New Medigap Options

Written by Staff Planner, Santina Michel

On June 1, 2010, Medicare made changes to its Medigap (or Medicare Supplement) Plans.  Two new lower-cost Medicap policies are being offered and four old policies are being discontinued.  Insurers no longer sell Plans E, H, I and J for two reasons: (a) these plans offer some benefits that are now covered either under original Medicare or under Medicare Part D, and (b) certain benefits, e.g., “Preventive Care Benefit” and “At-Home-Recovery” are removed and thus, these plans become identical to other lettered Medigap Plans.

Instead, insurers are now selling two new plans, M and N.  Medigap Plans M and N charge lower premiums than most other Medigap Plans but the insured must pay a higher share of the cost for various services.  Both of the new plans are similar to Medigap Plan F.  However, Plan M provides only 50% of the Medicare Part A deductible ($1,100 in 2010) and none of the Part B deductible ($155 in 2010).  Plan N is similar to Plan M.  Yet, it covers the Part A deductible in full and charges a $20 co-payment for doctor visits and a $50 co-payment for emergency room visits.  The co-pay will apply after the $155 deductible is paid.  In addition, neither Plan M nor Plan N provide coverage for Part B “excess charges,” which helps pay the difference if a doctor charges more than Medicare allows.  Plans M and N cost about 15-35% less than Plan F.

There are approximately 47 million people with Medicare and about 89% of them have some form of supplemental health insurance because patients are required to pay a portion of their medical bills.  Some of those patients choose to have a Medicare Advantage Plan, while others receive supplemental coverage from a former employer, and close to one-fifth purchase a Medigap policy.

If an individual was enrolled in a Medigap Plan before June 1, 2010, and the plan is no longer being offered, he or she can keep that plan/ policy and its benefits, and is not required to switch to a new plan.  Even though it may be beneficial for some people to switch, as all plans after June 1, 2010 offer a hospice benefit that is not available to people who keep their existing plan, there may also be a downside.  For example, insurers in many states are required to issue Medigap policies only under certain circumstances, e.g., when someone age 65 or older applies for coverage within six months of enrolling in Medicare Part B.  Therefore, if someone tries to switch plans at a later point, he or she may be denied coverage or charged a higher premium due to existing health problems or advancing age.

The plans that are currently being offered are the following:  A, B, C, D, F, G, K, L, M, and N.  Only Massachusetts, Minnesota, and Wisconsin have their own versions.  As before, all plans have standardized benefits that insurers have to follow.  Other items to consider when choosing a Medigap Plan is that Medicare Part A and B are required before being able to get a Medigap policy.  Someone cannot get a Medigap policy on a Medicare Advantage Plan.  A monthly premium is due for the Medigap policy in addition to the monthly Part B premium, and costs can vary depending on insurance companies and age of the insured.

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