Supplemental Health Care for Medicare: Do I Need It?

Medicare may be a financial life saver for most elderly or disabled Americans, but not in every case. There are times when the well-known health insurance plan falls short in paying medical bills. That’s when supplemental health care for Medicare, also known as Medigap, can fill the “gaps” in Medicare coverage.

Medigap policies are sold by private insurance to help pay for health-care costs not covered by the original Medicare plan. The two policies, used together whenever possible, will each pay a share of medical expenses.

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There are 10 types of Medigap policies, lettered A through D, F, G, and K through N. Each must be labeled “Medicare Supplement Insurance.” The plans offer varying types and levels of coverage, leaving consumers to sort out their health-care priorities and budget before choosing a plan that fits their health-care needs and finances.

Thinking about traveling outside the United States when you retire? You can find a policy that will cover medical care should you need it while in a foreign country. But there are gaps in Medigap policies, both large and small. For instance, they don’t cover long-term care. Nor do they cover mundane costs, such as eyeglasses.

Plans F and C became the most popular plans over the years. However, Congress decided to wind down those Medigap options to cut government spending. If you choose either of those, make sure you understand how long that coverage will last and have a fallback plan for dealing with your medical bills at the ready.

That leaves you with two major questions to ask yourself. The first is: Can I take the chance that I will have enough money to pay medical bills that Medicare won’t cover?

The second is: If not, should I buy supplemental health insurance before 2020 so that I’m not locked out of the plan I may want later?

If you are turning age 65 or are otherwise entitled to Medicare due to a disability, you will be able to take advantage of a six-month open enrollment period for Medicare supplemental insurance that begins the month you first enroll in Medicare Part B. After this period, your option to buy a Medicare supplemental policy may be limited.

If you apply for a Medicare supplemental policy during your six-month open enrollment period, any insurer you apply to must insure you and must give you the plan you choose. This is known as “guaranteed issue.” Insurers may ask you medical questions during this period, but you cannot be refused coverage during open enrollment, even if you have a medical condition.

Disabled Medicare beneficiaries who enroll in Medicare Part B before age 65 have a Medicare supplemental health care open enrollment period at that time and an additional six-month open enrollment period when they turn age 65.

After these initial periods, “guaranteed issue” for Medigap applies only in specific cases, such as:

• Your Medical Advantage plan shuts down or you move out of its service area.
• Your retiree plan shuts down.
• You joined Medicare Advantage but decide to switch back to original Medicare within a year.
• Your Medigap plan shuts down.

When you buy a Medigap policy you must have Medicare Part A and Part B. Medicare Advantage plans and Medicare Part D are not supplemental health care for Medicare. You must pay the monthly Medicare Part B premium. In addition, you must pay a premium to the Medigap insurance company. As long as you pay your premium your Medigap policy is guaranteed to be renewable. Your coverage will continue year after year as long as you pay your premium. However, your premium may go up each year.

Something else to remember if you’re married: both you and your spouse must purchase separate policies.
Another caveat: be aware of the timing should you decide to switch Medigap plans. Late enrollment fees may apply if you wait too long between ending the old policy and starting a new one.

Medigap policies must follow federal and state laws. The federal government sets minimum rules to help protect consumers, but many states have added additional consumer protections of their own. Each Medigap plan must offer the same basic benefits, no matter which insurance company sells it. Still, Medigap costs vary, so it’s important to compare policies before choosing coverage. Also, if you’re married, you and your spouse must buy separate policies.

It’s important to remember that Medigap plans simply fill in health coverage; they don’t make any decisions about what to cover. Medigap plans pick up the tab for a specific part of health care costs not covered by Medicare, such as deductibles and co-pays.

You can find a complete list of Medigap insurance carriers in your area on Medicare.gov. Quality and financial ratings for the insurers are thin because the plan offerings are dictated by federal and state regulations. Still, buying supplemental health care insurance may be the financial decision that helps you sleep when medical bills stack up.

Do you have supplemental health care insurance for Medicare? Tell us about your experience and share your advice for choosing supplemental health care in the comments below.