Medicare Supplement Plans, Explained.

1. Will I be able to enroll in a medicare supplement plan?

Not everyone who wants to enroll in a Medicare Supplement plan will be able to. Medicare supplement plans are allowed to perform extensive health underwriting, and plans reject people with certain pre-existing conditions. Luckily, Medicare lets beneficiaries skip underwriting if they sign up during the Medicare Supplement Open Enrollment period, a six month period that begins the month you become eligible for Medicare.

This period may be your only opportunity to skip underwriting (rules vary by state), so if you are new to Medicare, think deeply about whether or not to go the Medicare Supplement route. If you do not enroll in a supplement when you are first eligible, there is no guarantee that you will be able to enroll later on

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2. How Medicare Supplement Plans Work

Medicare Supplement plans (aka Med-Supp or Medi-Gap plans) are a popular option for seniors who want to reduce their Medicare bills. A Medicare Supplement plan pays some or all of the portion of the bill that is left over after Original Medicare pays its share:

If you decide to enroll in a supplement plan, you will actually need to be enrolled in 3 different insurance plans: Original Medicare, which will be your primary medical insurance, the Supplement plan, which will be your secondary medical insurance, and a Part D plan, which will cover your prescription drugs.

3. Medicare supplement plan coverage is standardized

Medicare Supplement plans were created as we know them today in 1992, when congress created the 10 standard Medicare Supplement Letter plans. When congress created the Medicare Supplement plans, they defined in detail what the benefits for each plan would be. Insurance companies have no ability to change plan benefits. This has two important consequences:

• All supplement plans with the same letter name are exactly the same. A plan G is a plan G whether you enroll with United Healthcare, Humana, or Premera. This means that when you are shopping for supplement plans, the focus should be on finding the lowest premium.

• Supplement plan benefits stay the same from year to year. Your plan benefits will stay exactly the same until Congress can pass a law to change them.

Frequently Asked Question:

Q: is choosing a Medicare Supplement plan really as simple as just finding the lowest rate?

A: There is just a little more to it than that. As in independent broker, I look at past years premiums to make sure the company keeps their premiums stable. I look at how many folks are enrolled in the plan — too few people indicates that the plan is not well established, and could raise premiums or leave the market if they aren’t making a good profit. Finally, I draw on the experiences of my clients. If I get a lot of complaints about a certain plan, I might not recommend it, even if it has the lowest price.

4. Medicare Supplement Plans Make Sense for Retirees

No two people on Medicare have exactly the same needs, but it’s fair to say that most retirees value stability, predictability, low exposure to medical costs. Let's take a closer look at a few of these common needs, and how Medicare supplement plans can meet them.

1) Most retirees are on a fixed income, and people on a fixed income like to stick to a stable budget, whether that budget is large or small. Seniors are expecting their use of the medical system to increase as they get older, and worry about how they will pay the bills.

A Medicare supplement plan takes care of this by making medical costs predictable. Instead of having to budget for sporadic medical bills of unpredictable cost, people on a supplement plan pay a regular premium each month, and low or no copayments and coinsurance when they receive medical care. This works well for people on fixed incomes and also protects older Medicare beneficiaries from the high medical bills that could result from a complex health problem later in life.

2) Seniors value stability, which means being able to stick with their doctors and their insurance plan year after year.

Supplement plan benefits stay the same year after year and do not use provider networks. This means that if you like your plan, you can keep it as long as you want, and if you like your doctor, you don’t have to worry about losing them due to a network change. As long as Medicare is still around, you will never have to change plans or learn about a new set of benefits.

5. Is a Medicare Supplement Plan Right for Me?

As we talked about in the Medicare Advantage lesson, the answer to this question might depend on where you live. Most people who live in a major metro area will have a large selection of MAPD plans which provide good benefits at a low price. Folks looking for MAPD coverage in rural areas will usually have much more limited options. In areas with limited MAPD options, Supplement Plans are much more popular.

Of course, Medicare Supplement Plans are not just popular in rural areas. Medicare beneficiaries all over value Supplement plans for two reasons: stability and simplicity. For those who are willing and able to pay, a Medicare supplement plan can offer something special: generous, reliable coverage that you don’t have to spend any time thinking about. In the end, that’s what most people really want form their health insurance, and my clients on Supplement plans are usually quite satisfied.