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Medicare Supplement Benefits

Medicare Supplement Benefits

Medicare supplement insurance – sometimes called Medigap -- fills in the gaps between what original Medicare pays and what you must pay out-of-pocket for deductibles, coinsurance, and copayments.

Medicare supplement policies only pay for services that Medicare deems medically necessary, and payments are generally based on the Medicare-approved charge. Some plans offer benefits that Medicare doesn’t, such as emergency care while in a foreign country.

Medicare supplement policies are sold by private insurance companies that are licensed and regulated by TDI. Medicare supplement benefits, however, are set by the federal government.

Your Medicare supplement policy is automatically renewed each year.  If you drop your Medicare supplement policy, you may not be able to get it back or you may not be able to buy a new policy.

Medicare Select

Medicare Select is a type of Medicare supplement policy that generally requires you to use doctors and hospitals in the plan’s network for your routine care. If you use out-of-network hospitals, other than in an emergency, you’ll have to pay more of the cost. If you leave a Medicare Select plan, the company must offer you any Medicare supplement plan it has on the market with similar benefits.

The 10 Standard Medicare Supplement Insurance Plans

There are 10 Medicare supplement insurance plans. Each plan is labeled with a letter of the alphabet and offers a different combination of benefits. Plan F offers a high-deductible option. Plans K, L, and M have a cost-sharing component.

Every company must offer Plan A. If they offer other plans, they must offer Plan C or Plan F. Contact your Medicare supplement company for more information.

The 10 Medicare supplement plans (plans A, B, C, D, F, G, K, L, M, and N) offer these benefits:

  • Hospitalization:
    • Pays your daily copayments for hospitalization expenses from the 61st through the 90th day of the Medicare benefit period.
    • Pays the Medicare Part A copayments for any hospital confinement beyond the 90th day in a benefit period, up to an additional 60 days during your lifetime. (These are your inpatient reserve days. You may use these days when you require more than 90 days in the hospital during a benefit period. When you use a reserve day, it is subtracted from your lifetime total and cannot be used again.)
    • Pays the Medicare Part A coinsurance plus coverage for 365 additional days after Medicare benefits end.
  • Medical expenses: Pays your portion of the 20 percent Part B coinsurance for Medicare-eligible expenses for medical services -- including doctor bills, hospital or home health care, and specified higher payments for certain services under the prospective payment system -- after you have met your Part B deductible. Plans K, L, and N required you to share in the payment of coinsurance.
  • Hospice: Pays the coinsurance for out-patient drugs and inpatient respite care. Plans K and L cover this cost at a different rate. You must meet Medicare’s requirements, including a doctor’s certification of terminal illness.
  • Blood: Pays the reasonable cost of the first three pints of blood each year under Medicare parts A and B.

In addition:

  • Plans B, C, D, F, G, and N pay the entire Part A deductible. Plans K, L, and M pay a percentage of the Part A deductible and out-of-pocket limits apply to plans K and L.
  • Plan N requires you to pay a $20 copayment. .
  • Plans C and F pay the Part B deductible.
  • Plans C, D, F, G, K, L, M, and N pay for skilled nursing facility care copayments from the 21st day through the 100th day in a benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A. This is not custodial care. Plans K and L pay a portion of the cost until you meet the annual out-of-pocket limits. The plan will then pay 100 percent.
  • Plans C, D, F, and G pay for foreign travel emergency care. They pay 80 percent of the billed charges for foreign emergency care that Medicare would have covered if it was provided in the United States. Care must begin during your first 60 days outside the United States. The calendar year deductible is $250. The lifetime maximum benefit is $50,000.
  • Plans F and G pay Medicare Part B excess doctor charges.  They pay 100 percent of the excess fees, which are limited to 15 percent above the Medicare-approved amount. High deductible in Plans F: Offers the same benefits, but you pay a lower premium in exchange for paying a higher deductible. The deductible amount is set by Medicare and can change each year. In addition to meeting the 2011 $2,000 deductible, you must also meet the separate deductible for foreign travel emergency.

This chart summarizes the benefits offered with each plan: Standard Medicare Supplement Insurance Plans.

* Plan F has an option called a high-deductible Plan F. You will have a lower premium with the high-deductible option, but you will have to pay $2,000 out of pocket before the policy will begin to pay benefits. There is a separate deductible for the foreign travel emergency benefit.


Cost Sharing

Plans K and L
Basic benefits for plans K and L include similar services as other plans, but the cost-sharing (copayments and coinsurance) for the basic benefits is at different levels. In exchange for lower premiums, Plan K has a 50 percent coinsurance and an annual out-of-pocket limit of $4,640 in 2012. Plan L has a 75 percent coinsurance and an annual out-of-pocket limit of $2,320 in 2012. The limits apply to the deductible, copayments, and coinsurance amounts. Once your reach the annual limits, the company pays the costs for the rest of the year.

Plans M and N
Plan M pays 50 percent of the Medicare Part A deductible. Plan N require you to pay a $20 copay for doctor visits and a $50 copay for emergency room visits that don’t result in hospitalization.

Plans K, L, and M offer a cost-sharing feature that requires you to pay a portion of the cost of coinsurance and copayments in exchange for possibly lower premiums. Medicare supplement plans typically pay parts A and B deductibles, coinsurance, and copayments. If you choose to cost share, you will pay a portion of Medicare Part A deductibles, Part B coinsurance, or parts A and B copayments. Although the premiums for some of these plans may be lower, you will pay higher out-of-pocket costs if you see doctors and hospitals frequently.

Alternatives to Medicare Supplement Insurance

Before you buy a Medicare supplement policy, consider these other options for paying for your Medicare out-of-pocket costs.

Employee Group Plans

If you remain employed after your 65th birthday, you may continue your group health insurance through your employer and may not need Medicare Part B until you retire. Likewise, if you have health coverage through a spouse’s plan, you may be able to delay enrollment in Medicare Part B. You can verify with Social Security if you can delay Medicare Part B enrollment without a penalty. If you keep group insurance after retirement, you may not need a Medicare supplement policy if your group plan covers the gaps in Medicare parts A and B.

Some employers offer their retirees coverage through a group Medicare supplement plan. Because health plans work differently, talk to your employer’s benefits coordinator before making a decision about Medicare supplement insurance.

COBRA Coverage from an Employer Plan

Federal and state law allows employees who leave their jobs to continue their employer-sponsored group health coverage for a certain amount of time. In some cases, you may also continue family coverage through your former employer. If you continue your employer-sponsored coverage, you may not need a Medicare supplement policy. Be advised that COBRA coverage impacts the timeframes for enrolling in Medicare Part B without a penalty.

Additional information on employer coverage and COBRA is available in the CMS publication, Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare, which is available from TDI or at www.medicare.gov.

Medicare Advantage Plans

Depending on where you live, you may have the option to choose original Medicare or a Medicare Advantage plan. If you are in a Medicare Advantage plan, you don’t need and can’t use a Medicare supplement policy. Medicare Advantage plans provide at least the same benefits as Medicare.

If your Medicare Advantage plan terminates its contract in your service area, you have the right to purchase Medicare supplement plans A, B, C, F, K, or L offered in Texas, regardless of your medical history or condition. If your Medicare Advantage plan ends services in your area, it must explain to you in writing your options and timeframes to buy a Medicare supplement policy. This right is limited to Plan A for people under age 65.

Medicaid and Medicare Savings Programs

If your income and assets are below a certain level, you might be eligible for Medicaid. Medicaid is a state-administrated federal program that pays for health coverage for people with low incomes. If you qualify for Medicaid, the state will pay your Medicare premiums and out-of-pocket costs. Medicaid will also pay for some services not covered by Medicare. If you receive Medicaid, you do not need Medicare supplement insurance.

Medicaid-sponsored Medicare Savings Programs may pay Medicare premiums, deductibles, and coinsurance amounts for eligible Medicare beneficiaries. These programs enable Medicare beneficiaries to use their savings to cover other expenses or to buy more coverage.

The Qualified Medicare Beneficiary (QMB) program, the Specified Low-Income Medicare Beneficiary (SLMB) program, the Qualified Individuals (QI), and the Qualified Disabled Working Individuals (QDWI) program are all Medicare Savings Programs.

The federal QMB program pays the Medicare Part B premium and covers all Medicare deductibles and copayments for people with incomes below a certain level. You do not need Medicare supplement insurance if you are in the QMB Program. QDWI pays Medicare Part A premiums. The other plans pay only the Medicare Part B premium.

Texas Health Insurance Pool (Health Pool)

The Health Pool offers health insurance to Texans who can’t find coverage because of their medical condition and to certain individuals who have recently lost their employer-sponsored health coverage.

The Health Pool offers more comprehensive coverage than Medicare supplement Plan A but is probably more expensive. If you are under age 65, have Medicare parts A and B, and need more coverage than Medicare supplement Plan A offers, consider this option to supplement your Medicare coverage. The Health Pool does not include outpatient drug coverage for people on Medicare.

For more information, including eligibility requirements and benefits information, call the Health Pool or visit its website



Medicare Supplement Insurance Resources


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