FILL MEDICARE GAPS WITH SUPPLEMENTAL POLICIES
Medicare was created to offset the most pressing medical expenses by providing a basic foundation of benefits.
Medicare was never designed to pay 100% of a person's medical bills.
While Medicare pays a significant portion of a beneficiary's medical bills, Medicare does not cover all services that may be needed. Even approved services will not be covered in full. Insurance companies sell policies which cover some of those costs for beneficiaries enrolled in both Parts A & B of Medicare. These are referred to as "Medicare supplement" or "Medigap" policies which provide coverage to fill the gaps left after Medicare covers their share.
Insurance companies in Wisconsin are required to sell their Medicare supplement and Medicare select policies to beneficiaries regardless of age or disability, during the six month window beginning with the date Medicare Part B begins. During this six-month open-enrollment period, insurance companies may not deny or condition the issuance of a policy on health status, claims experience, receipt of health care, or medical condition. Policies may have a waiting period before preexisting health conditions are covered unless the beneficiary had prior "creditable coverage." In addition, if under age 65 and in Medicare due to disability or end stage renal disease, the beneficiary will be entitled to a second six-month open-enrollment period upon reaching age 65.
In addition to the open-enrollment period, a beneficiary has the right to purchase a Medicare supplement or Medicare select policy regardless of their health status if prior group health, Medicare Advantage, Medicare Supplement, or Medicaid coverage terminates.
The insurance company must offer one of these Medigap policies if:
If the beneficiary meets one of the above conditions and they apply for their new Medigap policy within 63 calendar days after the prior health plan or policy ends, the Medigap insurance company:
• The Medicare Advantage or Medicare cost plan stops participating in Medicare or providing care in the beneficiary's service area;
• The beneficiary moves outside a plan's geographic service area;
• The beneficiary leaves the health plan because it failed to meet its contract obligations;
• The employer group health plan ends some or all of their healthcare coverage (not of the beneficiary’s own choice);
• The Medicare supplement insurance company ends the Medigap or Medicare select policy and the beneficiary is not at fault (for example, the company goes bankrupt);
• The beneficiary drops their Medigap policy to join a Medicare Advantage plan, a Medicare Cost plan, or Medicare select policy for the first time, and then the beneficiary leaves the plan or policy within the first 12 months after joining. However, they may only return to the policy under which originally covered, if available; or will get Guarantee Issue to purchase any Medicare supplemental policy;
• The beneficiary enrolls into a Medicare Advantage plan when starting Medicare at age 65 and within 12 months they decide to disenroll from that plan;
• The beneficiary has Medicare Parts A and B and are covered under Medical Assistance and subsequently loses eligibility for Medical Assistance;
• The beneficiary's group plan increases its (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.
• Cannot deny insurance coverage or place conditions on the policy (such as a waiting
• Must cover all preexisting conditions, and
• Cannot charge more for a policy because of past or present health problems.
The insurance company terminating coverage must provide notification that explains individual rights to guaranteed issue of Medigap policies. A copy of this notice (creditable coverage) or other evidence of termination will need to be submitted with the application for the new policy.
Types of Medicare Supplement Polices
Individual Medicare supplement policies are designed to supplement benefits available under the original Medicare program. Medicare supplement policies pay the 20% of Medicare approved charges which Medicare does not cover in addition to the deductibles if the appropriate riders are selected. Types of Medicare supplemental policies include: "traditional" Individual/group; Medicare Select; High Deductible policies; Cost-Sharing policies; and Medicare Cost Insurance.
A "traditional" Individual/Group Medicare Supplement does not restrict the ability to receive services from a provider the beneficiary chooses as long as the doctor/provider accepts Medicare.
A Medicare Select policy is similar to a traditional Medicare supplement, however, a Medicare select policy pays supplemental benefits only if covered services are obtained through doctors or providers contracted by the insurance company or health maintenance organization (HMO) except in cases of emergency services.
A High-Deductible Medicare Supplement policy provides benefits after a calendar year deductible has been paid by the beneficiary. The deductible consists of all expenses that would ordinarily be paid by a full coverage Medigap policy. Once the deductible amount is met, the policy will pay 100% of costs like a "normal" traditional Supplement. The deductible amount is adjusted annually.
In a Medicare Supplement / Select Cost-Sharing policy (K&L policy), the beneficiary will pay either a 25% or 50% cost-sharing amount on the remaining balance after Medicare covers its share on Medicare approved services. The beneficiary continues to pay the cost-sharing amounts until that year's out-pocket-maximum amounts have been met, at which time the policy will continue to cover the costs for services after Medicare.
A Medicare Cost policy offered by HMOs, have entered into a special arrangement with the federal Centers for Medicare & Medicaid (CMS). These HMOs agree to provide Medicare benefits. A Medicare cost policy will pay full supplemental benefits if covered services are obtained through the HMO plan's contracted doctors or providers, called the plan's "network". A beneficiary is not "locked" in to the HMO's providers, however, if he/she choose to use services outside of the network, the beneficiary will be responsible for the out of pocket co-insurance and deductibles after Original Medicare. To obtain coverage for Wisconsin Mandated benefits or to minimize any out of pocket copays/coinsurance, beneficiaries may need to purchase the "Enhanced" policy or the additional mandated benefit rider.
For more information read:
Supplemental Benefits or Optional Riders
Individual Medicare supplement policies include a basic core of benefits. In addition to the basic benefits which are included in all policies, Medicare supplement insurance companies may offer specified optional benefits (riders) for an additional premium. Those include:
• Medicare Part A deductible rider
• Medicare Part A 50% deductible rider
• Medicare Part B deductible rider
(Only allowed for persons who were eligible for Medicare prior to 1/1/2020)
• Medicare Part B excess charges rider (Covers if provider does not accept Medicare Assignment)
• Additional Home Health visits rider (Expands mandated visits to 365 per year)
• Emergency Foreign Travel rider
• Part B copayment / coinsurance rider
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 (Beyond Medicare's approved service)
• 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 are guaranteed renewable for life. Which 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 beneficiaries should expect to budget for regular premium increases.
Some companies may impose a waiting period before the medigap policy will pay 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 health coverage ends. If certain conditions are met, this certificate will entitle the beneficiary to a reduction or total elimination of a preexisting condition waiting period under subsequent health benefits coverage obtained. This means the waiting period of benefits under a Medicare Supplement policy will also be waived or reduced based on the prior "creditable coverage."
Examples of Creditable Coverage:
- Individual Health Insurance
- Part A or Part B of Medicare
- Federal Employee Health Benefit
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 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:
- Deductible discount rider (limited availability)
A Deductible Discount Rider provides a lower policy premium by adding an annual deductible which automatically ends after a defined period of time. (i.e. The policy deductible automatically goes away January 1, following the third policy anniversary.) The rationale is that for a few years consumers may have fewer 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.
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.