America’s largest publicly funded health insurance program, Medicare, was designed in 1965 to provide senior citizens and those with disabilities with reliable and affordable health care. While Medicare is capable of covering nearly 75% of most individual’s health care needs, the program is not perfect. Rising costs for health care combined with poor health for some individuals, create gaps in Medicare’s coverage. Whether individuals are healthy or not, Medicare has some significant gaps that can leave beneficiaries paying for a lot of costs out of pocket.
As medical costs began to skyrocket and senior citizens with limited funds began struggling to cover the gaps in Medicare coverage, the need for supplemental insurances arose. Those individuals drawing on Medicare can now choose from a number of Medicare Supplement plans to help cover their extra costs related to medical needs.
Medicare Supplement Insurance is not directly controlled by Medicare, it is provided by private insurance companies who are contracted through Medicare to provide insurance coverage. Any individual receiving Medicare Part A and Part B is eligible to enroll in a supplemental insurance plan. Individuals become eligible on the first day of the month in which they turn 65 years old and this open enrollment period lasts for six months from that date. During this period insurance companies cannot use medical underwriting practices to deny an individual a plan. If an individual fails to enroll during this period, then an insurance company can choose not to sell them a plan or force them to wait for their coverage to start depending upon certain pre-existing conditions.
There are a few important notes to be aware of regarding Medicare Supplement plans. First, plans only cover one individual, so married couples will need to purchase two plans to cover a husband and wife. Individuals may purchase a plan from any private insurance provider in their state who is licensed to sell Medicare Supplement plans; however not every provider will offer every plan. Individuals who collect their Medicare Part A and Part B coverage through a Medicare Advantage Plan (Part C) cannot enroll in Medicare Supplement Insurance because their coverage already provides protection against many of Medicare’s gaps. Lastly, individuals need to carefully consider their medical needs as supplemental insurance plans do not cover expenses related to long-term care, dental, vision, hearing aids, eyeglasses, and private nursing assistance.
Currently, Medicare Supplement Insurance providers offer beneficiaries 10 different plans to choose from, Plans A, B, C, D, F, G, K, L, M, and N. Each of these plans offers varying amounts of coverage to beneficiaries. Generally speaking, Plan A is the simplest and most basic plan with each subsequent plan offering more and more coverage. As a result, Plan A tends to have the lowest monthly premium while subsequent plans have higher premiums. Below are the details of some of the differing supplemental insurance plans:
• Plan A: Provides 100% coverage of Medicare Part A Hospital Coinsurance, Medicare Part B Coinsurance/Copayment, first three pints of blood, Part A Hospice Care Coinsurance/Copayment, and Medicare Preventive Care Part B Coinsurance.
• Plan F: Provides 100% coverage of the benefits Plan A covers as well as Skilled Nursing Facility Care Coinsurance, Medicare Part A Deductible, Medicare Part B Deductible, Medicare Part B Excess Charge, and Foreign Travel Emergency costs.
• Plan K: Offers 100% coverage only for Medicare Part A Hospital Coinsurance and Medicare Preventive Care Part B Coinsurance, does not cover Part B Deductibles, Part B Excess Charges, and Foreign Travel Emergency costs, and covers only 50% of the costs associated with the remaining benefits.
Medicare Supplement Insurance plans have undergone changes in 2010. Plans E, H, I, and J have been discontinued as of June 1, 2010, however individuals already using one of those plans may continue to use their plan. Plans M and N were added to the list of available plans as of June 1 as well.
Medicare Supplement plans have become increasingly popular among individuals in need of assistance in covering their medical costs. As of 2006 an estimated 18% of Medicare beneficiaries were also covered by a Medicare Supplement Insurance plan.