“Why buy a Medicare Supplement plan?”

For many people on Medicare, traditional standardized Medicare Supplements are a great option to help cover what basic Medicare does not, and to limit catastrophic financial exposure.  The challenge for most in that situation is what might be my best option, and what would prevent me from getting what I want?

Determining your best option may not be as simple as you think.  Medicare is a monster not always well understood by those with the coverage.  While the material made available to the public to explain the program is very comprehensive, it can seem overwhelming.  For example, “The Official U.S. Government Medicare Handbook”, “Medicare & You” is 120 pages long.  Even if you’d like to examine Medicare Supplement or Medigap policies, the “Choosing a Medigap policy: A Guide to Health Insurance for People with Medicare” - that guide itself is 52 pages long.

However, let’s say you have a good base knowledge of what Medicare does and does not cover, and you feel Medigap coverage is what you’d like to do to cover the shortfalls in the basic medical coverage, what plan type and which company would be a good choice for you?

Let’s look first at the plans that are available to you.  This can vary according to the state in which you reside, and when you are looking to obtain the coverage.  In 47 of the 50 states, the standardized offerings are pretty much the same (those in Massachusetts, Minnesota, and Wisconsin have different rules).  If you are on Medicare before January of 2020, you may have eleven different plan types available to you, and you will have those types of options available going forward.  The plans’ medical benefits are standardized by the government; the cost and medical underwriting requirements are not.

The benefits in those plans cover, to one degree or another, the deductibles and coinsurance you have with traditional Medicare.  They run from the most basic of coverages in Plan A (normally the only plan type required to be offered to those under the age of 65 accessing Medicare coverage because of disability), to the plan that covers all of the expense for services that are not fully paid by Medicare (Plan F).  However, for those accessing Medicare coverage after January of 2020, Plan F (and Plan C), is not available, because of MACRA legislation prohibiting plans that cover the Part B annual deductible.

Additionally, depending upon when you apply for Medicare Supplement or “Medigap” coverage, you may need to qualify for the plan after undergoing medical underwriting, much like you do for most life insurance coverage.  That requirement can vary according to the guidelines mandated by the state in which you reside, as “Guaranteed Issue” periods may exist, based on when you first qualify for the coverage, or if your state has guaranteed issue periods based on the your birthday month or the anniversary of when you purchased previous Medigap coverage (not all states have those guarantee issue periods).

So what is “best” for you?

First, what plans are available to you?  If you need to qualify medically to purchase a plan, can you?  And, not all plans are offered everywhere by all carriers, but the extent of the coverage is very important to most purchasing a plan and is many times the determining factor in the purchasing decision.  Then, what can you afford?  Generally, the greater the benefit, the more expensive the plan.  And, plans generally get more expensive the older you get.  Your budget may well influence your decision.

Sometimes the choice can be complicated by “paralysis by analysis”.  Would you like to be popular?  Turn 65 and see just how much “outreach” you get from insurance companies and agents looking for your business.  You can look forward to the repetitive nature of that popularity contest to some degree around your birthday month, during Medicare’s Open Enrollment Period for other types of coverages from October 15^th until December 7^th, and maybe during the anniversary of the purchase of your prior coverage, if you live in certain states.

So what should a Medicare Beneficiary do?

1. Homework.  Use the information provided by the government to educate themselves regarding the coverages that are available.  Be careful of just “Googling it”, as advertisements by insurance companies and insurance agents will appear above the information supplied by the government agencies’ explanations of benefits.
2. Investigate.  Determine what options are available to you, especially if you are still working, have coverage available through prior employment or governmental service, or other options for coverage are appealing.
3. Work with a qualified insurance broker who represents multiple insurance companies for medical coverage and who knows what all else basic Medicare does not cover, e.g. prescription drugs; dental, vision, hearing coverage; long-term-care, burial coverage.

Medicare coverage can be confusing, but you need not know all the answers.  You just need to know what questions to ask.