Individuals who are age 65 or older and receiving social security are automatically enrolled in Medicare Part A, which is premium free and covers hospital and skilled-nursing costs and hospice care. Individuals may also enroll in Medicare Part B, which has a premium, and covers physician, medical lab and ambulance costs. Individuals who can still obtain private insurance through their employment will often postpone enrollment in Medicare Part B.
After individuals enroll in Medicare Part B, they have six months to select a Medigap policy (Medicare supplemental insurance). The open enrollment period to select a Medigap policy begins on the first day of the month when the individual is 65 and is enrolled in Medicare Part B.
During the 6 month open enrollment period an insurance company cannot use medical underwriting. This means that the insurance company cannot do any of the following because of a preexisting health condition:
1. Refuse to sell a Medigap policy.
2. Charge more for a Medigap policy that it would charge someone without a preexisting condition.
3. Make the individual wait for coverage to begin.
In some situations, individuals who have selected a Medicare Advantage plan under Medicare Part C may still be able to subsequently go back to Medicare Parts A and B and obtain a Medigap policy without medical underwriting.
If individuals do not select a Medigap policy during the open enrollment period, and they sign up on a later date, or if they change their Medigap policy, they will be subject to medical underwriting and will likely pay a higher premium for their supplemental insurance.
Medigap policies fill the gaps not covered by Medicare Parts A and B. Medigap policies are based on 10 standardized benefit packages developed by the National Association of Insurance Commissioners (NAIC). The current Medigap policies are the following: A, B, C, D, F, G, K, L, M, and N.
Some Medigap policies cover skilled-nursing facility costs and others do not. After a three-day hospital stay, Medicare Part A will pay all the costs of a skilled-nursing facility for the first 20 days; however, from day 20 through day 100, the patient is responsible for a daily co-payment. (In 2012 the co-payment was $144.50 per day.) If an individual has a Medigap policy that covers skilled-nursing facility costs, the copayment will be paid by the supplemental insurance. Individuals who do not have a Medigap policy that covers skilled-nursing costs, are surprised when they get a large bill from the facility.
Insurance companies do not have to offer every Medigap policy. Each company decides which policies it wants to offer, and the premiums it will charge. The premium offered by different insurance companies for the same policy may vary.
Consumers need to enroll in a Medigap policy during the six month open enrollment period and make sure they understand the services covered by their Medigap policy.
Tom Packer is an Elder Law Attorney serving all of Southeast Idaho. As part of his law practice, Tom offers life care planning to deal with the challenges created by long-term illness, disability and incapacity. If you have a question about a senior’s legal, financial or healthcare needs, please call us.