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I'm retired - do I need Medicare Supplement insurance?

Are you retired, or thinking about retirement, and wondering if you need Medicare Supplement insurance? The answer involves a look at your personal circumstances and a little educated guesswork into the future. It might seem scary, trying to figure out what kind of Medicare and related insurance you need when you retire – but you can generally make a plan based on your past and present health-care needs and costs, and your budget.

Before you can get Medicare Supplement insurance, you need to be enrolled in Original Medicare, Part A and Part B. So, if:

  • You're eligible for Medicare but you're not yet retired, and
  • You haven't enrolled in Medicare Part B because you're still on your employer's plan (or covered under your spouse's plan)
  • Or, whether retired or not, you're not enrolled in Medicare Part A and Part B

…then you're not yet eligible for a Medicare Supplement plan, as you must be enrolled in both Medicare Part A and Part B.

But let's suppose you are enrolled in both Medicare Part A and Part B. That coverage typically pays a portion of many health-care expenses, leaving you responsible for deductibles, copayments, coinsurance and sometimes other health-care costs. In other words, you pay the "out-of-pocket" expenses—out of your pocket.

Medicare Supplement plan overview

Before deciding whether you need a Medicare Supplement plan when you retire, you may want to read this brief overview of this type of plan.

The difference between what Medicare pays and the amount you owe for medical care is sometimes called the Medicare coverage "gap". If you have Medicare Part A and Part B, you might have the option of purchasing a Medicare Supplement plan to help pay the out-of-pocket costs of Medicare Part A and Part B. These plans are offered by private insurance companies.

In most states, Medicare Supplement plans are standardized and assigned lettered names: Medicare Supplement Plans A-N. (There are up to 10 of these lettered plans available in most states – Plans E, H, I, and J are no longer sold.) Each plan may cover a different combination of Original Medicare's out-of-pocket costs, at different levels. For example, Medicare Supplement Plan F covers all of the Medicare Part A deductible, while Medicare Supplement Plan K covers 50% of the Part A deductible.

In Massachusetts, Minnesota, and Wisconsin, Medicare Supplement plans are standardized differently.

With most Medicare Supplement plans you can use any doctor, health professional or hospital in the United States that accepts Medicare patients. Only one type of Medicare Supplement plan, called Medicare SELECT, may require you to see doctors and other providers in the plan network.

Do I need a Medicare Supplement plan when I retire?

Basically, Medicare Supplement insurance may provide protection from high out-of-pocket medical costs resulting from numerous hospital visits or doctor visits. So, you might want to consider a Medicare Supplement plan to supplement your Medicare Part A and Part B coverage, especially if one or more of the following situations applies to you now or after your retirement:

  • You travel extensively outside the United States and would like insurance coverage for emergency medical care abroad, which Medicare Part A and Part B might not provide. Some Medicare Supplement plans provide foreign travel coverage (e.g., Plan C, Plan D, Plan F, Plan G, Plan M and Plan N). These plans may pay 80% of covered emergency medical costs when you're outside the country, up to plan limits.
  • You're likely to have multiple hospital stays during the course of a year.
  • You expect to have frequent doctor visits or medical services.

You pay a premium for any Medicare Supplement plan, but the plan in turn may cover your hospital costs and other out-of-pocket expenses. So you might need to do some math to figure out whether your out-of-pocket costs under Original Medicare would likely be higher than your Medicare Supplement premium costs. If so, a Medicare Supplement plan might save you money.

On the other hand, if you don't typically have many doctor or hospital visits, you might want to consider a Medicare Advantage plan, discussed later in this article.

Medicare Supplement plan premiums

If you purchase a Medicare Supplement plan, remember you might end up paying several different monthly premiums:

  • The Medicare Supplement plan premium
  • Your Medicare Part B premium (you generally pay this no matter what type of Medicare coverage you have)
  • Your stand-alone Medicare Part D Prescription Drug Plan premium, if applicable Premiums for Medicare Supplement plans can vary widely. As with any purchase or proposed purchase, it is wise to shop for the best price for the coverage you think you will need.

Medicare Supplement plan eligibility

Another factor to consider when you're thinking about a Medicare Supplement plan upon retirement is whether you'd qualify for such a plan. Although you can apply for a Medicare Supplement plan anytime (unlike some Medicare coverage or plan options, where you're usually restricted to certain enrollment periods), you're not always guaranteed to be able to purchase a Medicare Supplement plan.

Your Medicare Supplement Open Enrollment Period (OEP) is generally the best time to sign up for a Medicare Supplement plan. This six-month period starts the month you're both 65 and enrolled in Medicare Part B. During this period, you can't be denied acceptance into a plan, or charged extra, because of a health condition. In some cases, a waiting period may apply for coverage of a pre-existing condition. Some states have additional Open Enrollment Periods including those for people under the age of 65.

After your Medicare Supplement OEP is over, you may be faced with medical underwriting, which could result in your paying a higher premium – or even denied coverage – if you have a health condition.

Remember that you must also be enrolled in both Medicare Part A and Part B to qualify for a Medicare Supplement plan.

Medicare Advantage overview

A different option you may have is to receive your Medicare benefits through the Medicare Advantage (Medicare Part C) program.

Offered by private insurance companies contracted with Medicare, Medicare Advantage plans must offer at least the same benefits of Medicare Part A and Part B (except for hospice care, which is still covered under Part A). Many Medicare Advantage plans offer additional benefits such as prescription drug coverage, routine vision coverage, and wellness programs. Some Medicare Advantage plans are designed to help people with special health-care needs, such as diabetes or congestive heart failure.

Deductibles, copayments and coinsurance amounts may vary among Medicare Advantage plans. Medicare Advantage plan premiums vary as well, and some plan premiums may be as low as $0. You will still have to pay your Medicare Part B premium if you sign up for a Medicare Advantage plan. Other points to know:

  • Medicare Advantage plans limit the maximum out-of-pocket expenses you pay for covered services during the year, so your costs can't keep piling up beyond a certain amount. If you spent up to that amount, the plan may cover all your approved Medicare-covered expenses for the rest of the calendar year. This might be helpful after you are retired.
  • Depending on the plan type, you might have to use a network of participating providers to receive the full benefits of the plan.
  • You have to reside in the plan’s service area.

If you choose a Medicare Advantage plan, you won’t need a Medicare Supplement plan; these plan types don't work together.

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Last Updated Date: 11/5/2016