Buying Supplemental Health Insurance: Medigap

| July 28, 2016

By Stacy Bush | Valdosta Today Financial Contributor

Stacy_Headshot (1)The Bush Wealth Advantage

Our column, “The Bush Wealth Advantage” is our way of giving back to the community with all sorts of insights, relevant news, and practical wealth planning strategies.

Buying Supplemental Health Insurance: Medigap

Medicare won’t cover all of your health-care costs during retirement, so you may want to buy a supplemental medical insurance policy known as Medigap. Offered by private insurance companies, Medigap policies are designed to cover costs not paid by Medicare, helping you fill the gaps in your Medicare coverage.

When’s the Best Time to Buy a Medigap Policy?
The best time to buy a Medigap policy is during open enrollment, when you can’t be turned down or charged more because you are in poor health. If you are age 65 or older, your open enrollment period starts on the first day of the month in which you’re both 65 or older and enrolled in Medicare Part B. A few states also require that a limited open enrollment period be offered to Medicare beneficiaries under age 65.

If you don’t buy a Medigap policy during open enrollment, you may not be able to buy the policy that you want later. You may find yourself having to settle for whatever type of policy an insurance company is willing to sell you. That is because insurers have greater freedom to deny applications or charge higher premiums for health reasons once open enrollment closes.

What’s Covered in a Medigap Policy?
Under federal law, only 10 standardized plans can be offered as Medigap plans (except in Massachusetts, Minnesota, and Wisconsin, which have their own standardized plans). The plans currently sold are Plans A-D, Plans F and G, and Plans K-N. Each Medigap plan offers a different set of benefits. All cover certain out-of-pocket costs, including Medicare coinsurance amounts. Some plans also cover other costs, such as all or part of Medicare Part A and Part B deductibles, foreign travel emergency costs, and Medicare Part B excess charges.

Medigap policies do not cover certain health-care expenses, including long-term care, vision care, dental care, or prescription drugs (to obtain prescription drug coverage you can purchase a Medicare Part D Prescription Drug Plan).

You can buy the Medigap plan that best suits your needs. But it’s important to note that not all Medigap plans are available in every state.

Are All Medigap Policies Created Equal?
Generally, yes. Although Medigap policies are sold through private insurance companies, they’re
standardized and regulated by state and federal law. A Plan B purchased through an insurance company in New York will offer the same coverage as a Plan B purchased through an insurance company in Texas. All you have to do is decide which plan that you want to buy.

However, even though the plans that insurance companies offer are identical, the quality of the companies that offer the plans may be different. Look closely at each company’s reputation, financial strength, and customer service standards. And check out what you’ll pay for Medigap coverage. Medigap premiums vary widely, both from company to company and from state to state. You can find a tool on the Medicare website (www.medicare.gov) that will help you compare Medigap policies offered in your area.

Does Everyone Need Medigap?
No. In fact, it’s illegal for an insurance company to sell you a Medigap policy that substantially duplicates any existing coverage you have, including Medicare coverage. In general, you won’t need a Medigap policy if you participate in a Medicare managed care plan or private fee-for-service plan or if you qualify for Medicaid or have group coverage through your spouse.

You may also not need to buy a Medigap policy if you work past age 65 and have employer-sponsored health insurance. If you find yourself in this situation, you may want to enroll in Medicare Part A, since it’s free. Remember that if you enroll in Medicare Part B, your open enrollment period for Medigap starts. If you don’t buy a Medigap policy within six months, you may be denied coverage later or charged a higher premium, so you may want to wait to enroll in Medicare Part B until your employer coverage ends.

In addition, you may not need to buy a Medigap policy if you are covered by an employer-sponsored health plan after you retire (e.g., as part of a retirement severance package). In this case, your employer’s plan may cover costs that Medicare doesn’t. If you have any questions about your coverage, talk to your employer’s benefits coordinator.

Stacy Bush has practiced independent financial advising in the Valdosta area for 15 years. Growing up on a farm in Donalsonville, Georgia, he is keen to the financial needs of South Georgia and North Florida families. Stacy and his wife, Carla, live in Valdosta with their four children. You can submit questions about this article to askbushwealth@lpl.com

BushWealthAdvantage (1)

Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC. The opinion voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Bush Wealth Management and LPL financial are separate entities.

Metro Valdosta’s unemployment rate rises to 5.7 percent in June
Ribbon Cutting for Partners in Health Management, LLC
×

1 Comment on "Buying Supplemental Health Insurance: Medigap"

Trackback | Comments RSS Feed

  1. kelly says:

    In Georgia, some carriers allow you to purchase up to 6 months in advance of Medicare Part B effective date, some companies will only allow 90 days. Ideally you want the coverage to begin on the Medicare effective date, so buying in advance allows the coverage to coincide with that start date with no potential and unnecessary gaps.