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What Really Is a “Medigap” Plan?

Many people confuse the term “Medicare Supplement Plans” with “Medigap Plans”. It should be noted that Medicare supplement plans fill in some gaps in coverage in original Medicare which is known as “Medigap”.

There are 10 standardized Medigap plans available for senior citizens, each marked with the letters A to N.  And these plans are only available through private insurance companies, and it is not necessary for the insurance companies to sell all the 10 Medicare supplement plans. Every insurance company selling Medicare Supplement policy have to offer at least Plan A and if they offer any other policy than they must also offer either Plan C or Plan F.

Please note that Medicare Supplement plans can be used only to pay Original Medicare expenses. These plans can be used to cover expenses that you may have in Part C Medicare. If you enroll in Medicare Advantage plan, you can keep your Medigap plan as long as you keep paying the monthly fee, but you will not be allowed to enjoy Medigap plans on the cost of Medicare advantage plans. There are few things that you need to keep in mind before going for Medigap plans.

First and foremost, the beneficiaries must be enrolled in Medicare Plan A and Plan B. Secondly, if the beneficiary has a Medicare advantage plan than they can apply for Medicare policy and you will have to leave Medicare Advantage plan before you can enroll in Medigap. These Medigap policies are only able to cover one person. If anyone from your family want to avail then they will have to enroll themselves.

Monthly premiums will have to be paid to private insurance companies in addition to monthly Plan B premium. You are not bound by any insurance company, you can select any insurance company you like that is licensed in your state. Each standardized Medigap policy is guaranteed renewable, even when suffering from health problems. This means that the company cannot cancel Medicare Supplement insurance contracts as long as you pay the premiums. Medicare supplement plans allow you to use any provider that can accept Medicare. Among all the states of America, Arizona is considered as one of the best places to live after retirement. Arizona provides the best Medicare and Medigap help to senior citizens.

There are two specific Medigap plans (Plan k and Plan L) which are capable of covering out of pocket limits, because once your basic health care costs reaches the limit, your Medigap plan will cover 100% of all the expenses for the rest of your year. It is worth mentioning that original Medicare don’t have the ability to include a yearly out of pocket limit. Remember, Medicare supplement plan is meant to work side by side with your original Medicare coverage. You only need to remain enrolled in original Medicare to take the benefits of Medigap.

Although private insurers are required to offer the same benefits for each Medicare plan, these companies can change the costs of premiums they charge for this coverage. So if you are looking for Medigap coverage, you must contact different insurance companies to find a Medicare Supplement plan that is appropriate for your medical and financial needs. Remember that insurance companies use different methods to price their Medigap plans. Pricing method that company uses may affect the amount of premium you pay when you first enroll in a Medicare Supplement plan, as well as your long-term costs.

Medigap can be used only by people enrolled in traditional Medicare only. It is not a Government-run program but you can buy private insurance to cover some or most of your expenses in traditional Medicare. Medicare advantage plans consist of variety of private health plans for every type of needs. HMOs and PPOs are the most commonly used among the beneficiaries. Most of the plans include drug prescription coverage at no extra cost. Some plans are capable of covering routine hearing and vision services but not all. By law, all plans have annual limits for out-of-pocket costs.

Another difference from the traditional program is that most plans require you to go to the doctors and hospitals within their network and if you want to go out of the network, you will have to pay extra.

If you enroll in Medicare Advantage health plan, you can’t use a Medigap policy to cover your expenses, and it is illegal to sell insurance Medigap policy if you are enrolled in a Medicare Advantage plan. If you want to stay in traditional Medicare, you will need a separate Part D plan to get prescription drug coverage and pay an extra premium for it. A Medigap does not cover drugs outputs of- pocket.

Some states even offer Medigap plans for beneficiaries under 65 years of age who are eligible for Medicare because of disability or under certain conditions. Federal law doesn’t allow states to sell Medicare Supplement insurance for under 65 years, but depending on where you live, some states offer Medigap coverage for beneficiaries under 65 years of age. Every state can have its own eligibility criteria and terms. If you are a Medicare beneficiary under 65 years of age and interested in purchasing a Medicare Supplement insurance, contact your state insurance department to find out if you qualify for Medigap coverage in your state or not.

Who’s Eligible For Medicare Coverage?

Medicare eligibility is a big question, especially among those newly eligible for Medicare. Generally speaking, a person is eligible for Medicare when s/he turns 65 years of age after having worked at least ten years, and is a citizen or a permanent resident of the United States. There are exceptions for persons who are completely disabled and unable to work, and for persons who have been diagnosed with End Stage Renal Disease.

Medicare is not like a private insurance plan, where a policyholder can add dependents. When a sole provider becomes eligible for Medicare at age 65, his or her spouse and/or minor children do not become eligible for benefits under the program. Each person who qualifies for Medicare coverage must do so independently, so the 60-year old spouse of a Medicare beneficiary may not collect Medicare benefits.

For newly eligible Medicare beneficiaries who may still be working and have minor children living at home, Medicare will not provide any coverage of any kind for dependents unless they independently qualify for Medicare by virtue of disability. If you have private health insurance through your workplace, you may extend those benefits to your minor child for up to three years through the COBRA statute. You pay all premiums for this coverage out of pocket. There is no reimbursement for this kind of coverage.

If you have minor children or dependents who are not eligible to collect Medicare on their own, talk with your benefits advisor prior to separating or retiring and enrolling in Medicare. Your benefits advisor can help you determine how much your premiums will be and what coverage will be available to your Medicare non-eligible dependents.

The Price Of Not Enrolling In Medicare

Nearly half of all workers polled in a recent survey conducted by Robert Half say that they will delay retirement beyond the “traditional retirement age.” Survey respondents also identified health care insurance as one of their most valuable benefits. A recent Pew Research Center survey found that more than one-third of workers age 62 or older had already delayed their retirement plans due to the recession.

What does the plan to keep working do to Medicare eligibility? Even if you plan to continue working, the choice to enroll in or decline Medicare insurance shouldn’t be taken lightly. As the system is designed now, you become eligible to enroll in Medicare during an initial enrollment period that includes the 3 months before you turn 65, the month in which you turn 65 and the 3 months following your 65th birthday.

If you elect not to enroll in Medicare and later decide to join the plan, you’ll pay a penalty for delaying enrollment, and your Medicare premiums will be higher than they would have been had you enrolled during the special enrollment window. Your premiums will include the penalty for as long as you have Medicare coverage. The penalties for not enrolling increase the longer you wait. Further, you may have to wait to enroll in Medicare and you may experience coverage gaps while you wait for open enrollment.

The problem may be made worse if you’re covered by private insurance through your employer. Once you turn 65, your employer-paid insurance plan may expect Medicare to become your primary payer. If you don’t enroll in Medicare, your private insurance plan may refuse to pay for otherwise covered expenses as a primary payer.

If you plan to work past the age of 65 and have health insurance as a benefit of employment, talk to your benefits administrator to determine what coverage you’ll have once you become eligible for Medicare.

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