Does thinking about Medicare have you tied up in knots? As of 2018, the Kaiser Family Foundation reported that there were 59,869,402 people with Medicare coverage. In 2018 the Medicare program cost $582 billion, about 14 percent of the total federal government spending. While the government is working to make basic Medicare coverage easier to understand, the current material made available to the public to explain the program can seem overwhelming. For example, while The Official U.S. Government Medicare Handbook, “Medicare & You” is very comprehensive, it is also 120 pages long. It’s easy to see why many think of Medicare as a giant, but the good news is it doesn’t need to be frightening. We’re here to unravel the confusion and demystify Medicare Supplement Plans.
Is Medicare Free?
Medicare Supplements really begin with Medicare itself. For a Medicare Supplement to cover a service, it first needs to be covered by Medicare. There are four “parts” of Medicare and then twelve different Medicare Supplement Insurance Plans. One major misunderstanding regarding Medicare is the belief that Medicare is “free.” While the sheer size of the program may give the allusion that Medicare is free, it is not. There also isn’t a one-size-fits-all answer to what the program costs an individual. Program costs vary depending upon:
- if you qualify for fully-funded Part A (do you have enough quarters paid into Social Security, or are you married to someone that has?)
- When you enrolled in the program (when you were first eligible, or did your delay to do so subject you to a lifelong penalty?)
- What is your income (beware IRMAA)
- Do you qualify for an entitlement program because of income and assets (what is LIS and MSP?)
Once you’ve determined your cost for Medicare, you need to understand that the twelve different Medicare Supplement Insurance Plans can have different requirements depending on the state in which you live. Further, MACRA legislation passed in April of 2015 that becomes effective in January of 2020 makes what policies one is eligible for dependent upon when your Medicare became effective. One last cost to consider will be prescription drug coverage, which is not part of original Medicare and is not part of any Medicare Supplement Plan currently available to purchase. That coverage is purchased separately through that fourth part of Medicare–Part D.
Are Medicare Supplement Plans Required?
Medicare Supplement Plans are not required. They are optional coverages that are the choice of the individual Medicare Beneficiary. However, while they are not required, an individual might find them necessary. Basic traditional Medicare has deductibles, of both an annual and per stay nature, along with coinsurance that would be out-of-pocket, in addition to the cost of the coverage itself. And, traditional Medicare does not have a maximum-out-of-pocket to keep expenses from piling up without a limit, so if you suffer a catastrophic illness or condition, the bills have no limit.
Are Medicare Supplement Plans All the Same?
This information, taken from the Centers for Medicare & Medicaid Services’ 2019 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare, page 11, details the policy types available to those who are on Medicare prior to the end of 2019:
The basic coverage of any of the standardized plans will be the same regardless of the company offering the plan. Additionally, some companies are making benefits beyond these required standardized benefits available in certain states. However, the companies are not required to offer all plans, and may well have different pricing and underwriting considerations. Those pricing differences can be substantial from company to company, even though the coverages may be identical.
How Do I Decide Which Medicare Supplement Plan is Right for Me?
Do your homework. Use the information provided by the government to educate yourself regarding the available coverages. Be careful of just going to a search engine and searching for it, as advertisements by insurance companies and insurance agents will appear above the information supplied by the government agencies’ explanations of benefits. Determine which options are personally available, especially if the Medicare beneficiary is still working, or has coverage available through prior employment or governmental service. Remember that options can vary greatly from person to person.
Once you’ve done some research, sit down with a qualified insurance broker who represents multiple insurance companies for medical coverage and who knows what basic Medicare does not cover, e.g., prescription drugs; dental, vision, hearing coverage; long-term-care, burial coverage.
We know that Medicare coverage can be confusing; that’s why we are here to help. You don’t need to know all the answers; you just need to know what questions to ask. Let the experts at Coverage Made help you make wise financial and insurance choices.