United States
Hong KongMedicare supplement policies
A Medicare supplement, or Medigap, policy pays costs Medicare leaves to the beneficiary: deductibles, coinsurance and copayments. Plans are standardized by letter, so the same letter buys the same benefits from any insurer. Texas sets minimum standards for them in the state portion of the outline.
Medicare pays most of a beneficiary's costs and not all of them. What is left is a set of deductibles, coinsurance and copayments that can add up to a great deal on a serious illness, and a Medigap policy exists to pay that remainder.
The remainder is the point.
What standardization means
Medicare supplement plans are standardized and identified by letter. Every insurer offering a given letter offers the same benefits under it, which is unusual in insurance and has a direct consequence for how these policies are sold.
- The benefits under a lettered plan do not vary between insurers.
- The price does, sometimes considerably, for identical coverage.
- So the comparison a client should make is on price, service and rate stability, not on benefit lists.
- An agent who claims one carrier's plan of a given letter covers more than another's is misrepresenting the product.
That last point connects straight to the unfair trade practice provisions in the Texas portion. Misrepresenting the terms or benefits of a policy is an unfair method of competition under the Insurance Code, and standardized products make the misrepresentation particularly easy to demonstrate.
What a supplement does not do
| Medicare supplement | Medicare Advantage | |
|---|---|---|
| Relationship to Medicare | Pays alongside it | Replaces how benefits are delivered |
| Who pays the claim first | Medicare, then the supplement | The Advantage plan |
| Provider choice | Any provider who accepts Medicare | Usually a network |
| Can you hold both | No | No |
| Where the outline lists it | Section V, its own heading | Section VII, as Medicare Part C |
The fourth row is the exam's favorite here. A beneficiary enrolled in a Medicare Advantage plan does not need and should not be sold a supplement, because the supplement has nothing to fill in. Selling one anyway is the classic senior market complaint.
The open enrollment protection
There is a period, opening when a beneficiary first enrolls in Medicare Part B at or above the qualifying age, during which a supplement must be issued without regard to health. Miss it and the insurer may underwrite, which for someone with a serious condition can mean no policy at all.
It is the same mechanism that makes conversion privileges and guaranteed insurability valuable: a window in which insurability cannot be considered. We do not print its length. The figure sits in federal rules and in the Administrative Code standards Texas adopts, and we hold neither of those.
The Texas portion of the outline gives Medicare supplement its own sub-item with minimum standards and cancellation rules, pointing at the Administrative Code. The Insurance Code also carries a Medicare supplement chapter. So this topic can be asked from either portion of the paper, with different content on each side.
A client enrolled in a Medicare Advantage plan asks an agent to sell her a Medicare supplement policy as well, for extra security. What should the agent do?
- Sell it, since the client has asked and can afford it
- Explain that a supplement cannot work alongside an Advantage plan and decline to sell one
- Sell it and recommend she drop the Advantage plan later
- Sell a lettered plan with fewer benefits at a lower price
Where it sits
- General portion
- Section V, heading D, in a 16-question section
- Texas portion
- Accident and health only, Medicare supplement minimum standards and cancellation
- Related
- Medicare Parts A, B, C and D, section VII, 6 questions
- Also related
- Long term care, which Medicare does not cover
The opinion, and the concession
Learn what Medicare does not pay before learning what a supplement does, because the product is defined entirely by the gap. Candidates who study Medigap first end up memorizing a benefit grid without knowing what any line of it is for. Half an hour on Medicare Parts A and B makes the supplement obvious rather than memorizable.
The concession: the lettered plan grid, the amounts Medicare leaves outstanding, and the length of the open enrollment window are all figures we do not hold from a primary source and do not print. Texas adopts its minimum standards through the Administrative Code, which we have not harvested. That gap is real, and it is the same one that limits several pages in the Texas half of this cluster.
Common questions
What does a Medicare supplement policy cover?
The costs original Medicare leaves to the beneficiary: deductibles, coinsurance and copayments. It pays after Medicare rather than instead of it, and plans are standardized by letter so the same letter provides the same benefits whichever insurer issues it.
Can you have a Medigap policy and a Medicare Advantage plan?
No. A supplement fills gaps in original Medicare, and an Advantage plan replaces the way benefits are delivered, so there is nothing for the supplement to fill. Selling a supplement to an Advantage enrollee is a well-known complaint in the senior market.
Why does open enrollment matter for Medicare supplements?
Because during it a policy must be issued without regard to health. Outside that window an insurer may underwrite, and an applicant with a serious condition can be declined. It is the same protection idea as a conversion privilege: a period in which insurability cannot be considered.
Are Medicare supplement policies the same from every insurer?
The benefits under a given lettered plan are, because the plans are standardized. The premium is not, and can differ substantially for identical coverage. Claiming that one carrier's version of a lettered plan covers more than another's is a misrepresentation of the product.