When it comes to this all-important piece of Medicare coverage,
timing is everything
Walecia Konrad | October 19, 2018
The first question
most folks who are new to Medicare ask is,
“Should I choose Original Medicare or Medicare Advantage?”
But an equally
important question to ask yourself is this: “Am I likely to want supplemental
insurance, now or in the future?”
The answer to the
second question is critical to ensuring you’ll be able to get the coverage you
need at a price you can afford.
That’s because in all
but four states, if you don’t sign up for a Medicare Supplement, or Medigap, policy
within six months of when your benefits kick in under Original Medicare and you
want to apply later, insurers can charge you substantially more if you have a
preexisting condition, such as asthma, heart disease, or diabetes. They can
even deny you coverage altogether.
That’s right: In most
cases, if you neglect to sign up for Medigap within the first six months of
receiving Medicare benefits, you may risk losing access to supplemental
insurance ever again.
Why Medicare
Supplement insurance is so crucial
Medicare Supplement
insurance is a private policy that helps you lower your out-of-pocket health
costs. It only works with Original Medicare—which two-thirds of Medicare
recipients choose—not with Medicare Advantage, the private alternative to the
federal Medicare program.
Original Medicare
consists of Parts A and B, which cover hospitalizations
and physician and outpatient services respectively. You pay a monthly premium
($135.50 for most enrollees in 2019), plus deductibles and coinsurance.
With Original
Medicare, you may also pay a separate premium to a private insurer for Medicare Part D, which covers your
prescription drugs.
Neglect to sign up on time, and you may
risk losing access to supplemental insurance ever again.
While Original
Medicare covers a lot, it’s hardly comprehensive. The deductible for
hospitalizations under Medicare Part A is $1,364 in 2019. Daily co-pays kick in
for hospital stays that are longer than 60 days, and for extended stays in
skilled nursing facilities.
For Part B, you’re
responsible for a $183 deductible plus 20% coinsurance for most doctor visits
and outpatient tests or treatments. And there’s no annual or lifetime limit on
out-of-pocket costs.
That’s where Medicare
Supplement insurance comes in. These policies cover at least some of the
out-of-pocket health care costs you incur with Original Medicare, and often
some hospice and home health care services as well. (For an overview of what
these policies cover, go here.)
Why you shouldn’t
overlook coverage early on
About one in four
people who choose traditional Medicare also get a Medicare Supplement plan. Yet
many who opt out likely don’t realize that a Supplement plan may not be
available down the line, says Judith Stein, executive director of the Center
for Medicare Advocacy.
During your six-month
open enrollment window, which starts the month after you are both 65 and have
signed up for Medicare Part B, insurers are legally obligated to sell you a
policy, regardless of your health. After that, poor health could come back to
bite you.
If you want help with
out-of-pocket healthcare costs—both now and in the future—you need to plan for
that no matter what your current health needs are. And that may mean buying a
Supplement plan before you really need it.
“You need to make
sure you choose insurance expecting that you may get sick or you may get
injured in the future,” says Stein.
There are 10
standardized Supplement plans to choose from. Depending on where you live, what
coverage you get and how old you are, you may pay between $100 and $250 in
monthly premiums.
When you get a valuable
second chance
There are exceptions
to the Medigap six-month rule.
If you live in one of
four states that don’t allow insurers to consider your health—Connecticut,
Massachusetts, Maine, or New York—you can purchase a Medicare Supplement policy
anytime without worrying about being denied coverage or charged more for a
pre-existing condition.
In any state, if
you’ve chosen a Medicare Advantage plan and change your mind within 12 months,
you can return to Original Medicare and purchase a Medicare Supplement policy,
no matter what the state of your health.
You may also buy a
Medicare Supplement policy any time if your Advantage plan withdraws from your
area or if you move out of your plan’s area.
If you depend on
employer or union-sponsored insurance to help cover out-of-pocket Medicare
costs and that policy is cancelled, Medicare Supplement insurers must also
cover you despite any preexisting conditions. And 28 states extend that rule to
employer policies that are altered in any way.
Need help? Counselors
at your local Senior Health Insurance Assistance Program (SHIP) can help you
sort through the options and determine what protections you have in your state.
(Find your state contact information here.)
The other way to
cover out-of-pocket costs
Another way to lower
your out-of-pocket costs is to forgo Original Medicare and a Medicare
Supplement policy altogether and buy an Advantage plan.
These plans cover
hospitals and doctor visits and usually your prescription drugs. Plus, they can
offer additional benefits not provided by Original Medicare, such as vision and
dental coverage, and they limit out-of-pockets costs to a maximum of $6,700 a year.
That said, Advantage
plans tend to have a more limited network of providers than Original Medicare.
So if you go this route and later find you want to see a specialist who is not
part of the network, you may look look to returning to Original Medicare plus a
Supplement plan, Stein says.
But at that point,
however, you may be too late.
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