Medicare Supplement Policies
MR. WATSON: A Medicare Supplement policy is sold by private companies to fill in the gaps left by Medicare. The National Association of Insurance Commissioner's Minimum Standards Model Act (NAIC) standardized these policies with minimum requirements. This standardization helps consumers understand and compare coverages of the various plans. The benefits in each plan may not be altered, nor the letters changed. Insurance companies do not have to sell ALL of these plans. They can sell what they want. Let's keep this simple and only go into what we need for the exam.
MR. WATSON: How many Medicare supplement policies are there? Eight. (Letters A, B, D, G, K, L, M, & N). Those letters ARE correct. They are designed to supplement Parts A & B. They do not pay anything for Medicare Parts C & D. There are eight (8). If someone has a Medicare Advantage Plan (Part C) they don't need it any way because the Advantage Plan covers many of the same benefits as a supplement.
MR. WATSON: You don't need to know what they are or which one covers more than the others. Plan A covers basic benefits. Does B cover more than A?
ALL: Yes.
MR. WATSON: Does B cover more than C?
ALL: No.
MR. WATSON: A more than G?
ALL: No.
MR. WATSON: The point is a senior would choose the most appropriate plan they can afford. All plans must cover basic benefits.
MR. WATSON: There are eight of them. Listen up. The National Association of Insurance Commissioners (NAIC) - remember those guys? -- they standardized the Medicare supplement policies. The reason they came out with these is seniors were being sold multiple plans and the choices were confusing. The benefits can't be altered by insurance companies. Nor the letter designations.
MR. WATSON: So the NAIC came out with eight model provisions. These older folks were buying multiple plans, and only one of these policies is going to pay, it is prohibited to sell a senior more than one plan. So the state adopted the eight model Medicare supplement provisions. They go from A, that covers core benefits, to B that covers A plus more, to C that covers A and B. Certain plans offer better coverages than others. Does that make sense?
ALL: Yes.
MR. WATSON: These supplement policies, also called Medi-gap policies, must provide certain "core" benefits (see chart below). Some would cover most of the $1,484 deductible of Part A, others would not. Some would cover the 20 percent of Part B, etc. The consumer has choices, inexpensive to expensive. But all plans MUST cover these "core" benefits.
MR. WATSON: Know the chart below.
MR. WATSON: The Medicare Prescription Drug, Improvement, & Modernization Act of 2003 created the prescription drug program (Part D) talked about in the last chapter. Medicare Siupplement plans do not cover the cost of drugs. The person would need Part D.
Medicare Supplement Policies
MR. WATSON: *Know these
- must provide a minimum of 30 days for a free look
- are limited to a six month period for pre-existing conditions
- must supplement both Part A and Part B
- must automatically adjust its benefits to reflect any statutory changes
- must cover all expenses not covered by Part A from the 61st - 90th day, plus the lifetime reserve co-payment AND provide coverage for 365 days after Medicare benefits have been exhausted
- Part B expenses not covered by Medicare (the 20% co-payment) must be covered. Medigap policies may include a deductible.
