Medicare Supplement Insurance works to fill in the gaps in Original Medicare. These plans cover some of the out-of-pocket costs that Part A and B don’t, such as copayments, coinsurance, deductibles, and hospital/nursing facility costs (after all Medicare-covered days have been utilized). Supplement plans are frequently referred to as Med Supps or Medigap plans.
Original Medicare consists of Medicare Part A and Part B, offered through a federal program. Having Original Medicare in place is a prerequisite to purchasing and maintaining a Medigap plan, and Medigap plans can only be purchased through insurance companies that are privately run. When a claim occurs, Medicare pays for the Medicare-approved amount (typically 80% of the service), and then your Medigap policy takes effect and covers the remaining amount (typically 20% of the service).
Medicare Supplement policies do not include prescription drug coverage, making a stand-alone Medicare Part D Prescription Drug Plan a necessity to avoid Part D Late Enrollment Penalties. These policies do NOT provide coverage for long-term care, vision, hearing, dental, and some other costs. Agents should consider offering ancillary plans to meet these client needs.
There are 10 different Medicare Supplement plans that are available in most states. The plans are standardized at the federal level and designated by letters (ex: Plan G). Medicare Supplement Plans include Plans A, B, C, and D (not to be confused with Medicare Parts A, B, C, and D), as well as Plans F, G, K, L, M, and N. Insurance companies, do not get to design the plan benefits, but they do get to determine the pricing, medical underwriting and propose rate increases for existing customers. Prospective buyers utilizing their Guaranteed Issue Right to select a Medigap carrier during their Open Enrollment Period (OEP) or due to the loss of creditable group coverage will simply bypass the health underwriting portion of the client application.
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