A supplemental insurance applicant must first be (or soon to be) enrolled in both Medicare Parts A and B before applying for a policy.
Most seniors enroll in both Parts A and B upon eligibility age 65, but this is not the case for all. Some consumers are eligible before age 65 due to disability while others wait to enroll in Part B after losing employer sponsored health insurance upon retirement.
Medicare Open Enrollment Window
Once approved for Medicare Parts A and B, seniors age 65 and over are afforded roughly a 6 month open enrollment window to purchase Medicare supplement insurance that includes the three months before and after their eligibility month - which in most cases is the month they turned age 65.
It is wise for consumers to take advantage of their open enrollment window should supplemental coverage be desired. If it is missed, medical underwriting will need to take place with most Medigap providers. Medicare supplement insurance providers can decline coverage to those who are not in open enrollment and have preexisting injuries or illnesses.
Choosing a Supplemental Insurance Plan
There are ten modernized Medicare supplement insurance plans to choose from (A,B,C,D,F,G,K,L M and N) and each offers a varying amount of coverage.
Currently, the most comprehensive coverage available is Plan F and it is therefore most often purchased as it fills in all the gaps in Medicare Parts A and B. Plans C, D, G, and N are also popular as they cover the most common gaps Medicare eligible consumers might encounter while leaving modest exposure to future out-of-pocket expenses.
Premiums can vary widely for the exact same supplemental coverage (Plan F for instance) between different insurance carriers. There can be several reasons for this, but most often it is due to the age of the coverage itself. Typically, the longer the plan has been offered, the higher the monthly premiums due to the claims experience of the insurance company.
Medigap Coverage Types, Underwriting and Discounts
There will always be unique attributes when comparing Medigap coverage options between companies. Some companies base their premiums on the current age (attained age) of the insured each year, others determine rates based on the age of the insured at purchase (issue age), and still others base rates on statewide factors (community rated) that pool all enrolled members. No matter the type of plan, premiums for the insured will increase over time with all insurance companies - usually at least once a year.
Many Medigap providers provide discounts to the insured in one form or another. Martial discounts for spouses or domestic partners who choose to purchase coverage from the same company are most common, but other companies will provide premium reductions for those in above average health or for those who enroll early upon eligibility.
Additionally, Medicare supplement underwriting standards will differ from company to company should the potential insured be outside of open enrollment. Underwriting practices are fluid and subject to change over time, so it is difficult to guarantee insurability should a consumer want to switch providers in the future.
Changing Medicare Supplement Insurance Providers
A common misconception with Medicare supplement insurance is the insured can change plans or providers without medical underwriting during the Open Enrollment Period (OEP) that runs from November 15th to December 31st each year. This is not the case. OEP is for switching or disenrolling from Medicare Advantage coverage as well as making changes to Medicare Part D prescription drug coverage. In almost all cases, some amount of medical underwriting will be needed to change providers or plans in the future.
A few states allow for an open enrollment window each year, California and Missouri for example, but the insured can only change to like or lesser coverage with a new supplemental provider. The one month open enrollment window afforded by California and Missouri will be unique for each individual and does not necessarily occur at the end of of each calendar year.
Prescription Part D Drug Coverage
An important issue to understand when considering Medicare supplement insurance is there are no plans that cover prescription drug coverage. Prescription part D drug coverage must be purchased separately, although these policies can sometimes be purchased from the same carrier. There will always be an additional cost to a stand-along part D plan when it is coupled with a supplemental policy.
Working With an Independent Insurance Agent
When factoring in the numerous variables to both Medicare and supplemental insurance, many consumers will choose to work with an independent agent who is familiar with the offerings in their home state.
It is important to know that supplemental insurance prices are controlled by law and are therefore no more or less expensive when purchased through an agent. comparing coverage types, monthly premiums, available discounts, and other unique aspects to Medigap policies can help consumers choose coverage that will best suit them now and in the future.
Adam Hyers owns and operates Hyers and Associates Inc., an independent insurance agency offering Medicare supplement insurance policies across the country. They provide quotes and enrollment assistance direct from several highly-rated supplemental insurance providers.