insurance website: insurance.ca.gov.

back to list

Basic Benefits in all A-N Plans
Medigap plans A - N must offer the following basic benefits:

• Co-insurance for hospital days 61-90 ($275/day in 2010) and co-insurance for the 60 lifetime reserve days ($550/day in 2010).
• 100% of the cost of hospital care beyond 150 days covered by Medicare, up to a
  maximum of 365 lifetime days.
• 20% co-insurance for Medicare approved charges after the $155 annual Part B
  Medicare deductible has been met.
• The first three pints of blood in each calendar year.
  

back to list

Modernized Medigap Plans K and L
Medigap plans K and L are structured differently than the other Medigap Plans.

back to list