Medicare was never intended to pay 100% of your medical bills, but instead was created to offset your most pressing medical expenses by providing a basic foundation of benefits. Thus, while it will pay a significant portion of your medical bills, Medicare does not cover all services that you might need. Even those services that are covered are not covered in full. Insurance companies sell policies that pay some of these expenses if you are enrolled in both Part A and Part B of Medicare. These policies are referred to as "Medicare supplement" or "Medigap" policies and provide a way to fill the coverage gaps left by Medicare.
Medicare supplement and Medicare select insurance companies must make coverage available to you, regardless of your age, for six months beginning with the date you enroll in Medicare Part B. This six-month period is called the open-enrollment period. Insurance companies may not deny or condition the issuance of a policy on your health status, claims experience, receipt of health care, or medical condition. The policy may still have waiting periods before preexisting health conditions are covered unless having prior creditable coverage. In addition, if you are under age 65 and enrolled in medicare due to disability or end stage renal disease, you are entitled to another six-month open-enrollment period upon reaching age 65.
In addition to the open-enrollment period, in some situations, you have the right to enroll in a Medicare supplement or Medicare select policy regardless of your health status if your other health coverage terminates. The insurance company must offer you one of these Medigap policies if:
• Your Medicare Advantage or Medicare cost plan stops participating in Medicare or providing care in your service area: or
• You move outside the plan's geographic service area; or
• You leave the health plan because it failed to meet its contract obligations to you; or
• Your employer group health plan ends some or all of your coverage (not of your choice); or
• Your Medicare supplement insurance company ends your Medigap or Medicare select policy and you're not at fault (for example, the company goes bankrupt); or
• You drop your Medigap policy to join a Medicare Advantage plan, a Medicare Cost plan, or Medicare select policy for the first time, and then leave the plan or policy within the first 12 months after joining. However, you may only return to the policy under which you were originally covered, if available; or
• You join a Medicare Advantage plan when starting Medicare at age 65 and within 12 months you decide to disenroll from that plan.
• You have Medicare Parts A and B and are covered under Medical Assistance and lose eligibility in Medical Assistance.
• Your group plan increases your (premium) cost from one 12-month period to the next (12 month period) by more than 25% and the new payment for the employer-sponsored coverage is greater than the premium charged under the Medicare Supplement plan the individual is applying for.
When you meet the above conditions you apply for your new Medigap policy no later than 63 calendar days after your health plan or policy ends, the Medigap insurance company:
• Cannot deny you insurance coverage or place conditions on the policy (such as a waiting
• Must cover you for all preexisting conditions, and
• Cannot charge you more for a policy because of past or present health problems.
The insurance company terminating coverage must provide notification that explans individual rights to guaranteed issue of Medigap policies. You must submit a copy of this notice (creditable coverage) or other evidence of termination with the application for the new policy.
Individual Medicare supplement policies are designed to supplement the benefits available under the original Medicare program. Medicare supplement policies pay the 20% of Medicare approved charges that Medicare does not pay. These are the types of Medicare supplemental policies: "traditional" Individual/group; Medicare Select; Cost-Sharing policies; and Medicare Cost Insurance.
The "traditional" Individual/Group Medicare supplement policies do not restrict your ability to receive services from the doctor of your choice.
Medicare select policies are similar to traditional Medicare supplement insurance policies. However, Medicare select policies pay supplemental benefits only if covered services are obtained through doctors or other providers selected by the insurance company or health maintenance organization (HMO).
In Medicare Supplement / Select Cost-Sharing policies (K&L policies), benefits are provided after 25% or 50% cost-sharing has been paid up to $2,480 or $4,960 (2016) in out-of-pocket expenses (respectively) during a calendar year.
Medicare High Deductible policies provide benefits after a calendar year deductible of $2180 (2016) has been paid. The deductible consists of expenses that would ordinarily be paid by a full coverage Medigap policy. Once the deductible is met, it pays as a "normal" traditional Supplement.
Medicare Cost policies are offered by certain HMOs that have entered into a special arrangement with the federal Centers for Medicare & Medicaid (CMS). The HMOs agree to provide Medicare benefits. Medicare cost insurance will only pay full supplemental benefits if covered services are obtained through HMO plan doctors or other providers, called the plan's "network". A beneficiary is not "locked" in to the HMO's providers; however, if he/she chooses to use services outside of the network, the beneficiary will be responsible for all out of pocket co-insurance and deductibles after Original Medicare. To obtain coverage for Wisconsin Mandated benefits beneficiaries need to purchase the "Enhanced" policy or the additional mandated benefit rider.
For more information read the Wisconsin Guide to Health Insurance for People with Medicare, the WI Medicare Supplement Approved Policies or Medicare's "Choosing a Medigap Policy".
Individual Medicare supplement policies include a basic core of benefits. In addition to the basic benefits, Medicare supplement insurance companies offer specified optional benefits (riders). Those include:
Part A deductible
Part B deductible
Part B excess charges (covers if provider does not accept Medicare Assignment)
Additional Home Health (expands mandated visits to 365 per year)
Part B copayment or coinsurance rider
Medicare 50% Part A deductible rider
With the approval of the Office of the Commissioner of Insurance (OCI), an insurance company offering Medicare Supplement policies may offer new or innovative benefits in addition to the benefits provided in the policy that otherwise complies with State and Federal regulations regarding Medicare Supplement Insurance. The new or innovative benefits shall include only benefits that are appropriate to Medicare Supplement Insurance, are new and innovative, are not otherwise available and are cost-effective. The new or innovative Supplement benefits must not adversely impact the goal of Medicare Supplement Standardization. New or innovative benefits shall not be used to change or reduce existing benefits, including any cost sharing provision, in any standardized plan.
Innovative benefits can include but are not limited to the following: Nurse Hotline; annual physical exam; preventive dental care; preventive vision care; drug discount card; routine hearing exam; and a deductible discount rider (limited availability).
Deductible discount rider provides a lower initial policy premium by adding an annual deductible that automatically ends after a defined period of time. The policy deductible automatically goes away January 1, following your third policy anniversary. The rationale is that for a few years consumers may have less medical expenses and are willing to cover the additional risk of having to pay Medicare out-of-pocket costs. After the defined policy period the deductible goes away without requiring a policy rewrite (underwriting) or asking of medical questions.
Wisconsin insurance law requires that individual Medicare supplement policies, Medicare select policies, and some Medicare cost policies contain the Wisconsin "mandated" benefits. These benefits are available even when Medicare does not cover these expenses. Mandated Benefits include:
- 30 days Non-Medicare covered Skilled Nursing Home stays
- Home Health Care (40 visits)
- Chiropractic Care
- Hospital/Ambulatory Surgery Center charges for Dental Care
- Breast Reconstruction
- Kidney Disease (at least $30,000 coverage in any calendar year)
- Coverage of Certain health Care Costs with Cancer Clinical Trials
- $120 toward Preventive Health Care services not covered by Medicare (some policies offer more)
- Diabetes Treatment (No longer included in policies purchased after 1/1/06 or if a Medicare Prescription Part D plan was selected)
- Catastrophic Drug Coverage (No longer included in policies purchased after 1/1/06 or if a Medicare Prescription Part D plan was selected)
- Colorectal Cancer Screening (Medicare supplement and medicare select policies issued or renewed after 12/01/10).
All Medicare supplement and Medicare select policies sold today must be guaranteed renewable for life. This means that the policy cannot be changed or cancelled by the insurer as long as the premium is paid on time. It does not mean that the insurance company cannot raise the premium. Premiums can increase on a regular basis and you should expect and budget for regular premium increases.
Some companies selling Medigap policies impose a waiting period before paying benefits for a pre-existing medical condition. This waiting period cannot last more than 6 months and applies only to those conditions that were treated during the 6 months immediately prior to purchasing the policy. Companies may impose this waiting period when a beneficiary buys a medigap policy during his/her initial six month open enrollment period if they did not have creditable coverage prior to purchase. This has not changed with the passage of the Affordable Care Act (ACA).
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires that all health insurance issuers, group health plans and / or employer plans issue a HIPAA certificate of creditable coverage when your health coverage ends. If certain conditions are met, this certificate will entitle you to a reduction or total elimination of a preexisting condition waiting period under subsequent health benefits coverage you may obtain. This means the waiting period of r benefits under a Medicare Supplement policy will also be waived or reduced based on the prior "creditable coverage".
Examples of Creditable Coverage: a Group Health Plan; Individual Health Insurance; Part A or Part B of Medicare; Medicaid; Tricare / Champus; Indian Health Service; Federal Employee Health Benefit; Public Health Plans; Peace Corps.
Note: If the beneficiary had health coverage during the 6 months prior to purchasing a Medigap policy the company cannot impose a waiting period. If the beneficiary is in a guaranteed issue period or is buying a new Medigap policy to replace another Medigap policy, the company cannot impose a waiting period with the new policy regardless of health condition.
The Wisconsin Office of the Commissioner of Insurance (OCI) regulates insurance companies that sell Medigap policies in the state. Complaints or inquiries about specific companies or agents can be directed to OCI directly at www.oci.wi.gov or call 1-800-236-8517.
Last Modified: 7/28/2016 9:19:26 AM