What Is Medigap Planning [Ultimate 2021 Guide]
What is Medicare?
To start discovering what medigap planning is, let’s first focus on a wider subject, which is Medicare. Medicare is a form of health care insurance that is meant for individuals aged 65 or older, as well as individuals under the age of 65 who may have disabilities. Medicare is also meant for individuals who may have End-Stage Renal Disease (ESD), regardless of their age.
Different parts of Medicare
Medicare is divided into different parts, each of which helps cover different types of services. These include:
Medicare Part A (Hospital Insurance)
Part A covers:
- Healthcare at home
- Health care in hospitals
- Nursing care
- Hospice care
Medicare Part B (Medical Insurance)
Part B covers:
- Healthcare at home
- Health care provider services
- Medical equipment (such as wheelchairs and hospital beds)
- Preventive services (such as vaccines and screenings)
Medicare Part D (Drug Coverage)
Part D covers:
- Prescription drugs cost (which also includes any vaccines or shots that may be recommended)
What is Medigap
Medigap planning is also commonly known as Medicare Supplement planning and helps cover any gaps that may be present in Original Medicare coverage (Medicare Part A and Medicare Part B).
A monthly premium is paid by customers for partial or full coverage for a monthly premium, which includes copayments and deductibles, all of which can be bought from private insurance providers or companies. Individuals who subscribe to these Medigap plans are still liable to pay off their Medicare Part B premium.
According to the trade association America’s Health Insurance Plans, Medigap membership has consistently increased from 12.3 million in 2015 to 13.99 million in 2018.
Except for Massachusetts, Minnesota, and Wisconsin, all states in the United States have standardized Medigap planning.
Supplemental insurance for Medicare pays for deductibles, coinsurance, and copays not covered by Original Medicare. It may also cover a variety of services not covered by Original Medicare. In some jurisdictions, Medigap Plan G is also offered as a high-deductible plan.
The following are some of the extra benefits offered by Medigap Plan G:
- After Original Medicare benefits have been exhausted, there is coverage for a further 365 days of hospital care, as well as support for hospital coinsurance and deductibles.
- Coinsurance and copays for Medicare Part B are covered.
- The first three pints of blood transfusion are covered.
- The hospice copayment or coinsurance under Medicare Part A
- The Medicare Part A deductible is waived, but the Part B deductible is not.
- A maximum of 80% of international travel exchange
- Nursing facility care
Dental treatment, as well as other services not covered by Original Medicare, such as cosmetic procedures and acupuncture, are also not covered by Medigap Plan G. However, some Medicare Advantage planning may include coverage of such services and procedures.
Applicants seeking Medigap coverage must be citizens or permanent legal residents of the United States for a minimum of 5 years. They must also be enrolled in both Parts A and B of Medicare to qualify for Medigap insurance coverage. In most areas, applicants are required to be 65 or older to qualify; however, in some states, insurance providers offer at least one Medicare Supplement to Medicare recipients under 65. Medigap is available to anyone over the age of 65 who is enrolled in Medicare Parts A and B.
Medigap Eligibility for Those Aging In at 65
When senior residents reach the age of 65, they will be automatically enrolled in Part A. Beneficiaries may be automatically enrolled in Part B in specific instances. After you’ve gotten Original Medicare, you can choose a Medicare Supplement policy during your Medicare Supplement Open Enrollment Period.
The best thing is that there is no medical underwriting if you enroll during this time. This occurs just once in a beneficiary’s life and lasts for a total of six months.
When it comes to Medigap eligibility, those who are new to Medicare have the best chance. When a beneficiary reaches the age of 65, he or she has the opportunity to obtain high-quality coverage at the lowest possible cost.
Medigap Eligibility for Those Under 65
There are fewer Medigap options for Medicare beneficiaries under the age of 65. In several states, insurance firms provide at least one coverage to recipients under the age of 65.
Medigap Plan A is the most common coverage provided to Medicare recipients under the age of 65.
Insurance providers are aware that beneficiaries under the age of 65 who receive Medicare are most likely disabled. Disability claimants are at a higher risk of filing a claim because they require more assistance. As a result, the cost of a supplement is typically higher for those under the age of 65 so think about that when applying for disability insurance.
Those under the age of 65 who receive Medicare should plan to acquire a Medigap plan when they reach that age, as this will provide them peace of mind and protect their savings from skyrocketing healthcare costs.
Medigap Eligibility Period
You can also apply for a supplement plan without having to go through a health test or background check. This period is referred to as a Special Election Period.
If your employer is sponsoring your Medicare supplement insurance and that policy expires, you’ll be eligible for Guaranteed Issue Rights. Guaranteed issue refers to health insurance coverage that is guaranteed to be issued to applicants regardless of their health status, age, or income. With these rights, in certain situations insurance companies must offer you certain Medigap policies.
They must sell you a Medigap policy, cover all your pre-existing health conditions and can’t charge you more for a Medigap policy because of past or present health problems.
Beneficiaries of Medicare Advantage plans can move to Medigap if their copayments or premiums have increased by 15% or more, the plan has been discontinued, or their connection with their physician has ended.
Medigap planning costs
Subscribers of Medigap plans pay off a monthly fee for their coverage. Premiums might range from $100 to $300, or even more.
A plan rating method is used to price Medigap plans, as follows:
- Community rated: Subscribers of Medigap plans, irrespective of age, pay the same monthly fee for their specific policy. Inflation may cause premiums to rise.
- Issue-age rated: Premiums are determined by your age at the time of purchase. People who joined up when they turned 65 and became eligible for Medicare have reduced costs. Premium costs may rise in line with inflation, but they do not rise in line with age.
- Attained-age rated: Premium may increase as an individual grows older. Premium prices may also rise due to inflation.
Why should you buy Medigap?
Here are four main reasons why retirees choose to supplement regular Medicare with Medigap.
- Most of your Parts A and B out-of-pocket expenditures can be eliminated with Medigap. After deductions, you are usually responsible for a percentage of the total cost under Medicare. Your Medigap insurance may cover your coinsurance, copays, and other out-of-pocket expenses.
- Long-term care insurance may also be provided via Medigap. For hospital stays, time in a skilled nursing facility (for example, after surgery or for rehabilitation services after a fall), or hospice care, you have a restricted number of covered days under Medicare. If you need more time in these facilities, Medigap can provide you with the additional time that you require.
- When traveling abroad, Medigap insurance covers medical expenses. When traveling abroad, the lifetime limit for Medigap coverage is $50,000. If you want more coverage, you should look into travel insurance, which includes medical evacuation insurance in case of an emergency abroad. The cost of your trip will be determined by where you’re going, your age, and how long you’ll be gone.
- In most cases, Medigap allows you to keep your current doctors. It’s still a good idea to double-check with your doctors, specialists, hospitals, and medical facilities to see if they accept the specific insurance company and Medigap policy you’re thinking about.
How much Medigap coverage should you go for?
It’s crucial to consider your health at 65, and assess or predict how healthy you might be at 75, 85, and 95 when determining how much gap coverage you’ll require. Consider these four rules of thumb when on the hunt for Medigap insurance coverage:
- Don’t overestimate the state of your health or its longevity. Consider the fact that as you become older, you’ll require more insurance. Even elite athletes experience health issues as they age.
- As a starting point, look at your family’s medical history. Examine your family history and speak with your doctor about aging. It could be a useful tool in determining the type of coverage you should choose.
- Pick an insurance policy that is separate from your spouse. Because Medicare does not provide “joint” or “family” coverage, it may be more economical for you and your partner to select separate coverage alternatives from various insurance carriers.
- Consider the costs and the amount of coverage that is provided. Medigap policies can be rather expensive. Consider where you might be able to make trade-offs if the expenses of gap insurance are impacting the overall health of your retirement income plan. It’s all about striking the appropriate balance so you have enough coverage and don’t run out of money during your golden years.
Medicare Supplement enrollment periods
When it comes to scheduling, an individual’s Medigap Open Enrollment Period is the best time for them to enroll in (or make changes to) their Medicare Supplement plan. This window begins on an individual’s 65th birthday month and lasts for six months (once they enroll in Original Medicare). Outside of this time frame, they may be subjected to medical underwriting or the insurer may refuse to issue them a policy. Even if they are approved, they may have to pay more because of current or previous medical issues.
If an individual has guaranteed issue rights to buy a policy that covers all of their preexisting health conditions at no additional cost, they may be able to transfer plans outside of open enrollment. When you lose your present health-care coverage, these Medigap benefits kick in.
Things to consider before enrolling
Consider your health and financial situation when enrolling. Insurers have the right to decline Medigap coverage to those who have pre-existing medical issues. Keep in mind that premiums vary greatly depending on the plan you select, your age, where you reside, your gender, and your medical history.
A Medicare Advantage or Medicare Part C plan may be preferable for you if you want more considerable benefits, such as dental, vision, and hearing coverage. However, if you only need coverage for out-of-pocket expenses, Medigap will be just the right thing for you.
Where can I find out more and get advice on Medigap planning?
Before making a huge decision like purchasing Medigap plans, you need to carry out some research so you can settle for the best possible option.
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Centers for Medicare & Medicaid Services 2021. (n.d.). Retrieved October 31, 2021, from https://www.medicare.gov/media/9486
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Medigap 101: What you need to know. Fidelity. (2021, October 15). Retrieved October 31, 2021, from https://www.fidelity.com/viewpoints/retirement/medigap-what-you-need-to-know
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