Buy Additional Health Insurance: Madigan

Medicare will not cover all your health care costs during retirement; you can buy an additional insurance policy known as Madigan. Offered by private insurers are Madigan policies cover costs not paid by Medicare, so you fill the gaps in your Medicare coverage. 

When is the best time to buy a Madigan policy?

The best time to buy a Madigan policy during open enrollment, when you can not be turned down or charged more because you are in poor health. If you are 65 years or older, your open enrollment period starts when you first sign up for Medicare part B. If you are not yet 65, your open enrollment period starts when you turn 65 and then lasts for six months. A few states also require that a limited open enrollment period be offered to Medicare beneficiaries under age 65. 

If you do not buy a Madigan policy during open enrollment, you will not be able to buy the policy you want later. You may find yourself having to pay for whatever type of policy an insurance company is willing to sell you. This is because insurers have greater freedom to refuse applications or charge higher premiums for health reasons when open enrollment is closed. 

What is covered by a Madigan policy?

Under federal law, only 12 standardized plans offered as Madigan plans (except in Massachusetts, Minnesota, and Wisconsin that have their own standardized plans). Each Madigan policy is labeled with letters A to L. Plan A is the basic benefit plan, while Plan J offers the most coverage. All include some services, including Medicare coinsurance amounts. Plans B through J also offer a combination of other services. These include coverage of Medicare Parts A and B deductibles, and preventive medical care. Plans K and L are designed to provide protection against catastrophic expenses. They have lower premium costs than other Madigan plans, but require you to pay some higher co-insurance costs until you meet an annual out-of-pocket limit. 

You can buy the Madigan plan that fits your needs. But it is important to note that not all Madigan Plans are available in all states. 

Are all Madigan policies created equal?

Generally, yes. Although Madigan policies are sold through private insurers, they are standardized and regulated by state and federal laws. A Plan B purchased through an insurance company in New York will offer the same coverage as a Plan B purchased through an insurance company in Texas. Everything you need to do is decide which level you want to buy. 

But even if the plans that insurance companies offer are identical, the quality of the companies offering 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 Madigan coverage. Madigan premiums vary widely, both from company to company and from state to state. You can find a tool on the Medicare website (www.medicare.gov) that will help you to compare Madigan policies offered in your area. 

Do all need Madigan?

No. Actually it is illegal for an insurer to sell you a Madigan policy that substantially duplicates existing coverage you have, including Medicare coverage. Overall, would you not need a Madigan policy if you join a Medicare managed care plan or private fees-for-service plan or if you qualify for Medicaid or have group coverage through your spouse. 

You may not need to buy a Madigan policy if you work past age 65 and have employer sponsored health insurance. You can still sign up for Medicare, but your employer-sponsored insurance will be your primary payer then you submit a claim to them first. Medicare will be secondary payer to pay the costs covered by Medicare but not covered by your employer's plan. If you find yourself in this situation, you can sign up for Medicare Part A because it is free. Remember, if you sign up for Medicare Part B, your open enrollment period for Madigan starts. If you do not buy a Madigan policy within six months, you may be refused coverage later or pay a higher premium. 

Additionally, you may not need to buy a Madigan policy if you are covered by an employer-sponsored health plan when you retire (such as a portion of a retirement severance pay package). In those cases, your employer's plan is your primary payer, and Medicare will be your secondary payer. But if you wish, you can convert your employer-provided plan in a Madigan policy. In fact, some auto insurance coverage changes when you turn 65, because they assume that you will enroll Medicare. Remember however that the coverage and premium can change.