Medigap Or Medicare Supplements

If you or your parents decide to stay with traditional Medicare, you should strongly consider the purchase of a Medigap policy (frequently called a Medicare Supplement) to fill the gaps in coverage. Before making a decision to buy, you need to do some research so that you clearly understand the benefits of each type of Medigap policy and how to compare plans.

A large number of Americans on Medicare rely on some form of insurance whether it be a retiree plan, Medicaid, or a Medigap policy- to supplement Medicare. Let's briefly review some of the areas where an individual might need assistance with Medicare Benefits.

First, Part A, which covers hospitalizations, has a benefit period deductible of $1100 for 2010. The first 60 days in the hospital are provided at no charge once the deductible is satisfied. If hospitalization goes beyond 60 days, the Medicare beneficiary is then responsible for a copay of $275 per day for days 61 through 90. The copay increases to $550 per day for days 91 through 150 which are your lifetime reserve days. For days 151 and beyond, the insured is responsible for all hospitalization costs. In the case where an individual is transferred from a hospital to a skilled nursing facility, the first 20 days are provided at no charge. Days 20 through 100 require the payment of a copay of $137.50 per day. Days beyond 100 in a Skilled Nursing Facility are excluded by Medicare.

Part B, which primarily addresses professional services, has an annual deductible of $155. After the deductible is satisfied, Medicare pays at 80% of approved charges (as determined by Medicare) with the insured being responsible for the remaining 20% and overage charged by the provider of service but not approved by Medicare. This 20% is open ended with no cap.

If you are traveling outside of the United States, Medicare generally does not cover anything. The insured would be responsible for all costs.

Changes Coming to Supplements as of June 1, 2010

Back in 2003 a law was passed that required changes to the types of Supplements sold and the benefits that these plans were to provide. Ironically, this new law takes effect as of June 1, 2010 and has nothing to do with the recently passed Health Care reform bill. In the past, the different types of Supplements had letter names assigned to them corresponding to the alphabet ranging from A thru L. With the implementation of the new law; plans E,H, I, and J are being eliminated while plans M and N are being added. People who purchased E, H, I, and J plans prior to June 1, 2010 will be able to keep them as long as they continue to pay their premiums. Please do not confuse the Supplement Plan types with the different coverages available thru Medicare; Part A, Part B, Part C, and Part D.

The Supplement plans that will be available as of June 1st will be A, B, C, D, F, High Deductible F, G, K, L, M, and N. These plans are sold by private insurance companies. In actual practice, most companies sell only selected plans. Historically, the "C" and "F" supplements have been the most popular.

With the change in the number of plans being sold come some changes in benefits. Plans E and J have had the "Preventive Care Benefit" eliminated (even though these plans will no longer be sold after 5/31/10). With some exceptions, Medicare has started providing preventive care. However, Preventive Care is first subject to the $155 annual Plan B deductible and then would be pay at 80% of approved charges with the insured being responsible for the balance. "At Home Recovery" has been eliminated from Plans D and G. For new sales of Plan G, the 80% Excess Benefit has been changed to 100%. However, if you have versions of D,G,E and J sold prior to June 1, 2010; you will continue under the old benefit provisions.

What is being added to Supplement plans sold as of June 1, 2010? Basic benefits for plans sold after June 1st will now include your share of Medicare Part A eligible Hospice Care and Respite Care. Plan K will pay your share of the cost at 50% while Plan L will pay 75% of the cost until the out of pocket limit is met, with any balance then being covered at 100%.

Brief Overview of Supplements C, F, M and N

Plan C: For copayment visits, includes 100% Part B Coverage; provides skilled nursing facility coinsurance; Pays part A deductible; Pays part B deductible; Does not pay part B excess; Covers foreign travel emergency**

Plan F: For copayment visits, includes 100% Part B Coverage; provides skilled nursing facility coinsurance; Pays part A deductible; Pays part B deductible; Pays part B excess; Covers foreign travel emergency**

High Deductible Plan F: For copayment visits, includes 100% Part B Coverage; Provides skilled nursing facility coinsurance*; Pays part A deductible*; Pays part B deductible*; Pays part B excess*; Covers foreign travel emergency**

Plan M: For copayment visits, includes 100% Part B Coverage; Provides skilled nursing facility coinsurance; Covers 50% of part A deductible; Does not pay for part B deductible; Does not pay part B excess; Covers foreign travel emergency**

Plan N: For copayment visits, includes 100% Part B Coverage except up to $20 for office and up to $50 copayment for Emergency room; Provides skilled nursing facility coinsurance; Pays part A deductible; Does not pay part B deductible; Does not pay part B excess; Covers foreign travel emergency**

*High Deductible Plan F pays the same benefits as Plan F after the insured has paid a $2000 calendar year deductible. High Deductible does not begin paying benefits until the insured's out of pocket expenses exceed $2000. Expenses that would go towards the $2000 deductible would include the deductibles for Part A and Part B. However, the separate $250 deductible for foreign travel emergencies would not be included in the $2000 deductible for this plan.

**Emergencies which occur outside the United States are generally not covered. These supplements do provide 80% coverage after a calendar deductible of $250 up to a maximum lifetime benefit of $50,000. The insured would be responsible for the other 20% of charges.

As mentioned, M and N are new plans for 2010. These plans are cost sharing plans and the insured will be responsible for a larger portion of the costs when compared to Plan C or F. Like the C or F plans, M and N will continue to allow an insured to visit any doctor or hospital as long as the provider of service "accepts Medicare assignment." In terms of cost, a Plan M is expected to be about 85% of the cost of a Plan F while a Plan N should be about 70% of the cost of a Plan F.

An individual who combines a prescription drug plan with a supplement and has both Parts of Medicare, should look forward to complete medical coverage.

Ed Walden is owner of Walden Associates Insurance Services, an independent agency that has over 55 years of experience in employee Benefits, Individual/Family Insurance, and Commercial Property/Casualty Insurance fields. Ed is certified to sell Medicare, along with Long Term Care, and many other products. Ed holds the designations of Chartered Life Underwriter, Registered Health Underwriter, Registered Employee Benefits Consultant. We pride ourselves on experience, knowledge, and being extremely accessible to our clients no matter how large or small the concern. We do not work for any insurance carrier so your needs are our top priority.

Watch for a future article that explains more about Medicare's prescription drug plans.

Medicare's website, http://www.medicare.gov, is a good source of information to aid in researching the types of Medigap policies available. Medicare does publish an official guide to purchasing Medigap policies called Choosing A Medigap Policy: A Guide to Health Insurance for People with Medicare. This guide can be obtained by calling 1-800-MEDICARE or it is available for download on medicare's website. In addition, it is available at our website: http://www.waldenbrokers.com.

Edward Walden, CLU, RHU, REBC