Medicare Supplement Policies

A Medicare supplement policy is designed to help pay for the costs that are not paid by Medicare for covered health care costs (i.e. deductibles and coinsurance amounts). Medicare supplement policies are often referred to as “Medigap” policies. You should consider purchasing a Medicare supplement policy if you do not have employer or retiree health care coverage and can afford to pay a monthly Medicare supplement premium. Authorized Medicare Supplement Insurers In Michigan

BLUE CROSS BLUE SHIELD OF MICHIGAN MEDIGAP LEGACY RATE INFORMATION:
For many years Blue Cross Blue Shield of Michigan (BCBSM) Legacy Medigap plans have been subsidized. Rates have been frozen for the past five years and not priced at market value. Upon expiration of the rate freeze in July 2016, BCBSM filed to adjust their rates to reflect actual claims experience and expenses. DIFS received a rate filing from BCBSM that was reviewed and approved. The rate change takes effect January 1, 2017. Until such time, BCBSM premium and subsidies remain the same.

MICHIGAN MEDIGAP SUBSIDY:
The Michigan Medigap Subsidy is a program administered by the Michigan Health Endowment Fund that will help pay for Medigap coverage. If the program finds you eligible, beginning in January, 2017, the program will pay a subsidy directly to your Medigap insurance company. This subsidy is subtracted from the amount of premium you owe, thus lowering your monthly premium. If you have household income of $17,820 or less for one person or $24,030 or less for two people and have a Medigap plan with a participating insurance company, you may qualify for the subsidy. Applications for the subsidy will be accepted beginning October 1, 2016. To apply or learn more, visit: www.MichiganMedigapSubsidy.com or call 866-824-9772.

MEDICARE SUPPLEMENT PLANS BASIC CORE BENEFITS:
Every Medicare supplement plan includes all of the following:

  • Hospitalization: Part A coinsurance plus coverage for 365 additional days after Medicare benefits end
  • Medical Expenses: Part B coinsurance (generally 20% of Medicare-approved expenses) for hospital outpatient department services
  • Medicare Part A and B Blood Coverage: First three pints of blood per calendar year
  • Medicare Part A Hospice Coinsurance

MEDICARE SUPPLEMENT STANDARDIZED PLANS:

  • Plan A includes only the basic core benefits.
  • Plan B includes the basic core benefits and the Medicare Part A deductible.
  • Plan C includes the core benefits, the Medicare Part A deductible, skilled nursing facility care, Medicare Part B deductible, and medically necessary emergency care in a foreign country.
  • Plan D includes the core benefits, the Medicare Part A deductible, skilled nursing facility care and medically necessary emergency care in a foreign country.
  • Plan F includes the core benefits, the Medicare Part A deductible, skilled nursing facility care, Medicare Part B deductible, 100% of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country.
    *Plan F also offers a high deductible option. The deductible increases every year and premiums are typically lower than other Medicare supplement policies. However, you must meet the deductible before the policy will cover your health claims. In 2016, the deductible for this plan was $2,180.
  • Plan G includes the core benefits, the Medicare Part A deductible, skilled nursing facility care, 100% of the Medicare Part B excess charges and medically necessary emergency care in a foreign country.
  • Plan K includes the core benefits. Plan K only provides 50% of the cost sharing for Medicare Part A covered hospice expenses and the first three pints of blood. It also only pays 50% of the Part B coinsurance after you meet your annual deductible. Once you meet your annual out-of-pocket spending limit, Plan K will pay 100% of all Part A and B deductibles, copayments and coinsurance. In 2016, the out-of-pocket limit for Plan K was $4,960.
  • Plan L includes the core benefits. Plan L only provides 75% of the cost sharing for Medicare Part A covered hospice expenses and the first three pints of blood. It also only pays 75% of the Part B coinsurance after you meet your annual deductible. Once you meet your annual out-of-pocket spending limit, Plan L will pay 100% of all Part A and B deductibles, copayments and coinsurance. In 2016, the out-of-pocket limit for Plan L was $2,480.
  • Plan M includes the core benefits, 50% of the Medicare Part A deductible, skilled nursing facility care and medically necessary emergency care in a foreign country.
  • Plan N includes the core benefits, Medicare Part A deductible, skilled nursing facility care, and medically necessary emergency care in a foreign country. ** Plan N pays 100% of the Part B coinsurance except up to $20 copayment for office visits and up to $50 for emergency department visits.

MEDICARE SELECT:
A Medicare select policy is a Medicare supplement policy (Plan A through N) that conditions the payment of benefits, in whole or in part, on the use of network providers. Network providers are providers of health care, or a group of providers of health care, which have entered into a written agreement with the insurance company to provide benefits under a Medicare select policy. A Medicare select policy cannot restrict payment for covered services provided by non-network providers if the services are for symptoms requiring emergency care or are immediately required for an unforeseen illness, injury, or a condition and it is not reasonable to obtain such services through a network provider. A Medicare select policy must provide payment for full coverage under the policy for covered services that are not available through network providers. A Medicare select insurer must make full and fair disclosure in writing of the provisions, restrictions, and limitations of the Medicare select policy to the applicant. This disclosure shall include at least all of the following:

(a) An outline of coverage sufficient for the applicant to compare the coverage and premiums of the Medicare select policy with other Medicare supplement policies offered by the insurer or offered by other insurers.
(b) A description, including address, phone number, and hours of operation, of the network providers, including primary care physicians, specialty physicians, hospitals, and other providers.
(c) A description of the restricted network provisions, including payments for coinsurance and deductibles if providers other than network providers are utilized.
(d) A description of coverage for emergency and urgently needed care and other out-of-service area coverage.
(e) A description of limitations on referrals to restricted network providers and to other providers.
(f) A description of the policyholder's rights to purchase any other Medicare supplement policy or certificate otherwise offered by the insurer.
(g) A description of the Medicare select insurer's quality assurance program and grievance procedure.

At your request, under a Medicare select policy, the health carrier must make available to you the opportunity to purchase a Medicare supplement policy offered by the company that has comparable or lesser benefits that does not contain a restricted network provision. The health carrier shall make the policy available and cannot require evidence of insurability after the Medicare supplement policy or certificate has been in force for 6 months.

THE OUTLINE OF COVERAGE:
The outline of coverage is a document that is required to be given to the applicant at the time of application. An outline of coverage consists of four parts:

  • A cover page giving company contact information
  • Premium information
  • Disclosure pages including:
    • Information regarding your right to return policy
    • That the policy may not fully cover all of your medical costs
    • Neither the company nor its agents are connected with Medicare
  • Charts displaying the features of each benefit plan offered by the insurer

YOUR RIGHT TO RETURN THE MEDICARE SUPPLEMENT POLICY:
The policy is your contract. You must read the policy itself to understand all of the rights and duties of both you and your health carrier. If you find that you are not satisfied with your policy, you may return it to the health carrier. If you send the policy back within 30 days after you receive it, the health carrier will treat it as if it had never been issued and return all of your premium payments.

REPLACING YOUR EXISTING MEDICARE SUPPLEMENT POLICY WITH ONE FROM A DIFFERENT COMPANY:
Do not cancel your present policy until you have received your new policy and are sure that you want to keep it.  Any agent selling a replacement Medicare supplement policy with a different health carrier must provide you with a notice. The notice will state that you are intending to drop existing Medicare supplement coverage and replace it with a new policy and that you have 30 days during which you may return the new policy without cost. The notice will also state that you should compare your current coverage to the new coverage and note that certain pre-existing health conditions may not be immediately or fully covered under a new policy. Furthermore, failure to include all material medical information on an application may result in future claims denial and termination of your policy. The notice will also have several boxes to check including if the replacement policy is being purchased for the following reasons:

  • Additional benefits
  • No change in benefits, but lower premiums
  • Fewer benefits and lower premiums
  • My plan has outpatient prescription drug coverage and I am enrolling in Part D
  • Disenrollment from a Medicare Advantage Plan
  • Other

HOW A MEDICARE SUPPLEMENT POLICY WORKS:
A Medicare supplement policy cannot pay for losses resulting from sickness on a different basis than losses resulting from accidents. A Medicare supplement policy must provide benefits that are designed to cover cost sharing amounts under Medicare and will be changed automatically to coincide with any changes in the applicable Medicare deductible amount and copayment percentage factors. Premiums may be modified to correspond with such changes. A Medicare supplement policy shall be guaranteed renewable. Termination shall be for nonpayment of premium or material misrepresentation only. Termination of a Medicare supplement policy shall not reduce or limit the payment of benefits for any continuous loss that began while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be predicated upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or payment of the maximum benefits. A Medicare supplement policy cannot cancel the coverage of a spouse solely because of the occurrence of an event that caused the cancellation of coverage of the insured, other than the nonpayment of premium.

OPEN ENROLLMENT PERIOD:
The best time to purchase a Medicare supplement policy is during the open enrollment period. The open enrollment period begins on the first day of the month in which you are both: age 65 or older and enrolled in Medicare Part B. The open enrollment period lasts six months during which you can purchase any Medicare supplement plan that any company offers.

GUARANTEE ISSUE RIGHTS:
You have 63 days to apply for new coverage with guarantee issue rights for standardized Medicare supplement plans A, B, C, F, High Deductible Plan F, K or L if you have had any of the circumstances listed below:

  • You are enrolled under an employer plan that provides health benefits that supplement the benefits under Medicare and the plan terminates or the plan ceases to provide all those supplemental health benefits to the individual.
  • You are enrolled with a Medicare Advantage plan or a PACE program and any of the following circumstances apply:
    (i) The certification of the organization or plan has been terminated.
    (ii) The organization has terminated or otherwise discontinued providing the plan in the area in which you live.
    (iii) You are no longer eligible to elect the plan because of a change in your place of residence
    (iv) You can show that the organization offering the plan substantially violated a material provision of the organization's contract including the failure to provide on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide covered care in accordance with applicable quality standards, or the organization, or agent or other entity acting on the organization's behalf, materially misrepresented the plan's provisions in marketing the plan to the individual.
  • You are insured under a Medicare supplement policy and the coverage ends because of any of the following:
    (i) The insolvency of the health carrier
    (ii)The health carrier substantially violated a material provision of the policy.
    (iii)The health carrier, or an agent or other entity acting on the health carrier's behalf, materially misrepresented the policy's provisions in marketing the policy to the individual.
  • You were covered under a Medicare supplement policy and you cancel the coverage and subsequently enroll, for the first time, with any Medicare Advantage plan and the subsequent enrollment is terminated by you during any period within the first 12 months.
  • When you first became eligible for benefits under part A of Medicare at age 65, you enrolled in a Medicare Advantage plan and you disenrolled from that plan not later than 12 months after the effective date of enrollment.

UNDER THE AGE OF 65 AND ON MEDICARE:
If you are under the age of 65 your choices of Medicare supplement policies is generally limited to a Medicare supplement Plan A or Plan C. There are a limited number of health carriers that must offer Plans A and C to persons under the age of 65. Companies that are required to offer Plans A and C to persons under the age of 65 are allowed to charge those individuals more for the coverage.

BECOMING ELIGIBLE FOR MEDICAID WHILE YOU HAVE A MEDICARE SUPPLEMENT POLICY:
Benefits and premiums under the policy will be suspended at your request for a period not to exceed 24 months. You must notify the health carrier within 90 days after you become entitled for the assistance. The health carrier must return to you the portion of the premium attributable to the period of Medicaid eligibility, subject to adjustment for paid claims.

If you lose entitlement to medical assistance under Medicaid, the policy shall be automatically reinstituted effective as of the date of termination of the assistance. In addition:

(a) The reinstitution shall not provide for any waiting period with respect to treatment of pre-existing conditions.
(b) Reinstituted coverage shall be substantially equivalent to coverage in effect before the date of the suspension.
(c) Classification of premiums for reinstituted coverage shall be on terms at least as favorable to the policyholder or certificate holder as the premium classification terms that would have applied to the policyholder or certificate holder had the coverage not been suspended.

BUYING A MEDICARE SUPPLEMENT POLICY:
Some Medicare supplement policies are purchased through licensed agents of health carriers. Other Medicare supplement policies are purchased through a direct response method where you fill out an application and send it directly to the health carrier. You do not work with an agent with direct response sales. If you would like free, impartial assistance with your Medicare options, you may wish to contact the Michigan Medicare Medicaid Assistance Program (MMAP) at toll-free 800-803-7174. Authorized Medicare Supplement Insurers In Michigan

FILLING OUT A MEDICARE SUPPLEMENT POLICY APPLICATION:
When you fill out the application for a policy, be sure to answer truthfully and completely any questions about your medical and health history. The health carrier may cancel your policy and refuse to pay any claims if you leave out or falsify important medical information. Review the application carefully before you sign it. Be certain that all information has been properly recorded. Application forms or a supplementary application or other form to be signed by the applicant and agent for Medicare supplement policies must include the following statements and questions:

  • [STATEMENTS] (500.3827(1))
    (1) You do not need more than 1 Medicare supplement policy.
    (2) If you are 65 or older, you may be eligible for benefits under Medicaid and may not need a Medicare supplement policy.
    (3) If, after purchasing this policy, you become eligible for Medicaid, the benefits and premiums under your Medicare supplement policy will be
    suspended during your entitlement to benefits under Medicaid for 24 months. You must request this suspension within 90 days of becoming
    eligible for Medicaid. If you are no longer entitled to Medicaid, your suspended Medicare supplement policy, or, if that is no longer available, a
    substantially equivalent policy will be reinstituted if requested within 90 days of losing Medicaid eligibility. If the Medicare supplement
    provided coverage for outpatient prescription drugs and you enrolled in Medicare part D while your policy was suspended, the reinstituted
    policy will not have outpatient prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of
    the suspension.
    (4) 500.3827 statement #5
    (5) Counseling services may be available in your state to provide advice concerning your purchase of Medicare supplement insurance and
    concerning Medicaid.
  • [QUESTIONS] (500.3827 (1))
    These questions should be answered to the best of your knowledge.
    (1) Question 1 A, B and C
    (2) Question 2 A and B
    (3) Question 3 A, B and C
    (4) Question 4 A, B and C
    (5) Question 5 A and B

MEDICARE SUPPLEMENT PLAN RATES:
There are three basic ways that Medicare Supplement plan carriers rate their policies.

  • Attained age: This means your premium is based on your current age and your premium will increase each year as you get older.
  • Issue age: This means the cost of the policy is based upon how old you are when you first purchase the policy. The premium will not increase each year because of your age, but could increase if the carrier files a request for a rate increase.
  • Community rating: Under community rating, all insureds in the same classification pay the same amount of premium. Your premium isn’t based on your age and may increase due to inflation or other factors if the carrier files a request for a rate increase.

PRE-EXISTING CONDITIONS:
A claim filed under a Medicare supplement policy cannot be denied as a pre-existing condition if the condition was last treated more than 6 months prior to the effective date of the Medicare supplement policy. The policy cannot define a pre-existing condition more restrictively than to mean a condition for which medical advice was given or treatment was recommended by or received from a physician within 6 months prior to the effective date of coverage. A Medicare supplement policy cannot use riders or endorsements to exclude, limit, or reduce coverage or benefits for specifically named or described pre-existing diseases or physical conditions. If a Medicare supplement policy replaces another Medicare supplement policy, the replacing health carrier must waive any time periods applicable to pre-existing conditions, waiting periods, elimination periods, and probationary periods in the new Medicare supplement policy for similar benefits to the extent such time was spent under the original coverage.

OTHER RESOURCES:
Michigan Medicare Medicaid Assistance Program
Medigap Insurance Comparison Guide
Medicare’s Find a Medigap Policy Search Engine
Michigan Medigap Subsidy
DIFS Medicare Page
DIFS Medicare Advantage Page
DIFS Medicare Prescription Drug Coverage Page