The health insurance coverage provided by Original Medicare, Parts A and B, is solid, but it does leave you exposed to certain out of pocket costs. These costs can be difficult to estimate and anticipate in advance, which can strain budgets. Medicare Supplement Insurance plans can help you cover some or all of these costs. With Medicare Supplement Insurance, you can have predicable, and generally very minimal, out of pocket health care costs. However, because these kinds of plans are offered by private insurance companies, there are some restrictions on enrollment. The best time to get this coverage is during your Medicare Supplement Open Enrollment period. This guide will review your rights and options during this important Medicare enrollment period.
How Does Medicare Supplement Insurance Work?
As we mentioned earlier, even with Medicare coverage, you can expect to experience out of pocket costs for health care services. Original Medicare was designed this way; Medicare will pay for most of your care, and you, the patient, are responsible for paying the rest. These out of pocket expenses are often called gaps in your coverage. These gaps include:
- Part A deductible
- Part A daily co-insurance for hospital stays longer than 60 days or skilled nursing stays longer than 20 days
- Part B deductible
- Part B co-insurance (generally 20% of the cost for every Part B-covered service, like doctor’s visits, lab work, and things of that nature)
- Part B excess charges (amounts up to 15% of the cost for Part B services. These amounts are only rarely applicable)
The two out of pocket costs that add up the most are the Part A deductible, which you pay if you’re hospitalized, and Part B co-insurance, which you generally pay every time you use non-hospital services. Importantly, there is no annual cap on these costs, which is much different from private health insurance. This lack of a cap on your spending is a concern to most people. Fortunately, Medicare Supplement Insurance is designed to cover many of these out of pocket costs.
There are ten standardized Medicare Supplement Insurance plans available. They are known by letter: Plans A, B, C, D, F, G, K, L, M, and N. Every one of these plans covers a different mixture of your out of pocket costs. For instance, Plan A covers your daily hospitalization co-insurance if you have a stay longer than 60 days. It also covers your 20% Part B co-insurance. However, it does NOT cover the Part A deductible. Plan G covers ALL of the gaps in Medicare, expect for the Part B deductible. If you have Plan G, you pay this small amount out of pocket each year. Once you’ve hit the Part B deductible, Plan G pays 100% of covered costs the rest of the year.
How Does Medicare Supplement Open Enrollment Work?
As was already mentioned, Medicare Supplement Insurance policies are issued by private insurance companies. These companies are able to impose certain eligibility requirements; people who don’t meet the requirements are not eligible to purchase Medicare Supplement Insurance. However, Medicare Beneficiaries do have certain rights where Medicare Supplement Insurance is concerned. The biggest of these is the Medicare Supplement Open Enrollment period.
This enrollment period is a window of time during which your enrollment in a Medicare Supplement plan is guaranteed. You cannot be turned down during this enrollment period, and you also can’t be charged higher rates due to pre-existing health conditions.
This enrollment window, which is also called the Medigap Open Enrollment Period (Medigap is another name for Medicare Supplement Insurance), lasts for a total of 6 months. It starts when BOTH of these conditions are true:
- You are 65 years old or older
- You are enrolled in Part B
The interplay of these two criteria is important. Some people qualify for Medicare before age 65 because of disability or illness. These people do not begin their Medicare Supplement Open Enrollment Period when they enter Medicare, because they are not yet 65 years old. However, they will have an open enrollment period whenever they do turn 65.
On the other hand, some people work past age 65 and choose not to take Part B while they’re still working. This is because they’re covered by an employer’s health insurance plan, and they don’t want to pay for Part B if they don’t need it. People in this situation do not enter their Medigap Open Enrollment Period at 65 because they haven’t yet started Part B. Whenever they actually retire and take Part B, then their Open Enrollment Period will start, even if they’re in their 70s or 80s. You don’t ever miss out on your Medicare Supplement Open Enrollment Period; everyone will have one, it just may be delayed in some cases.
What If I Don’t Take Advantage Of My Medicare Supplement Open Enrollment Period?
Just because you have an open enrollment period doesn’t mean you HAVE to sign up for Medicare Supplement Insurance. You can choose to do nothing. Or, you can choose to enroll in a Medicare Advantage plan. But, what if you decide you want Medicare Supplement Insurance after your Medigap Open Enrollment Period has ended?
All that means is that you have to apply for coverage, and your acceptance is NOT guaranteed. This is known as being Medically Underwritten. When you apply, you’ll have to answer health-related questions, and the insurance company will conduct a health history investigation. This is usually not a problem, but if you have certain serious health conditions, your application may not be approved. Or, you may be charged a higher premium based on your current health status. It is for this reason that anyone considering Medigap coverage should choose it during their Medicare Supplement Open Enrollment Period.
Other Times You may Qualify For Guaranteed Issue
There are some special reasons why you might qualify for Guaranteed Issue of a Medigap policy, even after your Open Enrollment Period has expired. They have to do with changes in your life circumstances. You can get Medigap coverage on a Guaranteed Issue basis in these common scenarios:
- You have Medicare Advantage coverage and you move outside of the plan’s service area
- You dropped Medicare Supplement coverage for your first Medicare Advantage plan, and you’ve had it for less than 12 months
- You enrolled in Medicare Advantage when you were first eligible, and have been on it for less than 12 months
The last two are known as Trial Rights because they allow you to give Medicare Advantage a try. There are a few other, more obscure, reasons you’d qualify for Guaranteed Issue, but these are the most common.
Because of the interplay of these rules, you might want to consider two strategies where it comes to Medigap:
- Enroll in Medicare Supplement when you’re first eligible (during your Medicare Supplement Open Enrollment Period). You can switch to Medicare Advantage at a later date. When you switch, you begin a 12 month period during which you can change your mind and get back into a Medigap plan with Guaranteed Issue rights.
- Enroll in Medicare Advantage when you first start Medicare. If for some reason you don’t like it, or you wish you’d chosen Medicare Supplement, you can exercise your Trial Right, and switch to Medicare Supplement insurance during the first 12 months of your coverage.
Navigating the many rules regarding Medigap plans and the various opportunities for Guaranteed Issue can be challenging. If you want to learn more about qualifying for Medigap, or if you’d like to compare rates, reach out to a licensed health insurance agent today.