Medicare Insurance Plans

“What are Medicare Plans?”

Medicare is the national insurance program implemented by the federal government in 1966. The plan makes coverage available for more than 55 million people and consists of Part A – Hospital, Part B – Doctor office visits, Part C – a Private alternative called Medicare Advantage and Part D which is prescription coverage.

On average the plan covers about 50 percent of the costs incurred by plan members. The balance of the costs in Parts A and B are borne by the plan member, most often in the form of supplemental coverage through private insurance carriers.

What are Medicare supplements plans?

Medicare supplements – also referred to as Medigap insurance— cover the deductibles and co-pays that are mandatory, once you’ve turned 65, for Part A and Part B coverage. There are 8 things to know about these policies:[1]

  1. You must have Medicare Part A & Part B Coverage.
  2. Medigap policies are not necessary if you choose a Medicare Advantage Plan because there is little, if any, co-insurance or deductibles.
  3. You pay the private insurance company a monthly premium in addition to the monthly Part B premium that you pay to Medicare.
  4. A Medigap policy only covers one person. If you and your spouse both want Medigap coverage, you’ll each have to buy separate policies.
  5. You can buy a Medigap policy from any insurance company that’s licensed in your state to sell one.
  6. Any standardized Medigap policy is guaranteed renewable even if you have health problems. This means the insurance company can’t cancel your Medigap policy as long as you pay the premium.
  7. Some Medigap policies sold in the past cover prescription drugs, but Medigap policies sold after January 1, 2006 aren’t allowed to include prescription drug coverage. If you want prescription drug coverage, you can join a separate Medicare Prescription Drug Program.
  8. It’s illegal for anyone to sell you a Medigap policy if you have a Medicare Medical Savings Account (MSA) Plan

What are Medicare Advantage Plans?

Part C coverage (also referred to as Medicare Advantage) is also offered by private insurers but the scope of coverage is quite different.

Medigap policies can’t work with Medicare Advantage Plans. If you have a Medigap policy and join a Medicare Advantage Plan (Part C), you may want to drop your Medigap policy. Your Medigap policy can’t be used to pay your Medicare Advantage Plan copayments, deductibles, and premiums.

If you want to cancel your Medigap policy, contact your insurance company. If you leave the Medicare Advantage Plan, you might not be able to get the same Medigap policy back or in some cases, any Medigap policy unless you have a “trial right.”

If you have a Medicare Advantage Plan, it’s illegal for anyone to sell you a Medigap policy unless you’re switching back to Original Medicare. Contact your State Insurance Department if this happens to you.

If you want to switch to Original Medicare and buy a Medigap policy, contact your Medicare Advantage Plan to see if you’re able to disenroll.

If you join a Medicare Advantage Plan for the first time, and you aren’t happy with the plan, you’ll have special rights to buy a Medigap policy if you return to Original Medicare within 12 months of joining.

  • If you had a Medigap policy before you joined, you may be able to get the same policy back if the company still sells it. If it isn’t available, you can buy another Medigap policy.
  • The Medigap policy can no longer have prescription drug coverage even if you had it before, but you may be able to join a Medicare Prescription Drug Plan (Part D).
  • If you joined a Medicare Advantage Plan when you were first eligible for Medicare, you can choose from any Medigap policy.

Medicare Advantage plans are promoted as saving consumers the expense of purchasing a Medigap policy. In exchange for saving the premiums consumers are directed to doctors and hospitals that are within the insurers “network”. That raises the possibility that your doctor and or hospital may not available. You can go outside the network but there are substantial deductibles that must be met. This type of plan is generally only effective in the state where you live.

Is it better to buy direct or from an agent?
Most direct-to-consumer websites present Medigap or Medicare Advantage plans as straightforward proposition. Experience shows that may not be the case. Each plan is state specific so it’s advisable to seek the advice of an agent who can find the right Medicare plan for you, in your area.


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