As we all know, quality and comprehensive health coverage are essential. However, insurance plan out-of-pocket costs can be quite expensive. Therefore, to help pay for Medicare expenses, Medigap policies are available to qualifying individuals. But who regulates Medicare supplement insurance plans?
Medigap, or Medicare Supplement insurance plans, can be an effective option to mitigate concerns about healthcare costs. It is important to know what these policies are, how to be eligible, and the benefits they offer. Furthermore, you should consider speaking to an experienced health insurance agent.
This article will discuss everything you need to know about the regulation of Medicare Supplement Insurance Plans.
What is Medicare Supplement Insurance (Medigap)?
Medigap is a Medicare supplement insurance plan to help individuals pay for out-of-pocket costs. Unlike Medicare, which is administered through the federal government, Medigap is sold through private insurance companies. As the name implies, Medigap fills gaps such as deductibles, copayments, and coinsurance.
There are ten different available Medigap policies: Plans A, B, C, D, F, G, K, L, M, and N. Each plan has different coverage options and benefits. It is important to note that Plans C and F are no longer available if you turn 65 after January 1st, 2020. However, individuals who turned 65 before that date may still be eligible to apply for those plans.
To be eligible for Medigap, you must be at least 65 and enrolled in Original Medicare (Parts A and B.) Typically, it is best to apply within your 6-month Open Enrollment Period (once you turn 65). If not, you may have higher monthly costs or be outright denied if you have pre-existing health conditions.
Since they are sold by a private insurance company, Medigap policies require regulation. These are implemented to protect the consumer and ensure they receive proper benefits.
While both plans help pay for pocket costs, there are key differences between Medigap and Medicare Advantage policies. Medigap has greater service areas, so members who travel frequently won’t be at risk of limited coverage options. Also, the out-of-pocket maximums for Medicare Advantage plans are typically higher. So, if you need frequent doctor visits, you may have higher health care costs. Alternatively, specific Medicare Advantage plans have a $0 monthly premium. Therefore, those who do not require frequent doctor visits may benefit significantly from this type of plan. In addition, Medigap does not provide prescription drug coverage. Medicare Advantage may also offer dental, vision, and hearing benefits.
It is also important to note that you cannot get Medigap or Medicare Advantage. You must leave one before enrolling in another plan. Although they have distinct differences, Medicare Advantage and Medigap do feature certain similarities. For example, you must be enrolled in Original Medicare (Parts A and B) before signing up for either plan.
Who is Responsible for Regulating Medicare Supplement Insurance?
Despite being sold by private insurance companies, Medigap policies are regulated by the federal government. Furthermore, states can choose to offer additional benefits to Medigap members. These regulations are implemented to protect consumers and ensure they receive the benefits they are paying for. In addition, laws are implemented to ensure proper creditable coverage. Each state has varying Medigap supplement policies, so it is important to properly understand the payment and coverage possibilities in your state of residence. With the help of a licensed and knowledgeable health insurance agent, you can receive fully accurate and up-to-date information.
The Importance of State Regulations in Medigap Policies
As previously stated, each state has its own Medigap regulations. In addition to complying with federal regulations, additional policies can help protect enrolling members. By doing so, Medigap plans become “standardized,” meaning they offer each member the same benefits (copayments, coinsurance, and monthly deductibles).
Additionally, depending on the state, you may pay more for Medigap. For example, the cost of living can impact costs. Speaking of prices, recent enrollment trends may have led to an increase in monthly Medigap prices. AJMC (American Journal of Medical Care) stated that “low-risk beneficiaries may delay Medigap coverage … leading to a disproportionately high Medigap enrollment of high-risk beneficiaries.”
Since more individuals with prevalent health conditions are enrolling in Medigap, the monthly costs are increasing. This is because high-risk beneficiaries tend to have more expensive claims.
States and Their Regulations in Medigap Policies
Understandably, knowing about your state’s Medigap regulations is essential. Depending on your state of residence, supplement policies can significantly influence your health care expenses. Also, all plans must abide by creditable coverage standards.
While it may seem confusing, there are helpful solutions. In fact, by receiving a quote online and speaking to an experienced health insurance agent, you can learn vital information. Plus, they can answer any questions or concerns you may have.
States Prohibitions on Medicare Excess Charges
Generally, doctors and healthcare providers who accept Medicare agree to Medicare-approved amounts for covered services. This is known as accepting the assignment. However, there are instances where a doctor or medical provider bills more than the Medicare-approved amount. They can charge up to 15% for covered Part B (medical insurance) services. Under most state laws, healthcare providers are allowed to do this, and Original Medicare is not required to cover these expenses.
Thankfully, there are Medigap supplement policies that offer excess charge coverage. They are Plans F and G. However, as previously stated, Plan F is no longer available for members who became eligible after January 1st, 2020. Luckily, Plan G is available to newly Medicare-eligible individuals.
States That Do Not Allow Medicare Excess Charges
Excess charges can be quite distressing, especially if you require frequent doctor visits. Fortunately, individuals who live in certain states do not need to be concerned about these out-of-pocket costs.
They are not allowed in these states: New York, Connecticut, Pennsylvania, Massachusetts, Ohio, Minnesota, Vermont, and Rhode Island.
In these states, doctors and healthcare facilities must abide by Medicare-approved prices.
Premium Rating Rules
There are three different types of Medigap payment methods.
Community-Rated: Monthly premiums are the same for all members, regardless of age or when they first enrolled.
Issue-Age-Rated: Your monthly premiums are based on when you first enrolled for Medigap. So, an individual who enrolled at age 65 will pay less than someone who enrolled at age 70.
Attained-Age-Rated: Your monthly premiums will increase as you get older.
Furthermore, premium rates can be determined by pre-existing medical conditions, place of residence, and smoking status.
Other Rare State Rules for Medigap
Varying states have several different Medigap regulations. If you take the time to stay informed, you can be better prepared to find a plan that works best for you. In addition, learning about different policy intricacies can save you money.
To start, not all states offer the ten standardized Medigap plans. Massachusetts offers three plans (Core Plan, Supplement 1A, and Supplement 1 Plan.) Each plan provides a different level of extensive coverage. Minnesota has two Medigap plans (Basic Plan and Basic Extended Plan). Finally, Wisconsin only offers one plan, their Basic Medicare Supplement Plan.
New York and Connecticut have year-round Open-Enrollment Periods for all available Medigap plans.
California and Oregon have a “Birthday Rule.” This rule allows individuals to change Medicare Supplement Insurance plans within 30 days of their birthday. They can then find a more comprehensive or affordable plan without an insurance company's evaluation.
Medigap supplement policies are community-rated in the following states: New York, Connecticut, Maine, Massachusetts, Vermont, Minnesota, Arkansas, and Washington. This is generally the most consumer-friendly payment method, as age cannot influence monthly prices.
How to Find Local Health Insurance Agents in Your Area
If you are looking to enroll in a Medicare Supplement Plan, there are specific tips you should follow. Finding a health insurance agent to speak to is on the top of the list. As a consumer, you are entitled to different protective rights. This includes finding a plan that is comprehensive and affordable. In addition, there are illegal practices that insurance agents may try to employ. You must stay aware of this to avoid being tricked and misled.
At Health Plans of North Carolina, our team of health insurance agents is determined to help you find the right plan that meets your medical needs.
Find a Trustworthy and Local Health Insurance Agent
To begin, health insurance agents must obtain a license to work professionally. Also, they may be required to renew their license every few years. This ensures that they are proficient with new health coverage policies and procedures. In addition, you can ask for verification from an insurance company and their agents. It is also beneficial to ask trusted friends and family members for advice. They can recommend insurance agents who are helpful to them. Also, you can look for reviews online to better understand your potential insurance agent and company.
Be Cautious of Dropping Your Existing Medigap Policy
Typically, health insurance agents receive payment through commission. So, an untrustworthy insurance professional may advise you to change your Medigap plan. They may lie about increased coverage options or lower monthly costs. In reality, they are just looking for more commission. You should be aware that this is an illegal practice as they are not working with truthful intentions.
Medigap is Not Part of Any Medicare Program
An insurance professional cannot claim that Medigap is part of the Medicare program. This is an entirely untrue statement. Medicare is administered by the federal government. On the other hand, private insurance companies sell Medigap.
Medigap Policy is Different from a Medicare Advantage Plan
It is illegal and highly unethical for an insurance professional to sell you a Medicare Advantage Plan when looking for a Medigap plan. Once you enroll in a Medicare Advantage Plan, you are no longer eligible for Medigap. Furthermore, your Original Medicare benefits (Plan A and B) will fall into the Advantage Plan. This can create a plethora of problems for an individual who wants to keep Original Medicare and enroll in Medigap.
In addition, the limited selection of healthcare providers can negatively impact one’s well-being. While Medicare Advantage has various benefits, it may not meet the requirements of someone looking for Medigap.
Read Policies and Fill Out Forms Correctly
Understandably, it is quite important to read policies when filling out forms thoroughly. You must be aware of your monthly costs and benefit options. If you can’t pay your monthly premiums on time, you may experience a lapse in coverage. By doing your due diligence, you can avoid this issue. In addition, if you want to return Medigap plans, you can do so within a 30-day return window. You can return any plan and receive a full refund during this time.
Additional Unfair Practices to Look Out For
Those who claim to be insurance agents but are hesitant to show verification should not be trusted. A legitimate health insurance professional can easily authenticate their license status. Insurance agents are not allowed to ask about family medical history or demand a genetic test. Also, they can not sell you a Medigap plan that is unavailable in your state.
Frequently Asked Questions
Are all Medicare Supplement plans standardized?
Yes, the federal government standardizes all available Medicare supplement plans. Each plan should provide adequate coverage.
Are Medigap policies only standardized in 3 states?
No, Medigap policies are standardized in each state. However, three states (Massachusetts, Minnesota, and Wisconsin) have different Medigap supplement plans. In addition, private insurance companies choose which Medigap policies to offer.
What happens to my Medigap plan if I move to another state?
Typically, you will not need to enroll in a new Medigap plan if you move states. However, your monthly premiums may change. Also, your current insurance company may not operate in your new state. In that case, you must find a new health insurance agent.
Which states allow you to change Medicare supplement plans without underwriting?
California and Oregon allow you to change Medicare supplement plans without medical underwriting. It is known as the “Birthday Rule”. Individuals can change their supplement plans within 30 days of their birthday. Your new plan must offer creditable coverage.
How Health Plans of NC Can Help
To learn more about Medicare Supplement Insurance Plans, please call us at 800-797-0327. Health Plans of NC, with a team of licensed and knowledgeable insurance professionals, can assist you in finding the right health coverage plan. It is our goal to provide high-quality service to all of our clients.