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Also referred to as “Medigap”, these plans are offered by private insurance companies in addition to Original Medicare. They are meant to cover some or all of what Original Medicare does not.
Here are a few of their most important characteristics:
- All 10 plans are lettered; A – D, F, G, and K – N. So, when an agent or broker refers to a Plan G or Plan N, you can now recognize these as Medicare supplement plans.
The plans widely considered to be the best options in most states are Plan G and Plan N.
Plan G
covers every gap in Original Medicare except the $226 annual deductible for Part B. Once you’ve come out of pocket with a total of $226, you have no co-pays or co-insurance requirements at a doctor or hospital for the rest of the year.
Plan N
is similar to Plan G in that it also requires you to pay the annual deductible for Part B. However after you’ve come out of pocket with $226, you will still have a $20 co-pay at a doctor’s office, and a $50 co-pay in the emergency room(continued below).
You will also be required to pay any excess charges. Depending on how a doctor decides to accept Medicare, they may charge up to 15% more than Medicare says they should for their service. This additional percentage represents an excess charge, which you are responsible for under Plan N.
- All plans were standardized in 1990 by the “Omnibus Budget Reconciliation Act”. This means that regardless of where you live, or which insurance company you choose to buy your supplement through, each lettered plan is identical. For example,) Every Medicare Supplement Plan G is exactly the same, everywhere it is offered nationwide, and across all insurance companies.
Insurance companies must contract with Medicare, and, once approved, are allowed to market and sell the standardized Medicare Supplement plans to Medicare beneficiaries. It is important to understand that when private companies are allowed to sell a standardized product, there will be a remarkable disparity in price for the same product, in the same area/market. This is due to varying levels of financial stability, and different pricing models across companies.
How to Choose
You will certainly want the most competitive rate available, but the lowest rate won’t do you much good if that insurance company raises rates quickly and aggressively. This is why you’ll want to make sure you do business with a financially stable insurance company, whose rates have followed a very stable trend historically.
It is hard to overstate the value of a good broker, who is familiar with the insurance carriers in your market and will shop your coverage for you every year.
- You can use any Medicare Supplement plan, from any insurance company, anywhere in the country that accepts Medicare. A recent study done by the Kaiser Family Foundation shows that 93% of primary care doctors accept Medicare. As of January 2018, there are 55 million people enrolled in Medicare, and roughly 8,000 people EVERY DAY will age into Medicare for the next 10 years.
Many of those who plan to vacation, travel to see family or own a second home will use a Medicare Supplement plan. This allows them to travel freely and use any Medicare provider, anywhere in the country when necessary.
- All plans are guaranteed renewable. Insurance carriers can never cancel your plan due to a medical condition, or medical history. They cannot single you out for a rate increase. Any rate adjustment must be done on a class basis, or for a very large group of people. This means the only reason your plan can ever be canceled, is if you do not pay your monthly premium.
- There are NO enrollment period restrictions. You can change or drop your Medicare Supplement plan, and/or insurance company at any time. This is often a point of confusion due to the fact that Medicare Advantage plans and Part D Drug plans can only be dropped or changed during the annual election period, October 15 – December 7 annually. This does not apply to Medicare Supplement plans.
- Medicare actually tells you when the “best” time to buy a Medicare Supplement/Medigap plan is.
According to the Medicare and You Guidebook – “The best time to buy a Medigap policy is during your Medigap Open Enrollment Period.” This six-month window begins on the first day of the month during which two criteria are met.
A) You will turn 65.
B) You will enroll in Part B of Medicare for the first time.
During this time, no insurance company is allowed to ask you health questions or look at your health history. They must accept your application, and issue you a policy.
For people planning to retire, and accept Medicare at age 65, the Medigap Open Enrollment period begins on the first day of the month in which they will turn 65 and lasts 6 months.
For those who will continue working, and continue to be covered by an employer group plan, they may choose to defer Part B of Medicare until they retire. In this case, the Medigap Open Enrollment period would not begin until the first day of the month in which they enroll in Part B, even though they will be older than 65.