MediGap
Medicare Supplement Insurance, also known as "Medigap" insurance, provides supplemental health insurance coverage for Medicare beneficiaries. Individuals in the "original" Medicare program may want to obtain Medicare Supplement ("Medigap") insurance because Medicare often covers less than the total cost of the beneficiary's health care.
Medicare is divided into two coverage components, Part A and Part B. Both programs have gaps in coverage that may be covered by supplemental insurance.
Medicare Part A Gaps
Medicare Part A (also known as Hospital Insurance) covers inpatient hospital, inpatient skilled nursing facility, home health, and hospice services. The following is a partial list of gaps in coverage that are not reimbursed by Medicare:
Hospital deductible per spell of illness ($992 for 2007);
Hospital coinsurance payments (Medicare covers the first 60 days in full after the deductible has been met; the daily coinsurance payment for days 61 to 90 is $248 per day in 2007, and for days 91 to 150, the "lifetime reserve days," $496);
Hospital services beyond 150 days per spell of illness;
Skilled nursing facility coinsurance payments (Medicare covers the first 20 days in full; the daily coinsurance payment for days 21 to 100 is $124 per day in 2007);
Skilled nursing facility services beyond 100 days per spell of illness;
Home health aide services that are provided on more than a part-time or intermittent basis;
Home health nursing and aide services when there is no longer a skilled care component;
Medicare Part B Gaps
Medicare Part B (also known as Supplementary Medicare Insurance) provides coverage for a variety of outpatient and physician services. It also pays for durable medical equipment, prosthetic devices, supplies incident to physician's services, and ambulance transportation. The following is a list of gaps in coverage that are not reimbursed by Medicare:
Part B deductible (an annual deductible - $131 in 2007- must be met before Medicare will make payment for covered services);
Part B 20% coinsurance payment (Medicare pays 80% of the approved charge for all Part B services and items, an amount that varies according to the services and items provided);
Balance billing above the Medicare-approved charge (many physicians and providers charge more than the amount Medicare approves);
Who Needs Supplemental Insurance
Medicare beneficiaries fill in Medicare's coverage gaps in a number of different ways, including:
Government Programs (Medicaid/QMB/SLMB);
Group Retirement Policies (Non-Standardized);
Non-Standardized Individual Medigap Policies (Issued Prior to July 31, 1992);
Standardized Individual Medigap Policies (Issued After July 31, 1992).
Medicare beneficiaries who are also eligible for Medicaid (Title 19) do not need Medigap insurance since Medicaid will cover the cost of their health care expenses. People who do not qualify for Medicaid but are within 100% of the federal poverty level are eligible for coverage under a program known as the Qualified Medicare Beneficiary Program (QMB). QMB program benefits include:
Payment of Medicare premiums.
Payment of Medicare annual deductibles.
Payment of Medicare coinsurance amounts.
Thus individuals who qualify for the QMB program generally also do not need, and should not pay for, Medicare Supplement Insurance. Individuals living in Connecticut with monthly incomes of $1,024.00 and assets up to $4,000, and couples with monthly incomes of $1,514.00 and assets up to $6,000 are eligible for QMB coverage through March, 2006. (These income figures change in April each year.) Contact the Connecticut Department of Social Services office in your area to find out more about Title 19 and QMB eligibility and enrollment.
Individuals who do not qualify for QMB because of excess income may qualify for the Specified Low-Income Medicare Beneficiary Program (SLMB) or Qualified Individual Program (QI). People who have incomes within 120% - 135% of the federal poverty level are eligible for SLMB or QI coverage. However, SLMB and QI only pay for the Medicare Part B monthly premium. Therefore, SLMB and QI individuals may still want to purchase Medigap insurance if they can afford to do so. Individuals with monthly incomes of $1,187.40 and assets up to $4,000, couples with monthly incomes of $1,734.00 and assets up to $6,000 are eligible for SLMB coverage through March, 2007. Individuals with monthly incomes up to $1309.95 and couples with monthly incomes up to $1899.00 are eligible for QI through March, 2007. There is no asset limit for the QI program in Connecticut. Like QMB, these income figures change in April each year and the programs are administered by the Connecticut Department of Social Services.
Some employers offer health insurance coverage to their retirees. Retirees who are covered by such group plans may not need to purchase an individual policy. While a retiree may choose to switch to an individual plan, this may not be a good choice because group retiree plans usually do not cost anything to the individual and the group coverage is often as good or better than most individual Medigap policies. Thus the individual should compare his company's policy costs and coverage with the ten Medigap policies. The retiree should also consider the stability of his company. If it is conceivable that the company will falter, that his costs will rise, or that coverage will diminish, the individual may wish to purchase an independent policy. Remember, however, that if a new policy is purchased the old policy must be dropped.
Most Medicare beneficiaries are not eligible for Medicaid or QMB, however, and may want to obtain Medigap insurance. Approximately two-thirds purchase Medigap policies. As of July 31, 1992, Medigap policies were standardized throughout the United States. This mandatory standardization was a result of legislation passed by Congress through the Omnibus Budget Reconciliation Act of 1990. There are ten specific benefit plans which federal law permits to be sold as Medigap policies. Two new plans were added in 2006. States may allow all or some of these plans to be marketed. Insurance companies may sell all or some of the plans which the individual state allows them to market. However, there is a basic benefit package, known as the "core benefit" plan, which must be allowed in all states and which must be offered by any company which sells Medigap insurance.
Although individual Medigap policies have been standardized since 1992, some seniors are still covered by previously issued non-standardized plans. These policies are no longer available for purchase. However, individuals may continue to keep their old policies and many people have chosen to do so. Individuals covered by an old policy should consider changing to a new "standardized" plan, and should compare the benefits and costs of each of the policies. Then an informed decision can be made. An individual who purchases a new standardized policy can only have one Medigap policy and must therefore drop the old, non-standardized plan. This protects people from the unnecessary costs of duplicate coverage.