What is Medicare Supplement Insurance (aka Medigap)?

Medicare Parts A & B only cover 80% of the cost of hospitalization. Medicare Supplement Insurance plans help pay the remaining 20%. Some plans also provide out-of-pocket maximums to limit your overall exposure to health costs.

 

Medicare Part A includes coverage for bills related to hospital care, skilled nursing facility or nursing home care, hospice care and home health services. Most enrollees will not pay an annual premium for Part A coverage. However, individuals who submitted less than 30 quarters of Medicare taxes will pay an annual premium.

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Medicare Part B is an optional coverage in most cases. Part B coverage helps to pay a portion of non-hospital provided medical care, such as doctor visits, home health services, physical therapy, durable medical equipment, outpatient services, ambulance service, and many other medical needs. Annual premiums have a basis on the income earned in the years before enrollment. Like Part A coverage, Medicare adjusts premiums each year.

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Medicare Part C is also known as a Medicare Advantage plan. These plans include and replace Medicare Part A, B, and D coverage, with the exception of hospice care. Medicare pays the premiums for participants. Plans have a structure of health maintenance organization (HMO), preferred provider organization (PPO) plans, private fee-for-service (PFFS) plans and special needs plans (SNPs). The federal government forbids private insurers from selling Medigap policies to individuals enrolled in Medicare Advantage.

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Medicare Part D is a prescription drug benefit program. An individual participant’s actual costs will vary depending on several factors, including the specific plan they choose, the medications they use, and the pharmacy they select. Individuals who enroll in Medicare Part D cannot also receive prescription drug coverage from a Medigap plan. Part B coverage will have annual deductibles and coinsurance costs.  Medicare updates maximum deductible amounts each year which as of 2018, is $405. SIM plans will assist with covering these out-of-pocket expenses.

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Is Medicare Enough?

Medicare won’t cover all of a participant’s health costs. Under each of these parts (A,B,C, and D) a participant receives coverage for different kinds of medical care. Unfortunately, the coverage Medicare provides under each of these plans isn’t complete. So, if a participant were to get extremely sick, he or she would end up paying an amount out of pocket — and that amount is usually exorbitant. For example, Medicare part A is supposed to cover hospital expenses. But if you spend more than 151 days in the hospital, Medicare won’t cover any of the cost. Which means: you could wind up spending tens of thousands of dollars — all while struggling with your personal health.

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What is Medicare Supplemental Insurance aka Medigap?

Medicare supplemental insurance, also known as Medigap, is any health insurance policy sold by a private company that pays some of the health care costs not covered by Medicare. Essentially, it is health insurance for your health insurance. It protects your assets from gaps in Medicare coverage by covering costs Medicare won’t, like copayments and deductibles. Some Medigap policies also offer additional kinds of health insurance not included in Medicare, like insurance for traveling overseas.

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What kind of Medigap Plans are Out There?

There are several standardized Medigap plans, labeled alphabetically. Each insurance company that offers Medigap will offer at least one or more of these standardized plans. No matter which insurance company you choose, each standardized plan will offer the same benefits, but the premiums may differ based on the age of the participant, the location, and more. Plans A and B offer basic coverage, which means they are the least expensive. The other plans offer additional medical coverage, and cost varying amounts. Medigap policies only cover one person, so you and your spouse cannot be on the same plan.

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Finding the best plan requires a bit of research, as well as considering the level of risk you’re willing to take and the kind of health problems you expect to face in the future. RCM Senior Services has an extensive background in helping people find the right Medicare Supplement plan. Contact us today to see the plan that best fits you or your spouse.