What is a Medi-Gap in­surance plan?

Lodi News-Sentinel - - BUSINESS - Dale Im­mekus is the owner of Ded­i­cated Fi­nan­cial Ser­vices and an ac­cred­ited wealth man­age­ment ad­vi­sor. Reg­is­tered Rep­re­sen­ta­tive of­fer­ing se­cu­ri­ties and ad­vi­sory ser­vices through In­de­pen­dent Fi­nan­cial Group, LLC (IFG), a reg­is­tered bro­kerdealer and in­vest

In this in­stall­ment of our Medi­care se­ries we will ad­dress Medi-Gap in­surance plans. Go­ing back to our Medi­care ba­sics, re­mem­ber that Part A is a govern­ment in­surance pro­gram of­fer­ing lim­ited cov­er­age for hos­pi­tal­iza­tion, skilled nurs­ing and hospice ser­vices; and Part B of­fers lim­ited cov­er­age for doc­tor vis­its and out­pa­tient ser­vices. The Medi­care pro­gram is run by the Cen­ter for Medi­care & Med­i­caid Ser­vices (CMS).

If a ben­e­fi­ciary doesn’t add any ad­di­tional cov­er­age be­yond Orig­i­nal Medi­care (OM) there may be cov­er­age gaps which could be quite ad­verse fi­nan­cially. There­fore, once a ben­e­fi­ciary obtains OM one should de­ter­mine the best op­tion for ad­di­tional cov­er­age. In our last in­stall­ment we dis­cussed Part C or more com­monly known as Medi­care Ad­van­tage plans. A sec­ond and sep­a­rate op­tion is to add a Medi­care Sup­ple­ment which is some­times re­ferred to as a Medi-Gap in­surance plan. A ben­e­fi­ciary can­not have both an Ad­van­tage plan and a Gap plan. It is one or the other.

These Gap plans are de­signed to fill the holes or gaps in cov­er­age of OM. These plans are of­fered through pri­vate in­surance car­ri­ers. Plans can vary greatly in the amount of out-of-pocket costs to ben­e­fi­cia­ries and pre­mi­ums, as there are mul­ti­ple plans of­fer­ing dif­fer­ent lev­els of pro­tec­tion. What doesn’t vary are the ben­e­fits of these plans from year to year, or from car­rier to car­rier. Let’s look closer at the many dif­fer­ent as­pects of Gap plans.

When on a Gap plan Medi­care is the pri­mary in­surer and will be billed first, then the Gap plan will be billed for any ad­di­tional amounts. CMS sets prices for ser­vices for physi­cians and other providers and al­lows these med­i­cal providers to charge up to 15% over the set prices. This is re­ferred to as ex­cess billing and some Gap plans cover these amounts and some do not. Providers must con­tract with CMS and main­tain cri­te­ria to keep the con­tract in good stand­ing. While there are many dif­fer­ent plans to choose from, the ben­e­fits of those plans are static and do not change from one year to the next.

Plan F has been one of the more pop­u­lar plans. This plan cov­ers all de­ductibles, co-pay­ments and co-in­surance for CMS ap­proved ser­vices. It doesn’t mat­ter if you are with Acme in­surance or ABC in­surance, for the Plan F they will of­fer the same ben­e­fits from year to year. The pre­mium may vary from in­surance car­rier to an­other but not the ben­e­fits.

Note for Plan F mem­bers, these plans will no longer be of­fered to new ben­e­fi­cia­ries start­ing on Jan. 1, 2020. Those mem­bers al­ready en­rolled in Plan F will be grand­fa­thered in and will not be dropped from their cur­rent plan if pre­mi­ums are kept up. Plan F has the high­est pre­mium be­cause it of­fers the most cov­er­age to ben­e­fi­cia­ries. Plan G has es­sen­tially taken the place of Plan F with the only dif­fer­ent in ben­e­fits be­ing the ben­e­fi­ciary will be re­spon­si­ble for the Part B de­ductible an­nu­ally.

Gap plans with a wide range of pre­mi­ums and ben­e­fits are avail­able. It would be much too com­pli­cated to de­scribe the many dif­fer­ences be­tween these plans. To over­sim­plify we can state that higher pre­mi­ums al­low for more cov­er­age, and lower pre­mi­ums, less cov­er­age. In help­ing make this de­ci­sion con­sider how much ser­vices your health sit­u­a­tion re­quires. The more of­ten ser­vices are needed a plan with more cov­er­age might be a better fit. For some­one who rarely uses ser­vices then a lower pre­mium with more of a pay as you go plan might be a better fit. Ev­ery sit­u­a­tion is dif­fer­ent.

An­other pop­u­lar fea­ture of a Gap plan is that there are no net­works and you may go to any physi­cian or provider which con­tracts with CMS and will ac­cept you as a pa­tient. Ad­van­tage plans on the other hand will have a net­work to work within and re­fer­rals are needed. You do not need re­fer­rals with Gap plans. Just to clar­ify, if you know that you have a foot prob­lem you can prob­a­bly go to a po­di­a­trist with­out a re­fer­ral but it is un­likely that you could walk into an imag­ing fa­cil­ity and de­mand an MRI or CT Scan with­out a physi­cian re­quest­ing it as med­i­cally nec­es­sary.

Gap plans are also ac­cepted through­out all 50 states. This means a Gap mem­ber can go to any physi­cian or provider who con­tracts with CMS within all 50 states. This is where Ad­van­tage plans may lack as you do need re­fer­rals and prior ap­proval be­fore go­ing out­side of net­work. For peo­ple who travel out of their home area a lot this may be an im­por­tant fea­ture to con­sider. How­ever, none of these af­fect emer­gency ser­vices as all Gap and Ad­van­tage must in­clude cov­er­age for such events.

En­roll­ment pe­ri­ods in a Gap plan also has some lim­i­ta­tions which we talked about in a pre­vi­ous ar­ti­cle. Here are some things to re­mem­ber. Medi­care ben­e­fi­cia­ries can en­roll or ap­ply to switch Gap plans at any time. How­ever, ben­e­fi­cia­ries only have a Guar­an­teed Is­sue (GI) un­der cer­tain cir­cum­stances. When a ben­e­fi­ciary is new to Medi­care, they have a seven-month win­dow to en­roll with a GI. In ad­di­tion to that there is ap­prox­i­mately 20 cir­cum­stances when a ben­e­fi­ciary may en­roll with a GI.

If there is not a cir­cum­stance that al­lows for a GI, then the ben­e­fi­ciary can ap­ply but will have to go through med­i­cal un­der­writ­ing and could pos­si­bly be de­nied. This is a big dif­fer­ence be­tween Ad­van­tage and Gap plans. Ad­van­tage plans only can deny a ben­e­fi­ciary if they have end-stage re­nal dis­ease and in such a case,

CMS has spe­cific pro­grams for those in­di­vid­u­als.

Cal­i­for­nia has a spe­cial cir­cum­stance called the Cal­i­for­nia Birth­day Rule. This al­lows a ben­e­fi­ciary who is cur­rently en­rolled in a Gap plan to switch from in­surance car­rier to an­other with­out go­ing through med­i­cal un­der­writ­ing dur­ing their birth­day month. The time frame may vary slightly from one car­rier to an­other. Car­ri­ers do not let you trade up from a plan with less ben­e­fits to a plan with ad­di­tional ben­e­fits. This rule might be used to re­duce pre­mium costs while main­tain­ing the same level of ben­e­fits.

An im­por­tant point is that Gap plans do not have any pre­scrip­tion drug cov­er­age. CMS states that Part D pre­scrip­tion drug plans are op­tional but, if you do not keep cred­i­ble cov­er­age in place then you will in­cur a Late En­roll­ment Penalty be­gin­ning 63 days af­ter you are el­i­gi­ble. There­fore, if you choose to add a Gap plan to your OM you will also need to add a Part D Pre­scrip­tion Drug Plan. We will cover Part D in our next in­stall­ment.

There are many more con­sid­er­a­tions to make when choos­ing whether to go with a Gap plan and which plan. As al­ways, I ad­vise you to con­sult with your team of pro­fes­sion­als to help make im­por­tant de­ci­sions. Here are a few of the many re­sources avail­able:

Un­til we talk again be well.

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