Your Online Resource for Medicare Insurance: Guiding you along the maze of Medicare

Questions & Answers

This section of Medicare Insurance Finders will review some of the questions we have received from our clients. Over the last 5 years we have received numerous questions because of all the changes to Medicare ( Medicare Part D, Medicare Advantage Plans, 2010 Modernization Act, New Enrollment Periods, Etc ). This should be a very informative section on the website dealing with questions that people have had problems with or been stumped on in the past.

If you have any questions submit them to seniorservices@morganwhite.com and we'll be glad to help you with them. Also if we have received the question before we will post it on our website so that other people can get help as well.

Q. What is the difference between a Medicare
Supplement and traditional health insurance?

A. Medicare Supplement Insurance is like regular health insurance in several ways and differs in several ways, too. Medicare Supplement Insurance is sold by private insurance companies just like regular health insurance except you must have Medicare Part A and Part B to be eligible. Just like regular health insurance, the prices vary depending on the company you choose to go with. As of now, one of the biggest differences between the two is the fact that all Medicare Supplement Insurance plans, including the plan letter), are the same from one insurance company to another. Example: A Plan F with United of Omaha is identical to a Plan F with Gerber, American Continental, Family Life, etc…except for the price of the plan and health questions asked.

All Medicare Supplement Insurance plans are standardized plans and range from Plan A to Plan N, missing a few letters in between. These plans can be used anywhere—including hospitals and doctors’ offices—your Medicare is accepted and cover the majority of what your Medicare Part A and Part B leaves for you to pay. You are responsible for paying your Medicare Part B premium and your Medicare Supplement Insurance premium every month.

Your Medicare Part B premium is usually held out of your monthly Social Security payment, but you Medicare Supplement Insurance premium cannot be held out of your Social Security payment. Normally, your Medicare Supplement Insurance premium will be directly drafted from your bank account. In some cases, you will be allowed to pay by a monthly bill called “direct billing”.

Q. Medicare Pays 80%, What About The Rest?

A. Medicare provides a large amount of coverage for senior citizens, but it does not cover all of the needs. Generally, Medicare pays 80% of your doctor and/or hospital bills which leaves the rest up to the insured. Many people decide to purchase Medigap Insurance (Medicare Supplement) to fill in the gaps left by Medicare. Medigap Insurance Policies are sold by private insurance companies. The coverage ranges depending on the plan chosen.

Right now, Medigap Insurance Plan F offers the most coverage. With a Plan F your coverage includes:

  • Medicare Part A Coinsurance and all costs after hospital benefits are exhausted
  • Medicare Part B Coinsurance or Copayment for other than preventive services
  • Blood (First 3 Pints)
  • Hospice Care Coinsurance or Copayment
  • Skilled Nursing Facility Care Coinsurance
  • Medicare Part A Deductible
  • Medicare Part B Deductible
  • Foreign Travel Emergency (Up to Plan Limits)

Be sure to know all of your options and to explore the benefits of the different Medigap Insurance Policies.

Q. Why Are Guaranteed Issue Periods Important?

A. Guaranteed Issue period is the time when someone who is eligible can sign up for a Medicare Supplement with no health questions. During this time, you can be declined for any reason. If a person waits until he/she is out of their guaranteed-issue period, there is a possibility they will not be approved. Outside of guaranteed-issue periods, a Medicare Supplement application must go through regular underwriting. Underwriting will review the answered health questions and prescription medications and possibly conduct a phone interview to determine if the applicant will be approved or declined.

There are many different qualifications for a guaranteed-issue period (see “Choosing a Medigap Policy” at www.Medicare.gov). The most popular and well known are the Open Enrollment Period and the Special Enrollment Period. It is always important to be informed and knowledgeable about your guaranteed-issue rights and enrollment periods. For many people the Open Enrollment Period is a once in a lifetime opportunity, so it is essential to know and understand your rights and options.

Q. Will Your Medicare Supplement Change Over Time?

A. This is one of the most common questions we get, and there are good reasons to ask. Group health insurance changed almost every year that you worked, and even individual health insurance before 65 could single you out for changes in both price and benefits or to cancel your coverage outright. Medicare Advantage Plans and Prescription Drug Plans change both the price and the benefits every January 1.

The benefits of your Medicare Supplement, however, are renewable for life and have been standardized by law. In short, your benefits for a Plan F, for example, won’t change from year to year and won’t change even if you switch companies.

No company will ever be able to tell you, “We think we’ve paid enough claims on you, so we’re cutting you off.”  You can never be singled out for your benefits to end or reduce due to your personal claims or for your rates to go up individually due to your health status.

Your premium can increase automatically if you have an age-rated plan or by approval if the company is granted a rate increase by the state insurance department for all policyholders in your state. In some cases, if you move to another state or even to another ZIP code within your state, your premium could go up or down at your anniversary date, based on the prevailing medical charges in your new location. Your benefits, though, still won’t change.

Q. How Do I Escape From "Rate Increase Island"?

A. Most Medicare beneficiaries purchased their Medicare Supplements with no health questions asked when they first turned 65 or first retired and purchased Part B. That single Open Enrollment period was the only time they could count on a guaranteed-issue purchase. Even those who were healthy when they first bought their plans have experienced health problems since then and have found that they can’t change plans. All they can do is pay the rate increases and the rate increases and the rate increases with no end in sight. As a result, the plan that started out under $100 a month may now be $200-$400 a month or more. They are trapped on Rate Increase Island!

Another reason people can be marooned is that Plans E, H, I, and J were removed for new sales, also as of June 1, 2010. While people can keep those plans, the reality is that with no new premiums coming in, you will find yourself stuck on that Rate Increase Island where everyone gets older and sicker every day. You can well imagine what that will do for your premiums over the next few years.

For both groups of these fine folks, the answer may also be the new Plan N. One insurance company is offering Plan N with only one question (no health questions in some states). These policyholders may well be able to change from a high-priced Plan F to a very affordable Plan N and still have solid protection. That’s one way to consider for those who desperately need to escape from Rate Increase Island.

Does this "escape" mean they’ll have no more rate increases for life?

No, not at all. Premiums will continue to go up on all plans—such is life—but at least the insured can practically start over with rates much closer to what they were paying years ago.