Medigap (Supplemental) Insurance
What is Medigap (supplemental) insurance?
Medigap is private health insurance that covers the deductibles and copayments associated with Original Medicare Parts A & B. Depending on the Medigap policy, it is possible you will have no out-of-pocket expenses for hospital or outpatient care apart from the plan premium. Note: the Medigap plans currently offered for sale do not include Medicare Part D prescription coverage. You will need to purchase a Stand-Alone Part D plan.
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What do Medigap policies cover?
A Medigap policy helps pay the deductibles, coinsurance, and copayments that Original Medicare does not cover. The policy you purchase will determine which deductibles, coinsurance, or copays are paid. Medicare combined with a Medigap policy may be used nationally as long as the provider or facility accepts Medicare. If you have both Medicare and a Medigap policy, you do not have to go to a primary care physician to obtain an authorization for a specialist. With a Medigap, you may self-refer to any doctor who accepts Medicare.
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What are the basic benefits of Medigap policies?
Medigap policies must follow federal and state laws designed to protect you when purchasing coverage. The policy must state that it is a Medicare Supplement Insurance. Insurance companies sell only standardized plans that are identified in most states by the letters A through N as of June 2010. Each individual, standardized Medigap policy must offer the same basic coverage no matter which company is selling it, though companies have the option of adding benefits to a policy. Cost is usually the only difference between specific Medigap policies sold by different companies.
A Medigap policy will be your secondary insurance to Original Medicare. If you have a Private Fee-for-Service (PFFS) plan, or a Medicare HMO or PPO under the Medicare Advantage program, it is illegal to purchase a Medigap policy unless you are switching back to Original Medicare. NOTE: A Medigap policy will not cover the copays, coinsurance, or deductibles of a Medicare Advantage plan.
What are the costs of Medigap policies?
Although Medigap policies are standardized, premiums vary from company to company. Companies use three rating methods to determine the premium:
- Issue Age — Premiums and future increases are based on the age of the beneficiary when the policy is issued.
- Attained Age — Premium increases are based on the beneficiary's age at the time of the increase.
- Community Age — Premiums and future increases are based on the average age of all beneficiaries in the plan.
Once a Medigap policy is sold, it can only be terminated for failure to pay premiums. Companies may increase premiums, however, due to rising health care costs, inflation, and increasing age of beneficiaries.
Companies may charge a higher premium to a Medicare beneficiary under 65 who has a disability than to a person 65 years or older applying for the same policy.
It is recommended to compare quotes from a minimum of three companies. Go to the California Department of Insurance website (www.insurance.ca.gov) for a list of companies selling Medigap policies in California. You may also contact HICAP at 1-800-434-0222 to schedule a one-on-one appointment.
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What should I consider when purchasing a Medigap policy?
- You must have Medicare Parts A and B to buy a plan.
- You pay a monthly premium to the private insurer.
- A Medigap policy does not cover more than one Medicare beneficiary.
- There are certain enrollment and guaranteed issue rights for Medicare-eligible people. See Enrollment Periods/Guaranteed Rights for more details.
- If you have a Medicare Advantage Plan, it is illegal for anyone to sell you a Medigap policy unless you are switching back to Original Medicare.
- If you have an older Medigap policy that includes prescription coverage, you cannot purchase a Medicare Part D prescription plan.
- Employer, union, or retiree group plans may offer coverage similar to or better than a Medigap. See Employer Group and Retiree Health Plans for more information.
- An insurance agent or broker cannot sell you a Medigap policy if you have Medi-Cal/Medicaid with no Share of Cost (SOC).
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What is the Medigap birthday rule?
If you already have a Medigap policy, you may replace your current policy with one that has the same or fewer benefits for 30 days starting on your birthday without being denied coverage for pre-existing conditions.
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I am on Medi-Cal with a Share of Cost (SOC). Should I purchase a Medigap policy?
If you have Medi-Cal with a Share of Cost (SOC) or monthly deductible, the purchase of a Medigap plan may help you lower or eliminate your SOC. If you have full Medi-Cal (no SOC), you cannot purchase a Medigap policy.
Call HICAP at 1-800-434-0222 for more information.
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