Medicare Supplemental Insurance 101 A brief overview of Medicare Supplemental Insurance and how it works. Agentlink Senior Brokerage Created 4/14/2014 1

 A Medicare Supplement (Medigap) Insurance, sold by private companies, can help pay some of the health care costs that Original Medicare doesn’t cover, like coinsurance and deductibles.  Medigap's name is derived from the notion that it exists to cover the difference or "gap" between the expenses reimbursed to providers by Medicare Parts A and B for the preceding named services and the total amount allowed to be charged for those services by the United States Centers for Medicare and Medicaid Services (CMS).  Medigap policies are different from a Medicare Advantage Plan. Those plans are ways to get Medicare benefits, while a Medigap policy only supplements your original Medicare benefits.  Some Medigap policies also offer coverage for services that Original Medicare doesn’t cover, like medical care when you travel outside of the U.S. If you have Original Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare- approved amount for covered health care costs. Then our Medigap policy pays its share. Medicare Supplemental Insurance 101 2

1. Your client must have Part A and Part B 2. If your client has a Medicare Advantage Plan, they can apply for a Medigap policy, but make sure the client can leave the Medicare Advantage Plan before their Medigap policy begins. 3. The client will pay the private insurance company a monthly premium for their Medigap policy in addition to the monthly Part B premium that they will pay to Medicare. 4. A Medigap policy only covers one person. If a client and their spouse both want Medigap coverage, they will each have to buy separate policies. 5. A client can buy a Medigap policy from any insurance company that's licensed in the clients state to sell one. 6. Any standardized Medigap policy is guaranteed renewable even if the client has health problems. This means the insurance company can't cancel a members Medigap policy as long as they pay the premium. 7. Some Medigap policies sold in the past cover prescription drugs, but Medigap policies sold after January 1, 2006 aren't allowed to include prescription drug coverage. If the client wants prescription drug coverage, they can join a Medicare Prescription Drug Plan (Part D). 8. It's illegal for anyone to sell a client a Medigap policy if they have a Medicare Medical Savings Account (MSA) Plan. Medicare Supplemental Insurance 101 3

 During the open enrollment period which begins within 6 months of turning 65 or enrolling in Medicare Part B at 65 or older, a person may obtain any Medigap plan offered in their state on a guaranteed issue basis (i.e. no medical screening required).  Outside of open enrollment, the issuing insurance company may require medical screening and may obtain an attending physician's statement if necessary.  Medigap insurance companies can only sell an individual a “standardized” Medigap policy, which in most states are identified by letters A through N. (In Massachusetts, Minnesota, and Wisconsin, Medigap policies are standardized in a different way.  Each standardized Medigap policy must offer the same basic benefits, no matter which insurance company sells it. Cost is usually the only difference between Medigap policies with the same letter sold by different insurance companies  In some states, a person may be able to buy another type of Medigap policy called Medicare SELECT. SELECT plans are standardized Medigap policies that may require you to see certain providers to be eligible for the full supplemental benefits and may cost less than other Medigap plans. If an individual buys a SELECT policy, they have a right to change their mind within the first 12 months of coverage and switch back to a standard Medigap policy. Medicare Supplemental Insurance 101 4

Medicare Supplement Insurance Below are two charts. One showing what Medicare A&B pays and one showing what Medicare Supplements pay after Medicare A&B. Here you can see what exposure a person has without a supplemental policy.

Medicare Supplemental Insurance * Plan F also offers a high-deductible plan. If you choose this option, this means you must pay for Medicare-covered costs up to the deductible amount of $2,140 in 2014 before your Medigap plan pays anything

It is very important to note that there are different open enrollment periods for Medicare Supplement plans and Original Medicare. For Medicare Supplement, an individual is eligible to enroll:  When they are 65 or older; and after they enroll in Medicare Parts A and B.  An individual will want to enroll in a Medicare Supplement plan within their initial eligibility period so they can enjoy guaranteed acceptance into their choice of plan, without needing to answer questions about their health or qualify medically.  If an individual is under age 65 and eligible for Medicare due to disability, they will need to answer questions about their health and qualify medically. Medicare Supplemental Insurance 101 7

 The best time for an individual to buy a Medigap policy is during their Medigap Open Enrollment Period. This period lasts for 6 months and begins on the first day of the month in which a person is both 65 or older and enrolled in Medicare Part B (Medical Insurance) Guaranteed Acceptance:  An individuals acceptance is guaranteed if they apply for coverage before or within six months of their initial enrollment in Medicare Part B. If they have been enrolled in Medicare Part B for more than six months, a review of the individuals health history to see if they’re eligible for the plan they selected will be required. Pre-existing Conditions:  If an individual has had at least six months of prior creditable coverage or they are in a guaranteed issue situation, they do not have to wait for coverage to start for a pre-existing condition. Many types of health care coverage count as creditable coverage, but they only count if the individual did not have a break for more than 63 days. This prior coverage can be used to eliminate or shorten waiting periods for pre-existing conditions. A pre-existing condition is a condition either treated or diagnosed six months prior to the effective date of the individuals policy. Remember, for Medicare-covered services, Original Medicare will still cover the condition, even if the individual is responsible for out-of-pocket costs during the pre-existing condition waiting period. Medicare Supplemental Insurance 101 8

 The insurance company can't make an individual wait for their coverage to start, but it may be able to make them wait for coverage if the individual has a pre-existing condition.  In some cases, the Medigap insurance company can refuse to cover an individual’s out-of-pocket costs for these pre-existing health problems for up to 6 months (called the "pre-existing condition waiting period").  After these 6 months, the Medigap policy will cover their pre-existing condition. Coverage for the pre- existing condition can be excluded if the condition was treated or diagnosed within 6 months before the coverage starts under the Medigap policy. After this 6-month period, the Medigap policy will cover the condition that was excluded.  When the individual gets Medicare-covered services, Original Medicare will still cover the condition, even if the Medigap policy won't cover their out-of-pocket costs, but they’re responsible for the coinsurance or copayment.  The best time to buy a Medigap policy is during your Medigap Open Enrollment Period. This period lasts for 6 months and begins on the first day of the month in which you’re both 65 or older and enrolled in Medicare Part B (Medical Insurance) Medicare Supplemental Insurance 101 9

 If you buy a Medigap policy when you have a guaranteed issue right (also called "Medigap protections"), the insurance company can't use a pre-existing condition waiting period.  Guaranteed issue rights (also called "Medigap protections") are rights you have in certain situations when insurance companies must offer you certain Medigap policies. In these situations, an insurance company:  Must sell you a Medigap policy  Must cover all your pre-existing health conditions  Can't charge you more for a Medigap policy because of past or present health problems  In most cases, you have a guaranteed issue right when you have other health coverage that changes in some way, like when you lose the other health care coverage. In other cases, you have a "trial right" to try a Medicare Advantage Plan (Part C) and still buy a Medigap policy if you change your mind.  If you have group health insurance through an employer or union, your Medigap open enrollment period will start when you sign up for Part B. Medicare Supplemental Insurance