Medicare supplement policies

What a Medicare supplement policy does

Original Medicare (Part A hospital insurance and Part B medical insurance) does not pay every bill. The beneficiary still owes deductibles, coinsurance and copayments: the Part A hospital deductible, daily coinsurance for long hospital and skilled nursing facility stays, the Part B deductible, and generally 20% of approved Part B charges, with no annual out-of-pocket cap. A Medicare supplement policy, usually called Medigap, is private insurance sold to people enrolled in Original Medicare to pay some or all of those gaps. Medicare pays its share of an approved claim first, and the Medigap policy then pays its share of what is left.

A policy may not be sold in Florida as a Medicare supplement unless it complies with the Medicare supplement law (Fla. Stat. § 627.673(1)), which requires it to meet or exceed the federal standards in 42 U.S.C. § 1395ss or the NAIC Medicare Supplement model act (§ 627.674(3)). A Medigap policy may not duplicate benefits Medicare already provides (§ 627.674(5)), and its cost-sharing benefits change automatically when Medicare changes its deductibles and copayment percentages (§ 627.674(4)(b)).

Standardized plans

Medigap benefits are standardized into lettered plans. Every insurer's Plan G covers the same benefits as every other insurer's Plan G; only the price, the insurer's service and its rating method differ. The plans currently sold are A, B, C, D, F, G, K, L, M and N.

• Plan A is the core. Every plan includes the core benefits: Part A hospital coinsurance

plus 365 extra lifetime hospital days after Medicare's run out, Part B coinsurance or copayments, the first 3 pints of blood each year, and Part A hospice coinsurance.

• Plans F and C are the only plans that pay the Part B deductible. Since January 1,

2020, they cannot be sold to anyone who first became eligible for Medicare on or after that date. People eligible earlier may still buy them.

• Plans F and G are the only plans that pay Part B excess charges, the amount a

doctor who does not accept Medicare assignment may bill above the approved amount. Plan G is now the most complete plan a newly eligible person can buy.

• Plans K and L pay most gaps at 50% and 75% and have an annual **out-of-pocket

limit**; after it is reached, they pay 100% for the rest of the year.

• Plan N pays Part B coinsurance except for small copayments on some office and

emergency room visits.

• Plans C, D, F, G, M and N pay 80% of foreign travel emergency care.

A Medicare SELECT policy is a standardized plan that requires the insured to use network hospitals, and sometimes network doctors, for non-emergency care, in exchange for a lower premium.

What Medigap does not do

Medigap policies sold today do not cover prescription drugs (that is Medicare Part D), long-term custodial care, routine dental, vision or hearing care, or private-duty nursing. A policy covers one person; a married couple needs two policies. Medigap works only with Original Medicare. A person in a Medicare Advantage (Part C) plan does not use Medigap, and it may not be sold to them unless they are leaving Medicare Advantage for Original Medicare.

Buying and keeping a policy

• Open enrollment. For 6 months beginning with the first month a person is 65 or older

and enrolled in Part B, an insurer may not refuse a policy or charge more because of health (§ 627.6741(1)(a)1). This is the best time to buy.

• Pre-existing conditions. A policy that is not a replacement may exclude a pre-existing

condition for no more than 6 months, and may look back only 6 months before coverage starts (§ 627.6741(2)(b)).

• Guaranteed renewable. The insurer cannot cancel for health or claims, only for

nonpayment of premium or material misrepresentation.

• Free look and disclosure. The applicant gets an outline of coverage at the time of

application (§ 627.674(4)(g)) and a 30-day free look with a full premium refund (§ 627.674(4)(d)).

• Only one Medigap policy. It may not be sold if it would give the person more than one

Medicare supplement policy (§ 627.6744(2)(b)), except as a replacement.

• Pricing. Premiums are community-rated (same for everyone), issue-age-rated (set

by age at purchase) or attained-age-rated (rising as the insured ages).

Other health policies may be sold to people eligible for Medicare as long as they are not marketed as Medicare supplements (§ 627.673(3)). Their outline of coverage must say "This policy IS NOT A MEDICARE SUPPLEMENT policy" (§ 627.674(4)(g)4).