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What to Consider If You’re Thinking about a Medigap Policy

Seniors who choose Original Medicare are encouraged to purchase a Medigap policy to cover some of their out-of-pocket expenses. Also called Medicare supplement insurance, these policies help pay for deductibles, copays, and coinsurance. Each plan comes with its own premiums, coverage, and limitations so it’s important to understand what you’re signing up for.

What to Consider If You’re Thinking about a Medigap Policy

1. Medigap plans do not cover cost of prescription drugs

Since Medicare Part D for prescription drug coverage went into effect in 2006, Medigap policies no longer cover any costs associated with prescription drugs.

2. Medigap plans do not cover the cost of services not covered by Medicare

Medicare does not cover the cost of services not covered by Medicare including dental, hearing, and vision services.

3. Medigap plans are standardized at the federal level

Since July 31, 1992, Medigap plans have been standardized at the federal level to make it easier for seniors to obtain consistent Medicare supplemental insurance. Available plans are designated A, B, C, D, F, G, K, L, M and N. Each lettered plan option provides different but consistent levels of coverage, no matter what insurer you work with. The Centers for Medicare & Medicaid Services offers a helpful chart on its website that shows the differences between the plans.

Other things to know:

  • Not all plans are offered in every state and

  • Plans C and F aren’t available to people who were newly eligible for Medicare in 2020 or later because Medigap plans are no longer allowed to cover the Part B deductible.

4. Medigap plan premiums may vary

Medigap plans may offer consistent coverage but the premiums associated with them can vary widely from insurer to insurer and even from location to location. If you are required to undergo medical underwriting, your premium may be higher than someone else’s if you have health issues. Regardless of which plan you choose; you should expect to see premiums rise from year to year.

5. If you receive your Medicare benefits through a Medicare Advantage Plan, you cannot be enrolled in Medigap plan

Many seniors choose to receive their Medicare benefits through a Medicare Advantage Plan (Part C), which includes Medicare Part A (hospital insurance) and Medicare Part B (medical insurance) and often Part D (prescription drug coverage). Many Part C plans also include additional services such as vision, dental, and hearing that are not covered by Original Medicare. Advantage Plans also come with an annual out-of-pocket maximum, unlike Original Medicare. Seniors enrolled in a Medicare Advantage Plan may not register for a Medigap plan.

6. There is an optimal time to sign up for a Medigap policy

The best time to sign up for a Medigap policy is when you first enroll in Part B when you turn 65 or after group health insurance ends. Seniors are generally given six months from this enrollment date to purchase a Medigap plan without an insurance company asking to review your health history and deciding whether to insure you, delay coverage, deny coverage for a pre-existing condition, or charge a higher premium.

7. How Medigap policies are priced

Medigap policies are priced in one of three ways:

1. “Community rated”: everyone who buys a particular lettered plan pays the same rate regardless of their age.

2. “Attained age”: the rate you pay when you purchase the plan is based on your age and will increase as you get older.

3. “Issue age”: the rate won’t change as you age, but you get locked into a price based on the age you are when you enroll in the policy (people who sign up at a younger age may pay less than people who sign up when they are older).

Our independent insurance agents are dedicated to assisting people on Medicare and those who are ready to transition from employer coverage to personal retirement coverage. We help kupuna understand their benefits options and apply for additional coverage, as needed. Because we represent all the major Medicare Advantage and supplement plans in Hawaii, we are able to offer unbiased advice; all at no cost to our clients.

At PBC, our clients are our number one priority and we look forward to getting to know you and your needs. Call us today at (808) 738-4500 to see how we may be of assistance.

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