Medicare supplement insurance plans are standardized health insurance plans regulated by the Centers for Medicare and Medicaid Services that provide specific options for seniors who want to fill in the gaps of care provided by Medicare Part A and Medicare Part B. Unlike Medicare Advantage plans, Medigap insurance offers the same level of coverage no matter where a senior is located. Both are run by private insurers, similar to group health insurance policies, but the plans are more regimented and can be somewhat easier to understand. Note that there are some minor differences in these plans when offered in Massachusetts, Minnesota and Wisconsin.
Why do I need a supplemental plan?
Medigap plans chiefly cover the co-insurance and co-payments for certain aspects of care that seniors have to pay out-of-pocket for with Medicare Part A and Part B. All Medigap plans cover the co-insurance costs of up to one year of hospital costs after Medicare benefits are used up, and all of Part B’s co-insurance and co-pays including for preventive care such as physicals or diagnostic tests. Note that the differences in the plans (described below) chiefly relate to the deductibles that must be paid before coverage can begin.
What do the different letters mean?
Specifically, there are 12 plans, and some overlap between them. For each plan, here is what is covered:
- Medigap Plan A: One year extra of Part A co-insurance coverage for hospital stays; coverage of Part B coinsurance and copays, including preventive care benefits; up to the first three pints of blood.
- Medigap Plan B: All of Medigap Plan A, plus the Medicare Part A deductible.
- Medigap Plan C: All of Medigap Plan B, plus coverage of skilled nursing facility care coinsurance, the Medicare Part B deductible and foreign travel emergency coverage.
- Medigap Plan D: All of Medigap Plan C, except the Part B Deductible. Also adds at-home recovery coverage.
- Medigap Plan E: All of Medigap Plan D, except no at-home recovery and additional non-Medicare preventive care up to $120 (such as eye exams or similar healthcare options)
- Medigap Plan F: All of Medigap Plan C; also includes coverage for Medicare Part B excess charges. Is available in a high-deductible plan of up to $2,000 in 2010.
- Medigap Plan G: All of Medigap Plan C coverage, as well as 80 percent of Part B excess charges, at-home recovery costs up to plan limits, though it does not pay the Part B deductible.
- Medigap Plan H: Covers all of Medigap Plan C except for the Medicare Part B deductible.
- Medigap Plan I: Medigap Plan I covers Medicare Part A and Part B coinsurances, including for preventive care and skilled nursing care. Though it does not cover the Part B deductible, it does cover excess charges for Part B, and at-home recovery costs.
- Medigap Plan J: Medigap Plan J is one of the most extensive coverage plans. It pays for Medicare coinsurance costs for hospital stays of up to one year after standard Medicare benefits run out, as well as the Part A deductible. For Part B, it covers all coinsurances and copays, the deductible, nursing facility coinsurances and at-home recovery up to plan limits.
- Medigap Plan K: Medigap Plan K is a partial coverage plan with an out-of-pocket limit of $4,620. Outside of that, the plan pays for 50 percent of Part B (and Part B preventive care) coinsurance and copayments, hospice care costs, skilled nursing facility care coinsurance.
- Medigap Plan L: Medigap Plan L is a partial coverage plan with an out-of-pocket limit of $2,310. Outside of that, the plan pays for 75 percent of Part B (and Part B preventive care) coinsurance and copayments, hospice care costs, skilled nursing facility care coinsurance.
Who provides these plans?
The health insurance providers that operate in a given state or region and provide private health insurance may also offer Medigap or Medicare Supplemental insurance plans. Note that not all varieties of Medigap insurance may be offered due to costs or business decisions of the insurers. However, while the different insurance companies may offer different rates for different plans, a Medigap Plan A offered by three different insurers will differ only by price. There may also be differences in customer service or other factors, but the coverage must meet the minimum requirements listed above.
Note that health insurance companies generally have different divisions that handle senior health insurance options such as Medigap plans and Medicare Advantage plans. This means that while you may have had a good experience with one insurer for group health insurance, you may want to find reviews specific to the Medicare divisions.
What assisted living costs do Medicare Supplement Insurance plans cover?
The problem for assisted living facility residents is that Medicare Supplement insurance plans are very similar to Medicare plans. As this site has addressed in other guides, that means that preventive care and other healthcare costs are covered in large part by Medicare. Similarly Medicare Supplement insurance reduces the costs of deductibles and co-pays depending on the level of coverage offered.
At the same time, while this can reduce the costs of doctor’s visits and certain nursing services, assisted living facility costs such as the price of room and board are generally not covered. Furthermore, personal assistance for needs such as feeding, bathing and dressing are also not covered. For those costs, other senior financial assistance programs may augment Medicare and Medicare Supplemental insurance.
One thing that the plans may help with is certain medical events such as illnesses or slips and falls. Because these conditions can limit independence, seniors considering assisted living facilities may benefit from supplemental insurance if they want to remain in an assisted living facility and suffer a traumatic event. The rehabilitation and outpatient coverage can help limit the possibility of needing skilled nursing care or a move to a more focused facility.
What should I look for?
It may be best to sit down with either your financial adviser or your family doctor to figure out what aspects of your Medicare insurance could become costly without Medicare supplemental insurance. For example, those at risk for injury or those with debilitating conditions may want coverage that helps with skilled nursing facility costs, while those looking to stay in assisted living facility may want insurance that covers at-home recovery. In addition, be sure to compare the monthly premiums of Medicare supplemental insurance against the costs of the deductibles that are covered. You may find that the cost of the insurance does not make sense depending on your specific healthcare and financial needs.
Be sure to find out whether or not other financial instruments may be used in combination with the Medicare supplemental insurance, and review previous medical bills to see whether or not there are major cost drivers that could be minimized with supplemental insurance. Be sure to review the plan description with a family member or adviser to see what specific restrictions could affect you or what deductibles you may need to pay.
What’s the difference between these plans and Medicare Advantage plans?
The chief difference between Medicare supplement insurance plans and Medicare Advantage plans is the standardization. In plain English, Medicare supplement insurance plans offer 12 different options, and while the costs may vary based on where you live, a Medigap Plan A will offer the same coverage whether it is offered in Idaho or Iowa or New York. Medicare Advantage plans are similar to group health insurance plans in that the amount of benefits or co-pays required depend on the monthly premiums and the needs of the health insurance provider at the time.
Medicare Advantage plans have been reduced and cut back in some respects due to increased regulation by the Centers for Medicare and Medicaid Services as well as the Affordable Care Act passed by Congress in recent years. This is a double-edged sword for seniors. One positive is that because there are a reduced number of programs, they are easier to make sense of in terms of both benefits and costs. This means that seniors are less likely to be confused by lengthy pages of plan descriptions and restrictions.
On the other hand, Medicare Advantage programs offered benefits that were more extensive than in some Medicare supplement insurance offerings (listed above in the alphabet section), and some of these helped to offset some of the costs of assisted living that supplemental insurance programs cannot. In the changing marketplace, however, seniors benefit from supplemental insurance programs because they are regulated by the government and are less subject to the whims of insurance companies.
Sources:
http://www.medicare.gov/Library/PDFNavigation/PDFInterim.asp?Language=English&Type=Pub&PubID=02110
http://www.medicare.gov/publications/pubs/pdf/02110.pdf
http://www.medicare.gov/find-a-plan/staticpages/learn/learnmore.aspx#HaveMedigap
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