Enrolling in Medicare is a big step. You’ve worked hard for many years, and you’ve paid into Medicare all that time. However, there comes a time when you will need Medicare, and you may be wondering if you truly need supplemental insurance if you already have Medicare.
Although the answer to this question varies from one person to another, one thing is clear. While Medicare covers a good portion of your medical costs, it does not cover everything. Medicare typically pays 80 percent of your medical expenses. The remaining 20 percent of the cost is left for you to pay.
Because this portion of your expenses is not covered, it is often essential to purchase Medigap or Medicare supplemental insurance. Medical procedures, especially surgeries, can cost tens of thousands of dollars that many seniors cannot afford to pay. That is why you need supplemental insurance, in addition to Medicare.
There may be cases where people have enough money and may not need to supplement their coverage. However, many seniors cannot afford to pay $100,000 or more for surgery. The cost of prescription drugs alone can be hard to afford. But why exactly do you need supplemental insurance if you have Medicare?
Because Medicare covers a portion of your medical costs, it may be beneficial to purchase supplemental coverage from a supplement insurance company. In addition to paying large amounts of money on medical procedures, you may also need to pay out-of-pocket for coinsurance, copayments, costly deductibles, and other expenses that you may not expect.
Supplemental policies are purchased from private insurance companies and cover expenses that Medicare does not pay for. Also called Medigap, supplement insurance companies fill in the gaps in coverage, so you do not have to pay for expensive balances that could potentially drain your savings.
Most people on Medicare are above the age of 65 and are often on a fixed income. This can make it hard to afford extraneous medical expenses, in addition to other bills. Monthly premiums can vary significantly, and getting supplemental insurance can help cover the cost of future medical care and procedures.
Despite Medigap’s many benefits, not everyone decides to get Medigap coverage. According to experts, most seniors have Medicare. Roughly 23 percent of seniors on Medicare have a Medigap policy. Roughly 30 percent of seniors have a Medicare Advantage Plan, experts say.
If you want to get a Medigap policy, it is important to sign up during your Medicare Supplement open enrollment period (OEP). The enrollment period begins when you are enrolled in Medicare Part B and when you reach the age of 65.
The Medicare open enrollment period “lasts for six months.” This gives you ample time to pick a plan that meets your needs and fits your budget, while the policy is guarantee-issue with no health underwriting. The key to making the most of your Medigap policy is getting the right plan. You have a number of Medigap policies to choose from, and these policies help lower your out-of-pocket costs.
In addition to this, you get additional health care coverage. This is especially important to the aging population. Health conditions tend to develop in older age, and having supplemental coverage can ease the financial burden of costly treatments and procedures. Medicare supplement insurance plans are independent of the US government or Federal Medicare policies.
According to experts, Medigap is offered only to individuals who have Medicare Parts A and B. Medicare Parts A and B fall under the umbrella of Original Medicare. Medicare Part B covers preventative care and care that is necessary to one’s health, while Medicare Part A covers home health services, hospital care, hospice care, and care that is provided in nursing homes.
But can you change your care plan? There may be cases where you want to change your supplement insurance plan. Maybe your current plan has gotten too expensive, or your plan is not covering all the expenses you would like it to cover. Several other factors may make you want to change your plan.
Poor customer service and services offered by your provider are all valid reasons to change your plan; however, it is often due to rate increases, especially if you got a supplemental plan to cover extra expenses.
If you are already enrolled in a Medigap program, you can switch to a different policy at any point in time. By the time you decide to switch your Medicare Supplement plan, your OEP has likely passed. By switching outside of your open enrollment period, you run the risk of not getting the exact coverage you want due to health underwriting. Health underwriting does not involve a doctor visit and is often a quick questionnaire over the telephone regarding your current and historical health.
What are the benefits of having supplemental insurance with Medicare? Medicare supplement insurance plans are beneficial in many ways. These plans provide an extra level of coverage that Original Medicare does not. A supplemental insurance may be beneficial if you are traveling outside of your state to receive treatment or care. This is especially important if you are a snowbird.
A supplemental policy may also benefit you if you wish to see a specific doctor that is approved by Medicare. You may see any doctor that participates in original Medicare, unlike an advantage plan; that network is ~800,000 doctors nationwide. A supplemental plan can also help if you need help paying costs not covered by Original Medicare.
What about cost? How are costs affected when you have a supplemental insurance policy? According to experts, most people pay nothing for Medicare Part A. The amount you pay for supplemental policies in 2023 depends on your location, the type of Medigap policy you buy, and several other factors including your age, gender and tobacco use.
If you want to obtain and keep a Medigap policy, you must have Medicare Part B, and you must pay your Part B premium. The cost you pay for a supplemental policy will ultimately depend upon the type of policy you purchase. Some supplemental policies offer perks that lower costs, such as health care coverage for international travel.
Those who are new to Medicare often don’t realize that Original Medicare does not cover all your medical expenses. There are many supplemental insurance policies. Medigap plans offered by private insurance companies are “designated” by the letters A, B, C, D, F, G, K, L, M, and N, experts say. Benefits are standardized across all policies, and each plan must offer the same benefits.
As of January 1, 2020, new enrollers can no longer purchase coverage under Plans C and F – the only 2 plans that cover the Part B deductible. However, those who were already enrolled in Plans C and F were able to keep this coverage and receive the benefits they offer.
There are several reasons to get a Medigap policy. Having a Medigap plan can eliminate out-of-pocket costs associated with Medicare Parts A and B. Because a Medigap policy covers the amount you are responsible for paying, seniors are able to live more comfortably and not stress about extraneous medical costs.
Additionally, Medigap is beneficial for those who require skilled nursing facility care, according to Fidelity. Although Medigap does not offer long-term care (LTC) insurance, some shorter term SNK stays qualify for coverage. This includes coverage for hospital stays. If you are traveling overseas, your lifetime coverage is $50,000.
If you would like more coverage, you can purchase travel insurance. Travel insurance covers medical evacuations for emergencies if you are traveling abroad. The cost of travel insurance will depend on where you are traveling, how long you will travel, and your age. Another plus of a supplemental policy is the fact that you can keep your doctor without being constricted to a network. Medicare Supplement plans are neither an HMO nor a PPO, and you may see any doctor in the country that accepts original Medicare – 93% of all physicians in the U.S.
With Medicare Advantage, an alternative to a Medigap plan, you must make sure that your doctor, specialist, or medical facility accepts your specific policy. Medigap policies offer a number of benefits that other policies do not. These policies cover your Part A deductible, Part B excess charges, and a Part B copayment or coinsurance.
In addition, Medigap covers your Part B deductible and pays for the first three pints of blood. It will also cover hospital costs and coinsurance for up to one year after all Medicare benefits are used up. Now that you know that you need supplemental insurance, you may be wondering how much you need. When deciding how much coverage to purchase, you need to consider the status of your health and your age. Someone who is 85 may require more or less coverage than someone who is 65 or 75. It may also help to look into the history of your family to find out what health issues run in your family. However, you have only one guarantee issue window during your OEP to enroll in a plan, so we recommend selecting the plan at 65 you plan to stick with.
This will help you plan for any conditions that may arise. However, by having supplemental coverage, you are better equipped to handle health issues in the future. You may also want to compare the costs of coverage and make a decision that is best for you. If you find that a Medigap policy is not the best option for you, there are other options that can help cover medical costs as you age.
9 Sources
MedigapCoverage has strict sourcing guidelines to ensure our content is accurate and current. We rely on peer-reviewed studies, academic research institutions, and medical associations. We strive to use primary sources and refrain from using tertiary references.
https://www.westernsouthern.com/retirement/do-i-need-supplemental-insurance-if-i-have-medicare
Medicare Supplement Insurance | Medigap Insurance (westernsouthern.com)
https://clearmatchmedicare.com/blog/medicare/disadvantages-of-medigap-plans
https://ncoa.org/article/what-is-medigap
https://www.medicare.gov/basics/costs/medicare-costs
https://www.fidelity.com/viewpoints/retirement/medigap-what-you-need-to-know
https://www.aarp.org/health/medicare-insurance/info-2020/what-is-medicare.html