Seven Facts about Medicare Supplement (MEDIGAP) Plans

1. ALL MEDICARE SUPPLEMENT (MEDI-GAP) PLANS (A - N) ARE STANDARDIZED. THE ONLY DIFFERENCES LIE IN PRICE AND UNDERWRITING GUIDELINES

• Supplement plans use letters to identify them (A-N). Each lettered plan offers the policy holder a different level of benefits.
• The letter of the plan dictates the coverage you will receive, not the carrier you purchase the plan from.
• All Medicare Supplement plans are regulated by the federal government. Therefore, each carrier must offer you the specific benefits for each lettered plan as it is outlined by the Medicare system.
• Regardless of the carrier offering it, all Medicare Supplement coverages for the same lettered plan are identical.

• For example, every company’s Medicare Supplement “PLAN A” has the exact same member benefits as every other company’s “PLAN A”.
• The primary difference between carriers is the price, because each carrier is allowed to choose what they want to charge for each plan.
• The carrier also determines what the underwriting guidelines are in order to qualify for their plan. Some carriers have very strict guidelines geared towards healthier members, where others have more lenient underwriting which allows more people to take advantage of their plans.
• Tighter underwriting guidelines often mean lower monthly premiums
• With more relaxed underwriting, expect higher premium

• 2. UNLESS YOU ARE NEW TO MEDICARE, YOU HAVE TO MEDICALLY QUALIFY FOR A SUPPLEMENT PLAN

  • Once you turn 65 and are enrolled in Medicare PART B, federal law provides a six month guaranteed acceptance period where you are exempt from the underwriting process and can enroll in any Medicare Supplement plan that you wish.
  • This window is called the “Open Enrollment Period” (OEP). It only happens one time and it provides an automatic, guaranteed acceptance into Medicare Supplement plans (even if you have pre-existing conditions).
  • An insurance company cannot refuse to sell a plan, modify coverage, or charge a higher premium, because of an individual’s health status.
  • The window lasts for six months after these qualifiers are in place:
  • You must be 65+ years old and entitled to Medicare PART A
  • You must be actively enrolled in Medicare PART
  • If your PART B coverage is terminated your Medicare Supplement coverage will be automatically terminated at the same time. Be sure to always pay your PART B monthly premium on time.
  
  • During your six month OEP you can change (try out) supplement plans as much as you want with no underwriting.
  • After the OEP window has closed there is no longer guaranteed issue into any of the Medicare Supplement plans*. If you want to change your plan later you will have to medically qualify (be underwritten) each time.
  
  

• 3. PREMIUM PRICES ARE BASED ON - THE CARRIER, ZIP CODE, AGE, GENDER AND TOBACCO USE

  • Carriers – Medicare Supplement carriers cannot modify what the coverage benefits are for each plan, but they have the liberty to charge whatever they want for the ones that they offer. Supplement plan premiums are solely determined by the individual carriers.
  • Region– Insurance carriers often consider the average wealth in any area and charge what they believe the residents can afford.
  • Age – Premiums are typically based on your current age (attained age) and increase each year – the older you are, the more expensive the supplemental policy will be because; statistically, you are more likely to use it.
  • There are also some carriers that have issue –age rated plans. These would be priced on the age you were when you enrolled in the plan.
  • Gender – Generally, supplement premiums are less expensive for women (assuming all other variables are equal) because women tend to have better health and thus claim less often.
  • There are some providers that offer “community-rated” plans. These give every member, regardless of age, the same premium price.
  • Tobacco – Any form of tobacco use will affect premium costs. On average, tobacco users will spend about 10% more on their monthly premiums than a non-tobacco user.

  • 4. IF YOUR DOCTOR ACCEPTS MEDICARE - THEY WILL ACCEPT YOUR MEDICARE SUPPLEMENT PLAN

    • Medicare Supplement plans are not part of a “provider network”. Supplement members are welcome to see any doctor that accepts Medicare.
    • “Any doctor, any hospital, anytime”
    •  No prior authorization or referrals are required
    • If a doctor or group accepts Medicare they will accept any Medicare Supplement plan.
    • When reaching out to see if a provider will accept your Medicare Supplement insurance coverage, you do not need to ask if they accept the carrier that it has been issued through.
    • When you have a Medicare Supplement plan, the correct question to ask is:
    • “Do you accept assignments from Medicare?”
    • An example of why asking the correct question is important
    • If you contact a provider’s office and ask if they accept “Aetna Medicare” the office staff will likely assume that you are asking if they are part of an Aetna specific HMO plan network (Medicare Advantage) and they may not be participating in that network. This could cause them to mistakenly tell you that they do not accept your Medicare plan.
    • A provider may be willing to accept the standard negotiated Medicare reimbursement rate, but not be in any or every Medicare Advantage provider network.
    

  • 5. YOU CAN SHOP YOUR MEDICARE SUPPLEMENT PLAN ANYTIME OF THE YEAR

    • Medicare Supplement members are not required to be tied to a specific plan for any period of time.
    • Since there is no specific length of time that needs to pass in order to change a Medicare Supplement plan, policy holders can shop for a different plan or change carriers any time throughout the year.
    • Medicare Supplement plans do not have an “Annual Enrollment Period” (AEP) like the Medicare Advantage program does.
    • AEP is a window of time between October 15th and December 7th each year where Medicare Advantage plans can be added, dropped or switched.
    • The AEP is specific to Medicare Advantage (MAPD) and Prescription Drug Plans (PDP).
    • If you want to move from a Medicare Supplement plan to a Medicare Advantage plan you will have to wait for the AEP to do it, the new plan would then become effective January 1st of the following year.
    • Supplement plans are subject to rate increases at any time throughout the year.
    • Medicare Supplement plans do not have fixed annual premium rates and can be adjusted by the carrier at any time.
    • Most carriers do not have rate increases within the initial 12 months of plan coverage.
    • The first rate increases generally occur on the policy anniversary date.
    • The amount of the increase and when rate increases occur is at the discretion of the individual carriers.
    

  • 6. A MEDICARE SUPPLEMENT POLICY CAN FOLLOW YOU FOR LIFE

    • If you enrolled in a Medicare Supplement plan in one state but move to another, you do NOT need to enroll in a new Medicare Supplement plan (unless you have a Medigap Select plan).
    • Medigap Select offers a lower monthly premium in exchange for a small network of hospitals and facilities, but the same network of doctors as any other Medicare Supplement (Medigap) plan.
    • Your monthly premium could increase if your new home area has more expensive Medicare Supplement rates.
    • In some cases your price can also go down.
    • If you find another plan that is less expensive than the rate your current Medicare Supplement insurance is offering in your new state, you can always submit a new application. Since Medicare Supplement plans have a nationwide network, moving does NOT trigger a guaranteed issuance situation in most states*
    • This means you will usually have to answer medical questions to obtain the new coverage.
    • If you already have a Medicare Supplement plan, just call the number on the back of your card and they will tell you how much that plan will cost in your new state.
    • Another benefit of Medicare Supplement plans is if the premium is paid on time, the company cannot cancel the policy, regardless of any changes in health.

    • 7. IF YOU HAVE HAD THE SAME MEDICARE SUPPLEMENT PLAN FOR MORE THAN 2 YEARS, YOU MAY BE OVERPAYING

      • As is typical with any kind of insurance plan (car insurance, homeowners insurance, etc.) rates fluctuate and periodically shopping the competition can potentially save the policy holder a lot of money.
      • Premium rates for existing policy holders generally increase more often than the ones for the new customers that are being enticed to purchase the coverage.
      • Even though rate increases are inevitable, not all carriers are equal. Some carriers consistently have relatively small and/or infrequent increases while others change rates often or have very dramatic increases to member premiums.
      • For example, some carriers have issued increases at 25% (or higher) at a time to their members, while others have increased rates several times in a single calendar year.
      • Finding carriers that offer more stable premiums and marginal rate increases is worth considering.
      • Even if the initial monthly premium rate may be a bit lower than other carriers, a company that has a history of sizable and/or frequent rate increases can quickly put the cost for their product significantly above the cost of another carrier long term.
      • It is also important to consider that if a dramatic rate increase occurs after you become ill with a condition that can’t pass underwriting; you could be stuck in the now high premium plan, which will potentially affect you even more.
      • If you have had the same plan for two years and you are healthy enough to pass underwriting, it is likely that you will be able to get the same exact plan through your current carrier or with someone else for less money.