Significance of Medicare Supplement Insurance

Eldercare Review | Wednesday, February 22, 2023

Medicare supplement insurance helps cover some out-of-pocket medical expenses that Medicare doesn't cover. Often called Medigap insurance, Medicare supplement insurance covers some of the gaps in Medicare coverage.

Insurance companies sell Medicare Supplement Plans that cover medical costs not covered by Medicare. Medigap insurance covers out-of-pocket expenses such as copays, coinsurance, and deductibles.

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Medicare Supplement Insurance: How It Works

Medicare Supplement Insurance fills in the gaps in Medicare's standard coverage. Parts A and B of Medicare need to be enrolled in order to qualify for Medigap coverage. Medigap plans supplement Medicare, not replace it.

Open enrollment for Medigap begins six months after the first month of Medicare Part B coverage.

The Medigap coverage provider collects the monthly premiums directly from the policyholder. The Medigap premiums do not replace Medicare Parts B and D premiums. Medigap plan holders will pay one premium for Part B and another for the Medigap plan offered by the private company.

Medigap providers must standardize coverage according to the requirements of each of the ten standardized Medigap plans. Medigap policies from different companies provide a close range, making it easier to find the lowest cost.

There is a six-month waiting period for Medigap plans to cover preexisting conditions. Medigap plans do not require a waiting period if the customer has had continuous creditable coverage for six months before enrolling.

The Medicare program usually provides Medicare Part B claim information directly to Medigap policy providers. Private insurers then pay the difference between Medicare's direct payment and private insurers. Medicare Part A claims information is sometimes used to submit hospital payments, but it is less common. Medigap providers must pay Medicare-accepting doctors directly if they are requested to do so by policyholders.

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A Medigap policy generally does not cover dental care, eyeglasses, hearing aids, or private nursing. In contrast, most Medigap plans cover emergency healthcare during the first 60 days of overseas travel, subject to a $250 annual deductible and 20 percent coinsurance.

CMS warns those shopping for Medigap policies to look out for fraud and abuse. Medigap policy buyers may encounter high-pressure sales tactics or attempts to sell policies to people with incompatible Medicaid or Medicare Advantage coverage.

Some states also regulate Medigap policies. Medigap policies supplement Medicare, but private insurers only sell them. Private insurers cannot misrepresent Medigap policies as federal programs when purchasing supplemental plans.

Medicare Supplement Insurance vs. Medicare Part C

Medigap Plan C and Medicare Part C are often confused but very different and mutually exclusive. Medigap plans under Medicare Part C do not provide coverage for out-of-pocket costs. Medicare Advantage plans to replace, rather than supplement, Medicare Part A and B coverage. Medigap coverage cannot be marketed to Medicare Advantage participants.

With government approval, private companies market Medigap and Medicare Advantage plans to Medicare participants.

A Medicare Advantage plan usually has lower out-of-pocket costs than traditional Parts A and B of Medicare. They may also cover routine hearing, vision, dental care, and fitness memberships. Medicare Advantage plans typically cover care provided by providers in a network and require prior approval for specialist care.

Medigap insurance covers some of the out-of-pocket expenses that Medicare participants incur. Insurance companies charge monthly premiums directly to Medigap buyers. The Medicare Supplement Plan differs from Medicare Part C or Medicare Advantage. Patients can get Medigap after signing up for Medicare Part A and Part B. They can enroll in Medigap during the open enrollment period as long as they're 65 years old. If they don't enroll during the open enrollment period, Medigap may not be available to them or may become more expensive.

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