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Supplementing Medicare

Question:

How do Medigap policies work?

Answer:

Senior citizens have particular reason to be concerned about rising health care costs. According to national statistics, seniors are the part of our population that's growing the fastest and using the most medical services.

Medicare is a health program offered by the Social Security Administration of the federal government. Everyone 65 years or older who receives either social security or railroad retirement benefits qualifies for Medicare hospital insurance (known as "Part A"); additional medical insurance ("Part B") is available to eligible Medicare recipients, but you have to pay a monthly premium for it. These premiums can be deducted automatically from your Social Security check.

You can apply for social security benefits of any kind, including Medicare, during the three months before and after your 65th birthday. If you don't apply during this six-month period, you can still apply later, but only during an open enrollment period -- generally in January of each year.

Medicare provides you with basic protection against the high costs of health care, but it doesn't cover 100% of your medical expenses. Supplemental insurance policies like Medigap can help bridge the gap between what hospitals and doctors actually charge and what Medicare will pay.

So if you're eligible for Medicare, you might also want to consider augmenting your basic Medicare coverage with a Medigap policy. There are ten supplement plans -- known as plans A through J, and standardized by the government -- and many insurance companies offer one or more of them. But check the price tags: Premiums are higher for the policies with the most benefits, and different insurance companies often charge different premiums for the same policy.

The federal government guarantees your right to Medigap coverage -- if you buy your policy during the first six months you're qualified. You qualify as soon as two things are true at the same time: you're enrolled in Medicare Part B, and you're at least 65 years old. The first day on which both are true is the first day of your six-month open enrollment period.

During this period you have the right to buy any Medigap policy you choose, sold by any insurance company in your state, no matter what health problems you have. The company can't refuse to cover you, nor can it use your medical history, the state of your health, or any insurance claims you've made in the past as a reason to change the terms of the policy or the premiums you pay for it.

(The company is allowed to limit how far it will cover your pre-existing conditions -- that is, health problems you already had before you signed up for Medigap -- but only for the first six months of your policy. You can get around this if you can prove you've been covered for at least six months by another policy.)

Know whom you're dealing with. Every insurance company has to meet certain qualifications in order to do business in your state. Check with your state insurance department to make sure that the company you are considering is properly licensed.

Understand what you're buying. Don't be pressured into taking just any Medigap policy. Buy the plan that best fits your needs. If you aren't sure whether a particular plan is right for you, ask the salesperson to explain it to you, and have a friend or family member present.

Shop carefully. Medigap policies differ in what they cover and how much they cost. Check with different companies and compare their policies and premiums before you buy.

Don't pay cash. Pay by check, money order, or bank draft made payable to the company -- not to the agent or any other individual. Get a receipt with the insurance company's name, address, and telephone number for your records.

Things to Think About When Buying a Medigap Policy

Does it cover expenses over and above your existing Medicare coverage?
Does it cover care days not covered by Medicare?
Does it cover private or semiprivate rooms, private duty nursing care, or nursing care in an approved facility?
Does it cover prescription drugs?

The Social Security Administration offers support and explanation over the phone; you can call them toll-free at 800-234-5772. For local information about Medicare and supplemental insurance, ask your local Social Security office for two brochures: "Your Medicare Handbook" and "A Guide to Health Insurance for People With Medicare."