Questions about Medigap Policies
What are Medicare policies with limited networks, also known as Medicare SELECT?
What are high-deductible Medigap policies?
Are under-65 Medicare beneficiaries with disabilities able to obtain Medigap policies?
How much do Medigap policies cost?
Can a person have both a Medigap policy and be enrolled in a Medicare Advantage plan?
Should the standardized benefit packages in Medigap policies be restructured since there have been significant expansions in preventive and prescription drug benefits through Medicare?
What are Medicare policies with limited networks, also known as Medicare SELECT?
Federal law allows insurance carriers to sell a variant of the standardized plans known as Medicare SELECT. Medicare SELECT plans have the same benefits design as the standardized plans, but there is an added restriction that the enrollee must receive services through the carrier's contracted network in order to receive Medigap benefits. Typically, most beneficiaries who are willing to accept a limited network can obtain greater savings by enrolling in a Medicare Advantage plan.
What are high-deductible Medigap policies?
The Balanced Budget Act (BBA) of 1997 authorized insurers to offer high deductible Medigap policies, which are a variant of the standardized plans. These policies, also known as Plans F and J, have an annual deductible that increases annually. The reductions in premiums from high-deductible plans are substantial. If you are interested in these plans, please note that many state consumer guides only describe them in footnotes to the corresponding regular plan.
Are under-65 Medicare beneficiaries with disabilities able to obtain Medigap policies?
Medicare beneficiaries who are under age 65 do not fall within the scope of the Federal open enrollment provisions. However, they are eligible for the 6-month open enrollment period when they turn age 65. Certain states have improved access to Medigap plans for those under 65. In some cases these legislative mandates are limited to certain Medigap policy types. Often the Medigap premiums are significantly higher for under-65 Medicare beneficiaries.
How much do Medigap policies cost?
There are three different methods for setting premium rates. They can be either community rated, meaning that all policyholders in a geographic area are charged the same amount; issue-age rated, whereby premiums are based on the age at initial purchase; or attained-age rated, whereby premiums rise as beneficiaries age. Attained-age rating results in higher premiums as beneficiaries grow older, when their incomes are likely to decline. Policies with larger benefit packages are more expensive. In addition, if Medigap policies are available for those under age 65, the premiums are likely to be significantly higher than the premiums for those ages 65 and older.
Can a person have both a Medigap policy and be enrolled in a Medicare Advantage plan?
An individual can have a Medigap while enrolled in an MA plan, however, they cannot use the Medigap policy if enrolled in an MA plan. Medigap plans only pay for services when Original Medicare makes payment on a claim. If someone is in an MA plan and paying premiums for a Medigap plan, they are paying for something they cannot use.
Should the standardized benefit packages in Medigap policies be restructured since there have been significant expansions in preventive and prescription drug benefits through Medicare?
The National Association of Insurance Commissioners (NAIC) has undertaken an effort to modernize the standard Medigap offerings by reducing the number of offerings, adding to the “basic benefits”, providing additional cost-sharing options that in turn reduce premiums, and eliminating underutilized and redundant benefits (removal of plans E, H, I, J). There are no changes in enrollment rules or guaranteed issue rules. These proposed changes will not be adopted without federal legislative action. The old model is still in force.
For more information on Medigap policies in your state, please refer to your SHIP or State Department of Insurance.
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