6 Truths about Medicare Supplement Insurance Plans

What You Need to Know

Medigap plan benefits are standardized.
Clients can suspend their coverage.
Clients who qualify for Medicare early get a Medigap open enrollment period around the time they turn 65.

As we all know, health care can be very expensive, particularly if you don’t have the right protections in place to help manage any unexpected out-of-pocket expenses.

For many individuals covered by Medicare, the thought of being responsible for 20% of all their medical expenses can be nerve-wracking.

To help alleviate this burden and give beneficiaries more peace of mind, brokers and financial advisors can inform their clients about Medicare supplement Insurance, or Medigap, which offers financial predictability by helping to cover some of the out-of-pocket costs Medicare does not cover — including deductibles, coinsurance and co-payments.

Medicare supplement plans are sold by private insurance companies and are designed to work with Original Medicare, which is administered by the federal government.

There are many plan options offered by multiple health insurance companies, often making the decision feel overwhelming.

Here are six hidden truths about Medicare supplement Insurance that can help your clients make an informed decision and select the plan that best fits their individual needs and preferences.

1. Medigap plans are standardized.

Unlike other types of insurance where benefits differ from company to company, all Medigap plans with the same letter designation offer the same benefits — regardless of the insurance provider.

For example, a Medigap Plan G from one insurance company will offer the same benefits as a Plan G from another company.

2. You can suspend a Medigap policy for up to 24 months.

In certain situations, Medigap policyholders may become eligible for Medicaid or may return to employer coverage if they bought the Medicare supplement Insurance policy under age 65.

In these cases, there is an opportunity for your client to suspend the Medicare supplement insurance policy for up to 24 months.

This means the policyholder can temporarily stop paying the premium, and the policy will not be canceled.

Once the suspension period ends, the policy can be reinstated without the client going through the underwriting process again.

3. Medigap plans do not provide coverage for individuals enrolled in a Medicare Advantage plan.

Medigap only pays secondary to Original Medicare as the primary coverage.

Clients who enroll in a Medicare Advantage plan, managed by private insurance companies, can only buy a Medigap plan if they are returning to Original Medicare.

4. Pre-existing conditions may affect coverage.

Individuals with pre-existing conditions may be subject to medical underwriting when applying for a Medigap policy.

This can make it more difficult to get coverage.

5. State resources provide free assistance.

State Health Insurance Assistance Programs, or SHIPs, are state-based resources that provide free and unbiased information, counseling and assistance for Medicare beneficiaries and their families.

These services are available to individuals regardless of income or insurance status.

6. Those eligible for Medicare prior to age 65 receive a second Medigap Open Enrollment Period when they turn 65.

Some of your clients may become eligible for Medicare before turning age 65.

They are typically people who have been receiving Social Security disability insurance benefits for at least 24 months.

For these individuals, they receive a second opportunity to enroll in or make changes to their Medigap coverage when they turn 65, known as the second Medigap open enrollment period, or OEP.

The second OEP is important because it allows these individuals to review their Medicare coverage options and make changes based on their evolving health care needs as they age.

A company that offers Medigap plans can’t refuse to sell them a plan during this OEP.

In addition to covering many of the out-of-pocket costs associated with Original Medicare, Medigap policies offer beneficiaries the freedom to choose any doctor or hospital that accepts Medicare patients, giving them greater flexibility in their health care choices.

These policies help provide predictability throughout the year and peace of mind during major health events.

Before selecting a Medigap plan, I recommend brokers research and compare the available plans in their clients’ area to determine which ones best meet their health care needs and budget.

And keep in mind, cheaper isn’t always better, even with standardized plans.

Insurance companies may have different eligibility requirements, and the quality of customer support varies, so do some exploring before making a final decision.