The best time to decide whether Medigap coverage is right for you, or even which Medigap plan is right for you is during your Medigap Open Enrollment Period. This Open Enrollment Period is NOT the same as the Annual Election Period (often incorrectly referred to as “open enrollment”) that occurs from October 15th – December 7th. Instead, your Medigap Open Enrollment period is directly related to you the individual, and it is unique to everyone that is beginning their Medicare coverage.
The Centers for Medicare and Medicaid Services (CMS) states, “Your individual Medigap Open Enrollment Period begins the first day of the month that you a both 65 or older AND enrolled in Medicare part B.”
In most states, if you wish to enroll in a Medigap plan outside of your one-time six-month open enrollment, you will have to go through medical underwriting (in the form of health questions and possible medical background checks). You may be denied the ability to purchase a Medigap plan outside of your open enrollment period if you have certain pre-existing conditions at the time of your new Medigap application. Every Medigap company has different health underwriting criteria, so give us a call, and we can help you decide which company may be right for you.
We are not here to try and make it sound like once your Medigap Open Enrollment Period has passed, you will never be able to purchase a Medigap plan in the future. We help people year-round switch from one Medigap plan to another. Many consumers are unaware that if you can pass underwriting, you can change your Medigap coverage 365 days of the year!
Like all insurance options, Medigap plans do come with some pros and cons, so let’s look at some reasons you may or may not want to purchase a Medigap plan.
The most popular Medigap plans (typically G, N, and F) leave very little out of pocket medical costs for consumers that choose to enroll in one of those plans. Remember from the chart above that Plan F covers all the out of pocket medical costs for Medicare-approved procedures. Likewise, Plan G will cover the same out of pocket medical costs after you have satisfied your once per calendar year Part B deductible ($198 for 2020). For help determining what procedures Original Medicare covers, you can go HERE to Medicare.gov or download the app for your smartphone below:
Medigap plans are not HMOs or PPO’s like Medicare Advantage plans and therefore do not require you to receive treatment at “in-network” providers for lower-cost treatment. Instead, Original Medicare remains your primary insurer when you enroll in Medigap coverage. Because Medicare is primary, you can seek care at any facility or provider in the country that accepts Original Medicare. Make sure that if you call a doctor’s office to find out if they will take your Medigap plan, you ask, “do you accept Original Medicare.”
The most popular Medigap plans (plan F and G) cover most of the costs remaining after Original Medicare has paid their portion. Typically, this means that your out of pocket medical costs won’t fluctuate as much throughout the year when you do need to seek treatment. In retirement, having a relatively fixed monthly premium for medical care can help with budgeting and help ease the burden of unexpected medical bills.
Now, I know what you are likely thinking, how is having separate prescription drug coverage in the form of Part D a benefit when it comes to choosing Medigap coverage? Well, having separate prescription coverage from your medical coverage means that you can choose Part D coverage that best fits your unique needs. Additionally, during the Annual Election Period (AEP) from October 15th – December 7th you can change your Part D coverage without impacting your Medigap coverage
With Medicare Advantage, on the other hand, your medical coverage and prescription coverage are administered by one insurance company in a “bundled all-in-one” plan. Meaning, when you are first choosing your coverage or looking to change to a different Medicare Advantage plan, you must make sure that your bundled coverage adequately covers both your doctors as well as prescriptions.
Medigap plans tend to offer a more “a la carte” approach to choosing Medicare coverage.
The official “choosing a Medigap policy” handbook summarizes this best, “any standardized Medigap policy is guaranteed renewable even if you have health problems. This means the insurance company can’t cancel your Medigap policy as long as you stay enrolled and pay the premium.”
Outside of your Medigap insurer declaring bankruptcy and going out of business, your Medigap coverage will continue with the same benefits for the duration of your time on Medicare if you continue to pay your monthly premium. We recommend that our clients pay their Medigap premiums with automatic EFT payments for this very reason.
The comprehensive medical coverage with a Medigap plan, of course, comes with a higher monthly premium when compared to most Medicare Advantage Plans. Like we mentioned earlier, a 65-year-old in Michigan can expect to pay about $100-$120/month for a Medigap plan G. That same 65-year-old could likely find a Medicare Advantage plan available in their zip code for $0/month.
Medigap plans by design, cover the out of pocket costs for treatments and procedures approved by Original Medicare (Parts A and B). Therefore, Medigap plans typically do not cover extra benefits not provided by Original Medicare. Some examples of the additional benefits not offered include routine dental/vision/hearing coverage, over the counter benefits, yearly physicals, prescription coverage, and fitness memberships (some Medigap companies do offer no-cost fitness memberships). One exception to this is that the more popular Medigap plans do include some coverage for foreign emergency care, which is not provided by Original Medicare. Lastly, additional dental/vision/hearing coverage can be purchased separately to compliment your Medigap coverage.
Along with higher monthly premiums, Medigap monthly premiums also increase during the lifetime of your Medigap coverage. You can almost always expect your plans monthly premiums to increase by a few percentage points every year due to various factors. Medigap plans undergo rate increases depending on how your plan is “rated.” The three main types of Medigap premium “ratings” include:
Give us a call so we can help you find the different rating options available to you in your zip code.
Wait, wasn’t this a benefit of Medigap coverage? Well, the answer is that having separate prescription coverage is both a positive and a negative to Medigap coverage. Yes, the separate coverage allows for greater flexibility and customization, but it also comes with additional monthly premiums. Contrast this with Medicare Advantage plans that include prescription drug coverage at no added monthly premium.
Lastly, Medigap coverage typically comes with more insurance to keep track of, due to it’s a la carte style. What do we mean by this? Well, should you choose Medigap coverage, you will likely have your red/white/blue Medicare card, Medigap insurance card, Part D card, and possibly a dental/vision/hearing card. Whereas Medicare Advantage plans typically include all of this coverage in one plan (one card). Now, this is NOT a reason we would ever recommend one plan over the other, but it can be a negative for some consumers. Luckily we can help!
Medigap (Medicare Supplements) plans come in ten different “standardized” packages, and it is essential to understand which plan best fits your needs when you are first beginning Medicare Part B. Outside of your Medigap Open Enrollment period, it may be difficult to enroll into a new Medigap plan for the first time. Medigap coverage and Medicare Advantage plans are NOT the same when it comes to coverage, so make sure you take the time to compare both options. We are here to help you decipher your Medigap options so you can transition to Medicare with confidence.
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