If you are in the process of looking for a Medicare Supplement, you’ve probably had the same question.
Standardized Medicare Supplements offer the exact same coverage from one company to the next. Insurance companies do not have control over the benefits, just their prices and rate increases. A Plan G with one company is exactly the same as a Plan G with another. Although benefits don’t change, some carriers can give you perks for being their member, like gym memberships, and pharmacy discount cards. In some cases, carriers offer plans that may be part of a network.
This article focuses on Medicare Supplements, what it means when they are standardized and how that compares to Medicare Advantage Plans.
Keep reading to learn more.
Why Are Medicare Supplements Standardized?
In 1993 the federal government standardized all Medicare Supplements.
Before this, insurance companies offered all kinds of different coverage options and plans.
There was a lot of confusion, and people had a hard time understanding what was actually covered.
Many were left with medical bills they thought should be covered but weren’t.
People did not know what they had and how their coverage worked with Medicare.
So the government stepped in to help eliminate all of the confusion and consolidate the options that were offered.
In addition to Medicare Supplements, Medicare allows programs that provide alternative Medicare coverage, known as Medicare Advantage.
Advantage Plans are not standardized.
This article talks about what it means when a Medicare Supplement is standardized and how that compares to Advantage Plans, which are not.
What Are Medicare Supplements?
Medicare Supplements are plans you can purchase from private insurance companies. Read about the basics of Supplements here.
All Medicare Supplement plans are standardized.
This means the government is the one that sets the benefits.
Insurance companies have no control over the coverage.
They can choose whether or not they will offer a specific plan.
Not all companies offer all plans.
In addition to Medicare Part A and Part B, Supplements help minimize out-of-pocket expenses.
There are ten Medigap plans currently available:
We talked about the most popular plans, Plans F, G, and N, in another post, which you can read here.
Both Plan F and Plan G have high deductible options.
It is important to note that Medicare has begun to phase out Plan C and Plan F.
Plan C, Plan F, and the high deductible Plan F options are no longer available.
Remember, if you are new to Medicare on or after January 1, 2020, you cannot purchase those plans.
What Is Standardization?
A Medicare Supplement plan purchased from one company must have the same coverage and benefits as the same plan purchased from any other insurance company.
The benefits the same. Period.
For example, a Plan N from one company is the same as Plan N from a different Company.
Again, there is no difference in benefits – just price.
The Medicare and You handbook talk about this in detail here.
All 10 Plans Have a Few Things in Common
Remember, the same letter plan from one company is the same as any other.
Each letter, however, does have its own separate benefits.
Certain rules are the same:
- Supplements pay any healthcare provider as long as they accept Medicare.
- The claims process is the same.
- How someone is approved for a Supplement.
Does My Doctor Accept Medicare?
If your doctor does accept Medicare (Most do), the Supplement will always work.
There is never a time when Medicare pays, but the Supplement refuses to pay.
The best way to find out is on Medicare’s website using their “Provider Search Tool” found here.
The Way Claims Are Filed:
Providers file claims electronically with Medicare.
Medicare pays its portion and sends a claim to the Supplement plan.
Then the Supplement pays.
Whatever is your portion is then billed to you.
Use the Medicare & You Handbook to compare the different Medicare supplement plans.
Getting Approved for a Supplement
Turning 65, retiring, or losing health insurance allows someone to get a Medicare Supplement.
There are no health questions.
Otherwise, every insurance company determines if someone is eligible.
They ask precise health questions.
Sometimes, people realize they want a Supplement over an Advantage.
Usually, this requires them to go back to Original Medicare first.
The Medicare & You Handbook
Each year Medicare releases an updated version of the Medicare & You Handbook.
Call 1-800-Medicare and request to have a copy sent to you by mail.
You can also download the Medicare & You Handbook on Medicare’s website.
The Medicare & You Handbook contains information about Medicare.
It has good general knowledge about Medicare supplement plans and how they work with Medicare.
All 10 plans are listed, and Medicare recommends using their book to compare your options.
This way, you avoid any sales pitch the different insurance companies may give you.
Let’s look at an example of standardization in Supplements:
Ken has a Plan G from Best Insurance Company for which he pays $140 a month.
His friend Daniel has a Plan G from Great Health & Life for which he pays $160 a month.
Both Ken and Daniel have the same benefits and coverage, and both can see any healthcare provider in the country who accepts Medicare.
Ken wants to lower his premium, so he calls his agent and asks to switch to the Great Health & Life Plan G.
He saves $20 a month, or $240 a year, for the same coverage.
Nothing else changes.
Standardized Supplements Versus Medicare Advantage Plans
Medicare Advantage Plans are an alternative to Medicare Supplements and original Medicare.
They are an alternative coverage option to Medicare.
Advantage Plans help minimize out-of-pocket expenses.
We talked about Advantage Plans in more detail in another post, which you can read here.
Medicare Advantage Plans are not standardized.
There are many fundamental differences:
- Network requirements – You cannot see any provider in the country that accepts Medicare.
- No standardization – Out-of-pocket amounts can vary significantly from one plan to the next.
- Monthly premium – Low monthly premiums but higher out-of-pocket costs.
- Claims process – You often need referrals and prior approvals for specific services.
Let’s look at an example:
Tom has a Medicare Advantage Plan.
He had to undergo heart surgery and afterward suffered a stroke.
This required an inpatient hospital admission.
The hospital charged Tom $295 per night for each night he stayed there.
The hospital also charged Tom hundreds of dollars in copays and other out-of-pocket expenses.
He received various services and drugs during that hospital stay, which all added up.
If Tom had a Medicare Advantage Plan from a different company, the amount he paid would have differed.
For example, he might have paid $350 per night, and his copays on his medications would not have been the same.
Every year, Tom has to review his coverage and compare his options to make sure he has the lowest out-of-pocket.
Switching from Medicare Advantage to a Supplement
As you can see from our example above, different Advantage Plans offer different benefits.
It all depends on the company and plan.
Sometimes people prefer to switch back to Original Medicare.
Unfortunately, this can sometimes be very tricky if it is even possible at all.
You cannot switch back whenever you want.
There are certain rules for enrollment periods on when you can do this.
Then if you want to add a Medicare Supplement, you will have to qualify with your health.
We talked about enrollment periods in more detail here.
There are only two times during the year when you can switch from an Advantage Plan to Original Medicare:
- Annual Enrollment Period (AEP) – between October 15th through December 7th. If you enroll during this period, your supplement coverage starts on January 1st.
- Medicare Advantage Open Enrollment period (MA-OEP) – between January 1st through March 31st. If you enroll during this period, your supplemental coverage can begin:
- As early as the first of the month following the month you enroll or,
- No later than April 1st.
Do not leave a Medicare Advantage Plan until your application for supplement coverage is approved.
Keep reading to learn more.
Medically Qualifying for Coverage
Medical underwriting is the process of an insurance company examining health records and medication history.
They use these findings to determine whether to approve or decline an application.
Let’s say, Tom, from our example earlier, applies for a supplement.
He can only do so during one of the two enrollment periods mentioned above.
However, the company would decline his application because of his recent heart surgery and stroke.
Applications for Medicare Supplements Have Health Questions
Some of the more common disqualifying conditions include:
- Cancer or cancer treatment in the last couple of years
- Heart disorders or heart surgeries
- Current or recent stroke
- Diabetes with complications or recent changes in medication
- Kidney disease
- Ongoing physical therapy
- A treatment, procedure, or surgery is recommended but not yet performed.
Health qualifications can vary from one company to the next.
It is best to contact an independent agent familiar with each company and its specifications.
As you can see, the standardization of Medicare supplements provides beneficiaries with many protections and makes coverage and benefits quite clear.
Like supplements, Medicare Advantage Plans provide a way for Medicare beneficiaries to minimize their out-of-pocket medical expenses.
However, they can be much more costly than Supplements when major medical events arise.
Other vital differences might make Advantage Plans a less attractive option than supplement plans.
When individuals with Advantage Plans decide a supplement would provide better coverage, it is often too late for them to qualify.
Although Medicare’s goal helped minimize confusion around Supplement plans, the introduction of Medicare Advantage Plans undid a lot of that.
If you have any questions, use the search tool at the top of this page or on the home page.
Or, if you would like further detail on any of the topics we discussed, please fill out a contact form and submit your question.
If you prefer to speak by phone, call us at 888-209-5049.