Medicare Supplement Insurance Policies
Many insurance companies offer to individuals eligible for Medicare individual policies that supplement the benefits available under Medicare. These policies are referred to as Medicare supplement or Medigap policies.
The federal government has expanded the options available to include managed care plans that require that you see only network providers to receive optimum benefits, and plans whereby the insurance company agrees to provide all Medicare benefits.
Individual Medicare supplement policies are designed to supplement the benefits available under the original Medicare program. Medicare supplement policies pay the 20% of Medicare-approved charges that Medicare does not pay. These Medicare supplement policies do not restrict your ability to receive services from the doctor of your choice. However, these policies may require that you submit your claim to the insurance company for payment.
Individual Medicare supplement policies include a basic core of benefits. In addition to the basic benefits, Medicare supplement insurers are permitted to offer specified optional benefits. Each of the options that an insurance company offers must be priced and sold separately from the basic policy. The minimum required benefits and the optional benefits are listed below.
New Policy Option
Some insurance companies offer Medicare supplement cost-sharing policies. Benefits are provided after you have paid 25% or 50% cost-sharing up to $2,330 or $4,660 in out-of-pocket expenses, respectively, during a calendar year. The out-of-pocket limits for Medicare supplement cost-sharing policies are updated each year and are based on estimates of the United States Per Capital Costs (USPCC) of the Medicare program published by the Centers for Medicare and Medicaid Services (CMS). The cost-sharing and out-of-pocket expenses would ordinarily be paid by the policy.
Policy Benefits--Traditional Insurers
All Medigap policies offered by traditional insurers provide the following benefits:
- Copayment for 61st to 90th day of hospitalization ($289 a day)
- Copayment for 91st to 150th day of hospitalization ($578 a day)--full coverage after Medicare days are exhausted
- Copayment for 21st to 100th day of skilled nursing care in a skilled nursing facility ($144.50 a day)
- 175 days per lifetime of inpatient psychiatric care in addition to Medicare's 190 days per lifetime
- First three pints of blood
- 40 visits of home health care in addition to Medicare
- 20% of Medicare's Part B services with no lifetime maximum, or in case of hospital outpatient department services under a prospective payment system, applicable copayments
- Coverage for full usual and customary cost of non-Medicare diabetic supplies, non-Medicare covered chiropractic care, non-Medicare hospital and ambulatory surgery center charges and anesthetics for dental care, and non-Medicare breast reconstruction
- Coverage for 30 days non-Medicare skilled nursing facility care--no prior hospitalization required
Policies may also include preventive health care services, such as routine physical examinations, immunizations, health screenings, and private duty nursing services.
Insurers may offer the following optional benefits as a separate benefit for an additional premium:
- Part A deductible ($1,156)
- Additional home health care (up to 365 visits per year)
- Part B deductible ($140)
- Part B excess charges up to the actual charge or the limiting charge, whichever is less
- Foreign Travel Rider: May have a deductible of up to $250. Must pay at least 80% of billed charges for the first 60 consecutive days you are outside U.S. Benefit limit must be at least $50,000 per lifetime.
Insurance companies are allowed to offer additional riders to a Medicare supplement policy. The optional riders include:
Medicare Part A Deductible;
Additional Home Health Care (365 visits including those paid by Medicare);
Medicare Part B Deductible;
Medicare Part B Excess Charges; and
Wisconsin insurance law requires Medicare supplement policies to contain the following "mandated" benefits. These benefits are available even when Medicare does not cover these expenses.
Skilled Nursing Facilities: Medicare supplement policies cover 30 days of skilled nursing care in a skilled nursing facility. The facility does not need to be certified by Medicare and the stay does not have to meet Medicare's definition of skilled care. No prior hospitalization may be required. The facility must be a licensed skilled care nursing facility. The care also must meet the insurance company's standards as medically necessary.
Home Health Care: Medicare provides for all medically necessary home health visits. However, "medically necessary" is defined quite narrowly, and you must meet certain other criteria. All Medicare supplement policies will pay up to 40 home health care visits per year in addition to those provided by Medicare, if you qualify. Your doctor must certify that you would need to be in the hospital or skilled nursing home if the home care was not available to you. Home nursing and medically necessary home health aide services are covered on a part-time or intermittent basis, along with physical, respiratory, occupational, or speech therapy.
Medicare supplement insurance companies are required to offer coverage for 365 home health care visits in a policy year. Insurance companies may charge an additional premium for the additional coverage. Medicare provides coverage for all medically necessary home health visits. However, "medically necessary" is defined quite narrowly, and you must meet certain other criteria.
Kidney Disease: Medicare supplement policies cover inpatient and outpatient expense for dialysis, transplantation, or donor-related services of kidney disease up to $30,000 in any calendar year. Policies are not required to duplicate Medicare payments for kidney disease treatment.
Diabetes Treatment: Medicare supplement policies cover the usual and customary expenses incurred for the installation and use of an insulin infusion pump or other equipment or non-prescription supplies for the treatment of diabetes. Self-management services are also considered a covered expense. This benefit is available even if Medicare does not cover the claim.
Medicare supplement policies issued prior to January 1, 2006, for individuals who do not enroll in Medicare Part D cover prescription medication, insulin, and supplies associated with the injection of insulin. Prescription drug expenses are subject to the $6,250 deductible for drug charges. This deductible does not apply to insulin.
Medicare supplement policies issued beginning January 1, 2006, do not cover prescription medication, insulin, and supplies associated with the injection of insulin as policies are prohibited from duplicating coverage available under the Medicare Part D.
Chiropractic Care: Medigap policies cover the usual and customary expense for services provided by a chiropractor. This benefit is available even if Medicare does not cover the claim.
Hospital and Ambulatory Surgery Center Charges and Anesthetics for Dental Care: Medicare supplement policies cover hospital or ambulatory surgery center charges incurred and anesthetics provided in conjunction with dental care for an individual with a chronic disability or an individual with a medical condition that requires hospitalization or general anesthesia for dental care.
Breast Reconstruction: Medicare supplement policies cover breast reconstruction of the affected tissue incident to a mastectomy.
Coverage of Certain Health Care Costs in Cancer Clinical Trials: Medicare supplement policies issued or renewed beginning November 1, 2006, cover certain services, items, or drugs administered in cancer clinical trials in certain situations. The coverage is subject to all terms, conditions, and restrictions that apply to other coverage under the policy, including the treatment under the policy of services performed by participating and nonparticipating providers.
Catastrophic Prescription Drugs: Medicare supplement policies issued prior to January 1, 2006, to Medicare beneficiaries who do not enroll in Medicare Part D cover at least 80% of the charges for outpatient prescription drugs after a drug deductible of no more than $6,250 per calendar year. Medigap policies issued beginning January 1, 2006, and after will not include catastrophic prescription drug coverage as these policies are not allowed to duplicate benefits available under Medicare Part D.