Medicare supplement insurance guide

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Medicare is a federal health insurance program that pays most of the health care costs for people who are 65 or older. It will also pay for health care for some people under age 65 who have disabilities.

You can buy Medicare supplement insurance to help pay some of your out-of-pocket costs that Medicare won’t pay. Because it helps cover some of the “gaps” in Medicare coverage, Medicare supplement insurance is often called Medigap insurance.

Do you need Medicare supplement?

Not everyone needs a Medicare supplement policy. If you have other health coverage, the gaps might already be covered. You probably don’t need Medicare supplement insurance if:

• You have group health insurance through an employer or former employer, including government or military retiree plans.
• You have a Medicare Advantage plan.
• Medicaid or the Qualified Medicare Beneficiary (QMB) Program pays your Medicare premiums and other out-of-pocket costs. QMB is a Medicare savings program that helps pay Medicare premiums, deductibles, copayments, and coinsurance.

If you have other health insurance, ask your insurance company or agent how it works with Medicare.

Learn more: Retirement ahead? Think about your insurance.

Medicare basics

Original Medicare has two parts. Part A covers hospital services and Part B covers other types of medical expenses. You may go to any doctor or hospital that accepts Medicare. Medicare supplement policies only work with original Medicare.

Medicare Part A (hospital coverage) pays for:

• Care in a hospital.
• Care at a skilled nursing facility after a hospital stay.
• Home health care.
• Hospice care.
• All but the first three pints of blood each calendar year.

Medicare Part B (medical coverage) pays for

• Doctor visits.
• Home health care.
• Lab services.
• Outpatient hospital care.
• Durable medical equipment and supplies.
• Preventive health services, like exams, health screenings, and shots.

Medicare Part D (prescription drug coverage) pays for generic and brand-name prescription drugs. You can get prescription drug coverage by joining a stand-alone prescription drug plan or by buying a Medicare Advantage plan that includes drug coverage. If you have group health insurance, your health plan might already cover prescriptions. Ask your plan’s sponsor whether the plan has prescription drug coverage that is comparable to Medicare Part D.

Insurance companies approved by Medicare offer Part D coverage.

The Centers for Medicare and Medicaid Services (CMS) publishes the Medicare & You handbook that describes Medicare coverages and health plan options. CMS mails the handbook to Medicare beneficiaries each year. You can also get a book by calling 800-MEDICARE (800-633-4227).

Learn more: How to pick the right Medicare plan | Watch: How to understand Medicare plans

Services Medicare doesn’t cover

• Most long-term care. Medicare only pays for medically necessary care provided in a nursing home.
• Custodial care, if that is the only kind of care you need. Custodial care can include help with walking, getting in and out of bed, dressing, bathing, toileting, shopping, eating, and taking medicine.
• More than 100 days of skilled nursing home care during a benefit period following a hospital stay. The Medicare Part A benefit period begins the first day you receive a Medicare-covered service and ends when you have been out of the hospital or a skilled nursing home for 60 days in a row.
• Homemaker services.
• Private-duty nursing care.
• Most dental care and dentures.
• Health care while traveling outside the United States, except under limited circumstances.
• Cosmetic surgery and routine foot care.
• Routine eye care, eyeglasses (except after cataract surgery), and hearing aids.

What you pay with original Medicare

For Medicare parts A and B, you pay monthly premiums, and deductibles, copays, and coinsurance. You also pay the full cost of any services that Medicare doesn’t cover.

• Premiums are amounts you pay to keep your Medicare coverage. Most people don’t have to pay a Part A premium, but everyone must pay the Part B premium. The premium amounts may change each year in January.
• A deductible is the amount you must pay for medical expenses before Medicare begins to pay.
• A copayment is a set dollar amount you usually have to pay each time you see a doctor or go to the hospital.
• Coinsurance is the percentage of the cost of a service that you pay after Medicare pays its portion of the cost. This means that if Medicare pays for 80% of the cost of a service, you’ll pay the remaining 20%.

Ask if your doctor ‘accepts assignment’

Assignment is an agreement between doctors and other health care providers and Medicare. Doctors who “accept assignment” charge only what Medicare will pay them for a service. You must pay any deductibles, coinsurance, and copayments that you owe.

Doctors who don’t accept assignment may charge more than the Medicare-approved amount. You are responsible for the higher charges. You also might have to pay the full cost of the service at the doctor’s office, and then wait to be reimbursed by Medicare.

Use your Medicare Summary Notice to review the charges. You get a Medicare Summary Notice each quarter. If you were overcharged and weren’t reimbursed, follow the instructions on the notice to report the overcharge to Medicare. The notice will also show you any deadlines to complain or appeal charges and denied services. If you are in original Medicare, you can also look at your Medicare claims online at MyMedicare.gov.

Medicare has a directory of doctors, hospitals, and suppliers that work with Medicare. The Physician Compare directory also shows which providers accepted assignment on Medicare claims.

Medicare Advantage plans

You might have the option to join a Medicare Advantage plan, also called Medicare Part C. To be eligible, you must have both Medicare parts A and B and live in an area that has a plan.

The federal government contracts with insurance companies and managed care plans to offer Medicare Advantage in certain areas. Medicare pays the plan a set amount each month for the plan to provide Medicare parts A and B services to its members. You pay your monthly Medicare Part B premium and any premium the Medicare Advantage plan charges. You also must pay any copayments, deductibles, and coinsurance the plan requires.

If you are in a Medicare Advantage plan, you won’t get a Medicare Summary Notice. You’ll instead get monthly statements from your plan and you might be able to view your claims on the plan’s website.

Medicare Advantage options vary by ZIP code and county. The options available in Texas include:

• Managed care plans, such as health maintenance organizations (HMOs), preferred provider organizations (PPOs), and provider-sponsored organizations (PSOs).
• Private fee-for-service plans.
• Medicare special needs plans.

Medicare Advantage plans usually have more benefits than original Medicare. For instance, some Medicare Advantage plans cover dental and vision services. However, Medicare Advantage might not be the best option for some people. Your choice of doctors and hospitals in a Medicare Advantage plan are limited. If you have other insurance, such as a group retirement plan, ask your group plan if it works with a Medicare Advantage plan or with original Medicare.

Because Medicare negotiates contracts with Medicare Advantage plans each year, the plans available and the benefits they provide can change each year. If your plan discontinues services, you will have to find a new plan in your area or return to original Medicare. To learn what plans are available in your area, call Medicare or visit the Medicare Plan Finder.

If your Medicare Advantage plan leaves your area, or if you move out of the plan’s service area, you may have the right to join another Medicare Advantage plan. You may also have the right to buy Medicare supplement plans A, B, C, F (including Plan F with a high deductible), K, or L, regardless of your medical history or condition.

If your Medicare Advantage plan ends, it must give you written notice of your options and tell you how long you have to buy a Medicare supplement policy. The written notice is your proof to the Medicare supplement company of your right to buy Medicare supplement. If you’re under age 65 and on Medicare, this right in Texas is limited to Medicare supplement Plan A.

Medicare’s open enrollment period for Medicare Advantage and prescription drug plans is October 15 to December 7.

Medicare will mail you a Medicare & You handbook each year before open enrollment. The handbook has a list of Medicare Advantage and prescription drug plans. Use the handbook to review whether there are any changes and costs in your Medicare Advantage or prescription drug plan.

The Texas State Health Insurance Assistance Program (SHIP) can help you compare plans and costs in your area. Call SHIP at 800-252-9240.

The Medicare open enrollment period doesn’t apply to Medicare supplement plans.

Medicare supplement insurance

Medicare supplement insurance fills in the gaps between what original Medicare pays and what you must pay out-of-pocket for deductibles, coinsurance, and copayments.

Medicare supplement policies only pay for services that Medicare says are medically necessary, and payments are generally based on the Medicare-approved charge. Some plans offer benefits that Medicare doesn’t offer, such as emergency care outside the United States.

Medicare supplement policies are sold by private insurance companies that are licensed by TDI. But Medicare supplement benefits are set by the federal government.

Open enrollment

It’s best to buy a Medicare supplement plan during your one-time, six-month Medicare supplement open enrollment period. You only get one open enrollment period for Medicare supplement. It begins when you enroll in Medicare Part B at age 65 or older.

Note: The Medicare supplement open enrollment period is different from the annual Medicare open enrollment period when you can change Medicare Advantage and prescription drug plans.

Your one-time Medicare supplement open enrollment period is the only time companies must sell you a policy regardless of your health history or condition. If you wait until after your open enrollment period or your policy lapses, you might not be able to buy another policy if you have a preexisting condition.

Your Medicare supplement policy is renewed automatically each year to ensure you have continuous coverage. If you drop your Medicare supplement policy, you may not be able to get it back, or you might not be able to buy a new policy.

Medicare Select

Medicare Select is a type of Medicare supplement policy that usually requires you to use doctors and hospitals in the plan’s network for your routine care. If you use out-of-network hospitals -- other than in an emergency -- you’ll have to pay more of the cost.

If you move out of the plan’s service area, you have the right to buy a Medicare supplement policy that offers the same or fewer benefits as your current policy. You must buy the plan from the same company that provides your Select coverage. If you’ve had your Medicare Select policy for more than six months, you won’t have to answer medical questions.

The 10 standard Medicare supplement insurance plans

There are 10 Medicare supplement insurance plans. Each plan is labeled with a letter of the alphabet and has a different combination of benefits. Plan F has a high-deductible option. Plans K, L, M, and N have a different cost-sharing component.

Every company must offer Plan A. If they offer other plans, they must offer Plan C or Plan F.

Basic benefits

The 10 Medicare supplement plans (plans A, B, C, D, F, G, K, L, M, and N) provide these benefits:

• Hospitalization:
  • Pays your daily copayments for hospitalization expenses from the 61st through the 90th day of the Medicare benefit period.
  • Pays the Medicare Part A copayments for any hospital confinement beyond the 90th day in a benefit period, up to an additional 60 days during your lifetime. (These are your inpatient reserve days. You may use these days when you require more than 90 days in the hospital during a benefit period. When you use a reserve day, it is subtracted from your lifetime total and can’t be used again.)
  • Pays the Medicare Part A coinsurance plus coverage for 365 additional days after Medicare benefits end.
  • Pays the skilled nursing facility care coinsurance.
• Hospice: Pays the copayment for outpatient pain medications and the coinsurance for inpatient respite care. Plans K and L pay this cost at a different rate. You must meet Medicare’s requirements, including getting a doctor’s certification of terminal illness.
• Medical expenses: After you’ve met your Part B deductible, Medicare pays your portion of the 20% Part B coinsurance for doctor bills, hospital or home health care, and some other Medicare-eligible expenses. Plans K, L, and N require you to pay part of the 20% Part B coinsurance.
• Blood: Pays for the first three pints of blood each year under Medicare parts A and B.

In addition:

• Plans B, C, D, F, G, and N pay the entire Part A deductible. Plans K, L, and M pay a percentage of the Part A deductible. Out-of-pocket limits apply to plans K and L.
• Plan N requires a $20 copayment for most office visits and $50 for emergency room visits.
• Plans C and F pay the Part B deductible.
• Plans C, D, F, G, M, and N pay for skilled nursing facility care copayments from the 21st day through the 100th day in a benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A. This is not custodial care. Plans K and L pay a portion of the cost until you meet the annual out-of-pocket limits. The plan will then pay 100%.
• Plans C, D, F, G, M and N pay for emergency care while traveling outside the United States. They pay 80% of the charges that Medicare would pay if you were in the United States. Care must begin during your first 60 days outside the United States. The calendar year deductible is $250. The lifetime maximum benefit is $50,000.
• Plans F and G pay Medicare Part B excess doctor charges that Medicare doesn’t pay. They pay 100% of the excess fees, which are limited to 15% above the Medicare-approved amount.

This chart summarizes the benefits provided by each plan: Standard Medicare Supplement Insurance Plans.

Keeping your coverage if you move

If you are moving to another county or state, make sure your Medicare plan will still be in effect after you move.

If you have original Medicare, federal rules usually allow you to keep your Medicare supplement policy. There are exceptions to this if you have a Medicare Select plan or if you have a plan that includes added benefits, such as vision coverage or discounts that were available only where you bought the plan.

If you have a Medicare Advantage plan, ask the plan whether it’s available in your new ZIP code. If the plan isn’t available, you’ll have to get a new one. You can switch to another Medicare Advantage plan in your new area or to original Medicare.

Alternatives to Medicare supplement insurance

Before buying a Medicare supplement policy, find out whether there are other options for paying your Medicare out-of-pocket costs. The following plans and programs might help you pay costs.

Employee group plans

If you stay at your job after you become eligible for Medicare and you still have health insurance through your job, you probably don’t need Medicare supplement insurance. The same is true if you have health coverage through a spouse’s employer health plan.

Some employers offer their retirees coverage through a group Medicare supplement policy or a Medicare Advantage plan. Because health plans work differently, ask your employer’s benefits coordinator how well the plan covers the gaps in Medicare coverage. Then make a decision about Medicare supplement insurance.

COBRA coverage from an employer plan

Federal and state law allows people who leave their jobs to continue their employer-sponsored health coverage for a period of time. Be aware of the following:

• You have an eight-month period after your employment ends to enroll in Medicare. If you don’t enroll during that eight-month window, you might have to pay a penalty when you enroll.
• If you’re in your Medicare initial enrollment period, you must enroll in Medicare during that time to avoid a possible penalty.
• If you don’t buy a Medicare supplement policy during your open enrollment period, you’ll be able to buy some Medicare supplement plans within 63 days of losing your COBRA coverage.

Talk to your employer about COBRA and Medicare eligibility.

Medicaid

Medicaid is a state and federal program that pays for health coverage for people with low incomes. If you qualify for Medicaid, the state will pay your Medicare premiums and out-of-pocket costs. Medicaid will also pay for some services not covered by Medicare. If you have Medicaid, you don’t need Medicare supplement insurance.

Medicare savings programs

Medicaid-sponsored Medicare savings programs pay Medicare premiums, deductibles, and coinsurance for people who qualify. These programs allow people to use their savings to cover other expenses or to buy more coverage.

The Medicare savings programs are:

• The Qualified Medicare Beneficiary (QMB) program.
• The Specified Low-Income Medicare Beneficiary (SLMB) program.
• The Qualified Individuals (QI) program.
• The Qualified Disabled Working Individuals (QDWI) program.

The federal QMB program pays the Medicare Part B premium and covers all Medicare deductibles and copayments. You don’t need Medicare supplement insurance if you are in the QMB program.

The other Medicare savings programs pay either the Medicare Part A or Part B premiums. You might need a Medicare supplement policy to help cover your other expenses.

Your rights

Open enrollment for people age 65 and older

The Medicare supplement open enrollment period is a six-month period during which you may buy any Medicare supplement plan offered in Texas. During this period, companies must sell you a policy, even if you have health problems. The open enrollment period begins when you enroll in Medicare Part B. You must have both Medicare parts A and B to buy a Medicare supplement policy.

You can use your open enrollment rights more than once during this six-month period. For instance, you may change your mind about a policy you bought, cancel it, and buy any other Medicare supplement policy.

Although a company must sell you a policy during your open enrollment period, it may require a waiting period of up to six months before it starts covering your preexisting conditions.

Preexisting conditions are conditions for which you received treatment or medical advice from a doctor within the previous six months.

Open enrollment for Texans with disabilities

People under age 65 who get Medicare because of disabilities have a six-month open enrollment period beginning the day they enroll in Medicare Part B. This open enrollment right only applies to Medicare supplement Plan A.

Note: People who have Medicare because of disabilities have another open enrollment period during the first six months after turning 65.

Guaranteed issue right

You may have the right to buy a Medicare supplement policy outside of your Medicare supplement open enrollment period if you lose certain types of health coverage. This is called guaranteed issue.

For people over age 65, the guaranteed issue right applies to Medicare supplement plans A, B, C, F (including Plan F with a high deductible), K, and L.

Texans under age 65 with disabilities who enroll in Medicare Part B have guaranteed issue rights, but only for Medicare supplement Plan A.

People who lose Medicaid because of a change in their financial situation also have a guaranteed issue right to buy a Medicare supplement policy.

The guaranteed issue right is good for 63 days from the date coverage ends or from the date of notice that coverage will end, whichever is later. Companies may not place any restrictions, such as preexisting condition waiting periods or exclusions, on these policies. You must provide the company with proof that you lost coverage. Usually, people do this with a letter from the company notifying them that their coverage will end.

For more information about your guaranteed issue right, read Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare.

30-day ‘free look’

You can return your Medicare supplement policy within 30 days and get your money back with no questions asked. Keep a record of the date you received the policy. Read the policy when you get it. If you return the policy to the company, use certified mail with a return receipt to prove that it was returned within the 30-day time limit.

The 30-day "free look" period doesn’t apply to Medicare Advantage. If you drop Medicare supplement to join a Medicare Advantage plan, you may not be able to get your Medicare supplement policy back.

Renewing your policy

All Medicare supplement policies are “guaranteed renewable.” This means that a company may not cancel your policy or refuse to renew it unless you made intentional false statements on your application or you didn’t pay your premium.

An insurance company may raise your premium once a year. If you have an attained-age policy, a company may also raise your premium on your birthday.

Suspending a policy

If you become eligible for Medicaid, you may ask that your Medicare supplement benefits and premiums be suspended up to two years. You must notify your company within 90 days of becoming eligible. If you lose your Medicaid eligibility, the policy will automatically be reinstated.

If you lose Medicaid eligibility within two years and want to reinstate your Medicare supplement policy, you must contact your company within 90 days of losing eligibility. After two years, you’ll have to reapply with the company if you want to reinstate your policy.

Claims

Doctors who take Medicare must submit Medicare claims to the Medicare claims contractor for you. If you get a bill, review your Medicare Summary Notice and what your company paid to see if you owe anything.

Medicare supplement policies pay only for services that Medicare considers medically necessary. If Medicare denies a claim, you have the right to appeal the decision. The appeals process and deadline to request an appeal are described in your summary notice.

Texas law requires insurance companies to pay claims promptly. If your Medicare supplement company refuses to pay a claim for a Medicare-approved charge or delays payment of your claims, you, your doctor, or your hospital may file a complaint with TDI.

Shopping tips

• Buy during your one-time supplement open enrollment period. The best time to buy a Medicare supplement policy is during your one-time, six-month Medicare supplement open enrollment period. That period begins when you enroll in Medicare Part B at age 65 or older. This six-month period is the only time companies must sell you any plan they offer without looking at your health history.
• Shop around. Prices can vary. Premiums depend on the type of policy you get and other factors, such as where you live. If you have an issue-age policy, your premiums are based on your age when you bought the policy. Companies may increase issue-age policy premiums once during your first year of coverage. After that, the company may not increase the premium for 12 months. If you have an attained-age policy, your premium could increase within the first 12 months and will increase on your birthday.
• Consider other things. Price should not be your only consideration. You can learn a company's complaint history by visiting the TDI website or by calling our Help Line at 800-252-3439. Also ask family and friends if they’ve had any experiences with the companies you’re considering.
• Consider your needs. Although it’s illegal to sell you more than one Medicare supplement policy, insurance companies may offer other policies with benefits that work differently than Medicare supplement coverage. These include cancer, specified disease, hospital indemnity, and long-term care policies. Any duplication of benefits must be disclosed in writing. Duplicate coverage is usually a waste of your money because you’re paying twice for the same coverage.

Protect yourself

• Make sure the agent and company are licensed. You can verify company and agent licenses by calling our Help Line at 800-252-3439
• Try to buy from an agent you know and trust. Ask friends or family for recommendations.
• Ask questions and take notes when you talk to an agent. These could help you later if there is a dispute over what you were told about a policy.
• Have someone you trust with you when you talk to an agent or company.
• Be careful dropping or switching plans. If you drop your Medicare supplement plan, you might not be able to get it back if you change your mind later.
• If an agent tries to rush you, be suspicious. Tell the agent you need more time.
• Read what you are asked to sign before you sign it. Never sign a blank application form.
• Get the names and addresses of the agent and the insurance company. Know how to contact the agent and the company with questions.
• Answer all questions on the application accurately. If an agent helps you complete the application, make sure the information is correct and complete before you sign.
• Don’t pay cash or make a check out to an agent. Make checks payable only to the insurance company. Always pay by check or money order so you have a clear record of payment. Ask for a receipt on the company's letterhead that the agent has signed.
• Before making a lump-sum payment, ask the agent or company about getting back any unearned premium. This is especially important during the open enrollment period when you have the right to change companies. Unearned premium is what you paid in advance that didn’t actually go to toward coverage. For instance, if you buy a policy and pay a year’s worth of premiums up front, then cancel your policy a month later, the company would owe you 11 months of your premium.
• Read your policy carefully when you get it. You can return a Medicare supplement policy for any reason within 30 days and receive a full refund.
• Pay premiums on time. A company may cancel a policy if you don’t pay your premiums. Read your policy’s notice on payment of premiums, grace periods, and cancellations.

Unfair practices

Agents and companies are breaking the law if they do any of these things:

• Knowingly making misleading statements to encourage you to drop a policy and buy a replacement from another company. This is called twisting.
• Using high-pressure tactics, including the use of force, fright, or threat to pressure you into buying a policy.
• Getting sales leads through advertising that hides the fact that an agent or company may try to sell you insurance. This is called cold lead advertising.
• Using misleading advertisements made to look like mail from the government by using eagles or similar graphics or a return address with a name that sounds like an official government agency or bureau.
• Acting as a representative of Medicare or a government agency.
• Selling you a Medicare supplement policy that duplicates Medicare benefits or health insurance coverage you already have. An agent is required to review and compare your other health coverages.
• Suggesting that you falsify an answer on an application.

If you believe that an agent or company has engaged in unfair and illegal practices, file a complaint with TDI.

Agencies that can help

Medicare (Medicare eligibility and benefits questions or information about Medicare Advantage plan options)
800-MEDICARE (633-4227)

Texas Health and Human Services (Medicare Help Line)
800-252-9240

Texas Legal Services Center (information about your rights and public assistance benefits)
800-622-2520

Texas Health and Human Services Office of the Ombudsman (information about Medicaid or Medicare savings programs)
877-787-8999