Filling the GAP

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Gustavo J. Vega, CFP®, ChFC, APMA Co-Founder, WealthEngage
Gustavo J. Vega, CFP®, ChFC, APMA Co-Founder, WealthEngage

Are you or someone you care for about to turn 65? Perhaps you are being bombarded with mailed solicitations from insurance carriers every month. A lot of clients honestly don’t even know where to start. The information overwhelm becomes so great that often these envelopes go straight into the garbage. It’s important to talk with a trusted voice that’s going to offer honest advice and not sales solicitation, because Medicare enrollment decisions are very important.

We get lots of questions about Medicare, but I’d like to focus on Medigap. Medicare won’t cover all of your health-care costs during retirement, so you may want to buy a supplemental medical insurance policy known as Medigap. Offered by private insurance companies, Medigap policies are designed to cover costs not paid by original Medicare, helping you fill the gaps in your Medicare coverage.


When’s the best time to buy a Medigap policy?

The best time to buy a Medigap policy is during open enrollment, when you can’t be turned down or charged more because you are in poor health. If you are age 65 or older, your open enrollment period starts on the first day of the month in which you’re 65 or older and enrolled in Medicare Part B. If you don’t buy a Medigap policy during open enrollment, you may not be able to buy the policy that you want later. You may find yourself having to settle for whatever type of policy an insurance company is willing to sell you. That is because insurers have greater freedom to deny applications or charge higher premiums for health reasons once open enrollment closes.

What’s covered in a Medigap policy?

Under federal law, only 10 standardized plans can be offered as Medigap plans (except in Massachusetts, Minnesota, and Wisconsin, which have their own standardized plans). The plans currently sold are Plans A-D, Plans F and G, and Plans K-N. Each Medigap plan offers a different set of benefits. All cover certain out-of-pocket costs, including Medicare coinsurance amounts. Some plans also cover other costs, such as all or part of Medicare Part A and Part B deductibles, foreign travel emergency costs, and Medicare Part B excess charges.

Medigap policies do not cover certain health-care expenses, including long-term care, vision care, dental care, or prescription drugs (to obtain prescription drug coverage you can purchase a Medicare Part D Prescription Drug Plan).

Are all Medigap policies created equal?

Generally, yes. Although Medigap policies are sold through private insurance companies, they’re standardized and regulated by state and federal law. However, even though the plans that insurance companies offer are identical, the quality of the companies that offer the plans may be different. Look closely at each company’s reputation, financial strength, and customer service standards. And check out what you’ll pay for Medigap coverage. Medigap premiums vary widely, both from company to company and from state to state. You can find a tool on the

Medicare website, medicare.gov, that will help you compare Medigap policies offered in your area.

Does everyone need Medigap?

No. In fact, it’s illegal for an insurance company to sell you a Medigap policy that substantially duplicates any existing coverage you have, including Medicare coverage. You don’t need a Medigap policy if you join a Medicare Advantage plan or a private fee-for-service plan, or if you qualify for Medicaid or have group coverage through your spouse.

You may also not need to buy a Medigap policy if you work past age 65 and have employer- sponsored health insurance. If you find yourself in this situation, you may want to enroll in Medicare Part A, since it’s free. Remember that if you enroll in Medicare Part B, your open enrollment period for Medigap starts. If you don’t buy a Medigap policy within six months, you may be denied coverage later or charged a higher premium, so you may want to wait to enroll in Medicare Part B until your employer coverage ends.

In addition, you may not need to buy a Medigap policy if you are covered by an employer- sponsored health plan after you retire (e.g., as part of a retirement severance package). In this case, your employer’s plan may cover costs that Medicare doesn’t.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Prior to making any investment decision, please consult with your financial advisor about your individual situation. Any opinions are those of the author, and not necessarily those of Raymond James.

This article was written by Gus Vega, Certified Financial Planner, Co-Founder, WealthEngage and Branch Manager with RJFS. He can be reached at 786.264.4954, 9155 S. Dadeland Blvd. # 1014, Miami, FL 33156. WealthEngage is not a registered broker dealer and is independent of Raymond James Financial Services, Inc. Securities offered through Raymond James Financial Services, Inc., member FINRA / SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc.


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