 Personal Finance PowerPoint Presentation. Medigap? Who is it for? Prepare to get financially fit by practicing personal finance. Insurance is part of our long-term risk mitigation strategy where we follow the adage of measure twice, cut once, put in a formal process, and place something like setting the goals, develop a plan to reach them, put the plan in action, review the results, repeat the process periodically. Most of this information can be found at Investopedia. Who needs Medigap insurance? Which you can find online. Take a look at the references, resources. Continue your research from there. This is by Tim Parker, updated December 20, 2021. In prior presentations, we've been talking about insurance in general. Going to the medical insurance, which is a bit more complicated due to the complexity of the medical field and the laws and regulations related to it and the insurance of it. And now we're thinking about the Medigap insurance in conjunction with that overall insurance discussion. Who needs Medigap insurance? If you are covered by Medicare and are wondering whether you really need a Medicare supplemental insurance plan, I was wondering that. That's why I'm here. So let's talk about it. Also known as Medigap, you're not alone. I'm good. I feel comfortable that people, there's other people out there that are feeling similar stuff that I am. That's great. The Medicare website contains hundreds of pages of information, few of which are easy reading. That's for sure. It's hard to get an answer to the big question. Why should anyone who has Medicare get Medigap plan below is our answer. So Medicare, obviously, you might most likely most people getting Medicare after they reach the age threshold to be receiving it. And now the question is, well, what kinds of Medicare do I need? Do I need other insurance other than the Medicare? Do I need Medigap, Medicare Advantage, and so on and so forth? And the confusion spins and spins around in our noggin. So what is Medigap? Medigap is a supplement to Medicare coverage. So if you have Medicare, they might supplement it or add on in some way the Medigap. Depending on the type of coverage, Medigap policies are designed to provide more coverage for routine services. Medicare does cover and in some cases, all or part of the expenses Medicare does not cover, such as long-term care, vision or dental coverage. And you want to be careful with these items here, especially the long-term care to make sure that you've considered your options there. We've talked about in the past, the Medicaid and long-term care insurance. That could be a big one that you want to be considering. The purpose of a Medigap plan is to be reimbursed for the costs you paid directly out of your own pocket. These plans are offered by private insurance companies, so you'll have to do some comparison shopping to get the one that fits your needs and financial situation. Keep in mind that lettered plans from each company have the same benefits. So in other words, the government kind of put some restrictions around it so that they can kind of have the letters in place which should have the same benefits so that we can see some standardization and more easily possibly do some comparisons. So that's according to the government mandate. So why buy more insurance then? So if you have Medicare, we've talked about different options within Medicare, why possibly would you might need more insurance? As noted above, Medicare isn't a blanket insurance policy. This means it does have holes in it. Original Medicare as the government calls what we now know as Parts A and B, so if you hear the term original Medicare, we're typically thinking B which kind of kick in somewhat automatically although B you want to you know sign up or what but if you have been paying into the Social Security throughout your working time and Medicare prescription drug coverage that's Part D which we talked about in the past pays for most of your expenses but it's far from all of the costs you may face if you become seriously ill or get injured. Even routine services come with co-payments and deductibles. This is where Medigap insurance kicks in. So when we think about just the normal insurance you can kind of compare Medicare the original Medicare basically too at Part A and B and somewhat in Part D for example which still comes with the kind of terminology we talked about the deductibles and the co-payments that could be involved. So Medicare deductible here are a few examples. If you are admitted to the hospital 100% hospitalization coverage after the $1,484 annual deductible under original Medicare Part A as of 2021 $1,556 in 2022. So you've got the deductible that you know you got to clear the deductible for example and that's a general kind of insurance term. That's the basic bed and board. However you may owe 100% of some other costs such as anesthesiologists fees. So in other words even after you go over the deductible then sometimes there's going to be some things that you might still have to pay a portion of after you've gone over the deductible. If you are in the hospital for more than 60 days you have to pay $371 per day in 2021 $389 in 2022 that are similar co-payments for long stays and nursing facilities and hospices. Regular doctor visits and outpatient medical care may cost you too. Your deductible for 2021 is $203 $233 in 2022 but after that you'll pay up to 20% of the Medicare approved amount for most doctor services. There's no upper limit. Medicare donut hole prescription drugs can also eat into your budget and need expensive medications. You should know that you can purchase stand-alone prescription coverage. That's part D in Medicare terminology. So in other words for the drugs then you typically looking at Medicare part D would be the first thing that would come to mind with that which is not part of the automatic kind of A and B which A is kind of automatic and B you kind of would most likely be put and signed up for the prescription drugs. So under the Affordable Care Act the ACA the prescription price donut hole has been closed each year but it's not completely gone yet. A certain level $4,130 in 2021 $4,430 in 2022 you enter the notorious donut hole in coverage that requires you to pay up to 25% of covered brand name and generic drug costs. When costs go above $6,550 in 2021 $7,050 in 2022 you pass through the donut hole and owe only 5% of the cost of drugs. So you've got that range where things get out of whack for some reason the way it's currently set up paying more of it. So how does Medigap work? You may already know that Medicare parts A and B comprise basic coverage while part D is an optional prescription drug plan you can buy from a private provider and attach to your Medicare. So A B and C we're kind of getting that down it's kind of like the basic chords in our music and our guitar playing strategy we're going to say okay I got those chords down but what is this new Medigap thing and then you got part C also known as Medicare Advantage that's the more complex combo chord that we got to put into place replaces all the basic government coverage with a private insurance plan if you choose part C you do not need the Medigap plan so then again obviously you would be making a comparison and say okay do I want to just do the part C kind of thing or do I want to do this Medigap type of thing or do I need either of those added components but if you go for the original Medicare plus part D and do want a Medigap plan for more complete coverage there are more letters to learn some complex scales that are like they're like minor scales and not just the pentatonic and what not it's like a Dorian thing or something that we got to learn some crazy scale so this time for plans rather than parts so each letter represent a standard level of coverage for Medigap plans the most popular choices are F and G plan F and G those are the standard of the more exotic Medicare items so the most popular plan F this is the most comprehensive plan and has been the most popular choice for years the average cost per month for the most popular Medigap F plan is approximately $326 as of January 1st 2020 however plan F is no longer available to people newly eligible for Medicare what people who already have plan F will be able to keep it and people who were eligible for Medicare 2020 but didn't have a Medigap plan may still be allowed to get plan F if they wish then you got the Medicare plan G this plan will likely replace plan F in popularity now that they banned it F was so such a cool one but now we've got plan G as it has virtually the same coverage except for reimbursement of the part B deductible a perk that is no longer included in any plans offered to Medicare newbies as of 2020 you're no longer grandfathered and you're out of that benefit newbie people newbies and the oldies so the average plan G should be cheaper than plan F however cost very widely according to applicants zip code gender and tobacco use and they increase with age they're always prejudiced against those tobacco users which plan is best here's the short answer we want 100% coverage of everything an F or G plan depending on your eligibility is your choice the other plans offer progressively less coverage for lower upfront costs as you would expect the tradeoff between the two for a more detailed answer you can do one of the following speak with a qualified insurance agent or Medicare Advantage to find the plan that fits you read the Medicare publication choosing Medigap policy will you find descriptions of each policy type and what it covers now we got to consider the Medigap versus the Medicare Advantage now because we've got that comparison going head to head toe to toe Medi to Medigap to care Medigap policy is a supplement to your original Medicare coverage that pays expenses that original Medicare doesn't cover a Medicare Advantage plan Medicare Part C in other words is a private replacement for the public Medicare program so most of these plans are set up as health maintenance organizations those of the good old HMOs that replace all of the services of original Medicare and add additional services such as preventative health care within a pre-selected network of doctors a Medigap plan will probably give you more freedom of choice than Medicare Advantage providing your physician or facility accepts Medicare so it is a better option for snowbirds or others who travel a great deal or have homes in more than one location so in other words as we've seen in the past one of the issues with the HMOs is you got that whole network situation so if you're moving around a lot that could be somewhat of a restriction on the HMO so is my spouse covered no no your spouse isn't covered because we're moving from like an employer type of thing where you can have other people on it and stuff when you go through the insurance to the Medicare stuff which is by age so your spouse could be like 20 or something like that which probably not for most people unless you're like an actor or something I don't know but that could happen and they wouldn't be covered because you have to be over the threshold typically so in any case no a Medigap policy covers only one person and doesn't cover expenses incurred by your spouse. Medicare isn't like an employer's sponsor plan you can't enroll your spouse under your coverage this means you and your spouse have to purchase separate plans to be covered for supplemental insurance can my plan be canceled no that's illegal as long as you pay your premiums your policy is renewable for the rest of your life which is nice because that's what I need here my life might not be lasted all that long you know time's ticking here so I need this one kicking in for the rest of it can't be pulling the rug out from under me so close to my right at this point you can only be dropped if any of the following apply you stop paying the premiums well that kind of makes sense you lie down on the original Medigap application okay I guess the company goes bankrupt well that wouldn't be good hope that doesn't happen if you choose to cancel your Medigap policy you must do so by contacting the insurance company directly the CARES Act of 2020 have you heard about it on March 27 2020 President Trump signed into law a two trillion coronavirus emergency stimulus package called the CARES coronavirus aid relief and economic securities act it expands Medicare's ability to cover treatment and services for those affected by COVID-19 the CARES Act also increases flexibility for Medicare to cover telehealth services so the doctor can tell you to do strange and unusual and embarrassing things over a webcam instead of in person so authorizes the Medicare certification for home health services by physician assistance, nurse practitioners and certified nurse specialists increases Medicare payments for COVID-19 related hospital stays and durable medical equipment the changes will likely continue into 2022 or whenever the pandemic ends how much does Medigap cost you might ask since Medigap is privatized insurance each insurance company offers different premiums for its Medigap policies so obviously the answer is there it depends the good old it depends answer the price might be determined by a number of factors like your age, inflation or how long you've been enrolled why do I need Medigap Medigap policy supplements your original Medicare coverage covering more expenses Medigap provides more choice and covers a larger network of health care providers than Medicare options if you travel or need coverage that original Medicare doesn't provide Medigap might be a good option for you is my spouse covered by Medigap no Medigap only covers one person both spouses will need to purchase separate plans