Picking the Best Medicare Supplements Plan; How to Protect Your Assets from Gaps in Medicare Coverage
Medicare is supposed to cover your healthcare costs after retirement, right? Well, sort of. Medicare policies do cover some costs, but it turns out there will usually be gaps in your coverage. And these gaps can hit your assets hard when it comes time to pay those pesky hospital bills. That’s where Medicare Supplements come in. But understanding Medicare (and Medicare Supplements) can be confusing. So, let’s back up and take a look at the basics.
What is Medicare?
Medicare is a health insurance program provided by the U.S. government. Anyone 65 or older who has worked and paid payroll taxes to Medicare at some point in his or her life, as well as some individuals younger than 65 who suffer from disabilities, are eligible to receive Medicare. In 2015, over 55 million men and women in the U.S. benefited from Medicare. That number is expected to increase as more and more of the baby boomer generation retires.
Why might Medicare Not be Enough?
Medicare won’t cover all of a participant’s health costs. The U.S. government breaks Medicare into three parts: A, B, and D. Under each of these parts, 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.
What is Medicare Supplemental Insurance?
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.
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.
Does Medigap Cover Everything?
No. Medigap plans usually do not cover vision, dental, and long-term health care. No plans cover prescription drugs.
How do I Qualify for Medicare Supplements?
To be eligible for Medicare Supplements, you must already be on Medicare Part A and B. If you have a Medicare Advantage Plan (which is different than both Medicare and Medigap), you are eligible for Medigap as long as you can leave your Medicare Advantage Plan before your new Medigap policy starts. You are ineligible if you have a Medicare Medical Savings Account Plan. If you qualify for Medicare Supplements, you can buy a policy from any insurance company that’s licensed to sell these plans in your state. And if you’re diagnosed with additional health problems, that insurance company cannot cancel your plan.
How Much Does it Cost?
The cost of Medigap depends on the standardized plan you choose as well as the insurance company from which you buy it. You will pay a monthly premium for your Medigap plan along with the monthly Medicare Part B premium.
How do I Find a Medigap plan?
Remember: the Medicare Supplemental Insurance plan that works for your friend or spouse may not be the plan that’s right for you. Choosing 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. To begin researching Medigap plans, contact your state insurance department for a list of companies licensed to sell insurance.