Comparing Policies

Cost of Policies

When buying a Medigap policy you should find out exactly what the premium will be. A few insurance companies charge everyone the same amount. Most companies charge different premiums based on the age of the person applying for coverage. Several companies also use other factors, such as different rates for men and women or different rates in different parts of the state.

You should find out what happens to your premium as you get older. The premium for your policy will increase every year primarily due to inflation in medical costs and the increase in Medicare deductibles and copayments. The amount your premium goes up may also depend on the way in which the company reflects the aging of its policyholders in rates charged. Be sure to ask the agent for any Medigap policy you are considering to explain the approach the company uses. In general, insurance companies use one of the methods described below:

Attained age. In addition to medical inflation and increased Medicare deductibles and copayments, your premium will also increase as you age. This is due to the fact that you tend to use more medical services as you age.

Issue age. Your premium will increase due to medical inflation and increased Medicare deductibles and copayments. It will not increase due to your age. Your initial premium will be somewhat higher than under the Attained Age approach because a portion of the initial premium is used to prefund the increased claims cost in later years. As a result, the premium for later years should be somewhat less than it would be under an Attained Age approach.

No Age Rating. Your premium is the same as for all customers who buy this policy, regardless of age.

Under Age 65. Your premium is calculated for individuals who, due to a disability, are eligible to enroll in Medicare under age 65.

Policy Delivery and Refunds

Policy delivery or refunds on policies should be made promptly by insurance companies. If you do not receive your policy within a month, or if there is a delay in receiving a refund, call or write the insurance company.

If you buy from an agent, find a good local insurance agent who can help you buy the right policy and will also assist you with making claims.

Policy Storage

Keep the policy in a safe place. It is a good idea to choose someone ahead of time who can take over your affairs in case of a serious illness. This person should know where your records are kept.

Duplicate Coverage

Buy only one policy. Buying one comprehensive health insurance policy is much better than buying several limited policies. Duplicate coverage is costly and unnecessary. This is true for both group and individual policies.

Health History

Do not be misled that your medical history on an application is not important. Omitting specific medical information on your application can be very costly. If your application for individual Medigap insurance includes questions about your health, be sure that you answer all medical questions completely and accurately. If an agent helps you fill out the application, do not sign the application until you read it. If you omit medical information and the insurance company finds out about it later, the company may deny your claim and/or terminate your policy.

Since the application is part of the insurance contract, you will receive a copy with the policy. Make sure that the application has not been changed and that all the medical information in the application is accurate.

Payment

Make checks payable only to the insurance company--do not pay cash or make a check out to the agent. Be sure you have the agent's name, address, and Wisconsin agent's license number, and the name and address of the company from which you are buying the policy.

Replacing Existing Coverage

Make sure you have a good reason for switching from one policy to another. You should only replace existing coverage for different benefits, better service, or more affordable premiums.

Insurance Agents and Companies

Insurance agents and companies must be licensed to sell Medicare supplement and other insurance. You can check with the Office of the Commissioner of Insurance to see if they are licensed. To find out if an agent or company is licensed call 1-800-236-8517. Licensing information about agents and companies can also be found on OCI's home page in the Quick Links section under Agent/Agency Lookup (https://ociaccess.oci.wi.gov/ProducerInfo/PrdInfo.oci) and Company Lookup (https://ociaccess.oci.wi.gov/CmpInfo/CmpInfo.oci). Keep the agent's business card and information regarding the insurance company's address and telephone number.

Common Exclusions

No insurance policy will cover everything that is not covered by Medicare. Medicare excludes certain types of medical expenses. So do many Medicare supplement, Medicare select, Medicare cost policies, and Medicare Advantage plans.

Some services that are frequently excluded under these policies are: custodial care in nursing homes, private duty nursing, routine check-ups, eye glasses, hearing aids, dental work, cosmetic surgery, and prescription drugs.

Medigap policies include two other exclusions that are frequently misunderstood:

  1. Medicare pays only for charges that are considered reasonable and services that are considered necessary. Medicare's determination of reasonable or "approved" charge may be much less than the actual charge for a covered service. For example:

    Doctor's bill $115
    Medicare-approved $100
    Medicare pays $80

    In the example above, Medicare pays 80% of the approved charge ($80). Medicare supplements pay only the 20% difference between what Medicare approves and what Medicare pays ($20). If your doctor accepts assignment, you will not be charged the difference between what Medicare approves and the doctor's bill. Otherwise, you will be responsible for that portion of the bill. If you have the Medicare Part B Excess Charges Rider, the policy will pay the difference between what Medicare approves and the doctor's charge.

    Medicare select and Medicare cost policies cover the entire charge for covered services if you use doctors and hospitals connected to the plan. Medicare Advantage policies may charge a small copayment for doctor office and emergency room visits.

  2. Medicare pays for skilled nursing care in a skilled nursing facility approved by Medicare if your doctor certifies that it is necessary and you meet certain other criteria. There are no benefits for custodial care. In general, Medicare supplements, Medicare select, Medicare cost, and Medicare Advantage plans cover only skilled nursing care and not custodial or intermediate care. Skilled nursing care is quite narrowly defined.

Waiting Periods, Limitations and Exclusions

Many Medicare supplement insurance policies have waiting periods before coverage begins. If your policy excludes coverage for preexisting conditions for a limited time, that must be stated clearly on the first page of the policy. The waiting period for preexisting conditions may not be longer than 6 months, and only conditions treated during the 6 months before the effective date of the policy may be excluded. Insurance companies are required to waive any waiting periods for preexisting conditions if you buy a Medicare supplement policy during the open enrollment period and have been continuously covered with creditable coverage for at least 6 months prior to applying for the Medicare supplement policy. Insurance companies are also required to waive any waiting periods for preexisting conditions when one Medicare supplement policy is replaced with another.

Remember: For the first 6 months after you first enroll in Part B of Medicare, insurance companies offering Medicare supplement policies must accept you regardless of your health. Some companies have continuous open enrollments. However, the policies may include waiting periods before coverage begins.

Outline of Coverage

The Outline of Coverage is very important. It contains a chart summarizing the benefits provided by Medicare Parts A and B, and the benefits provided by the Medigap policy. The chart also shows which expenses are not covered by either Medicare or the Medigap policy. An agent or insurance company must give you an Outline of Coverage when selling you a new policy or converting one you already own.

Direct Response Insurers

Direct response insurers sell Medigap insurance through the mail, without using agents. Their advertising must mention the availability of the Outline of Coverage and the insurer must send it to you with an application within 14 days of your request. Before completing the application, discuss it with a family member or a friend for comparison. Since direct response insurers must follow the same rules as all other Medigap insurers. Direct response insurers do not pay agent commissions, the premium costs for mail order insurance may often be lower, but not always.