Why Should I Buy a Medicare Supplement Plan?
Once you’re 65 and enrolled in Medicare Part A and Part B, you may have a choice to buy additional insurance called Medicare Supplement (Medigap). Unlike Original Medicare (Part A and Part B) which is administered by the government, Medicare Supplement insurance plans are offered by private insurance companies and can help you pay for out-of-pocket costs for services covered under Original Medicare. These costs could be copayments, coinsurance, and deductibles, for example.
What basic benefits Medicare Supplement may include
There are up to 10 Medicare Supplement insurance plans offered in most states labeled A, B, C*, D, F*, G, K, L, M and N. (Plans E, H, I, J are no longer offered). The most basic of these plans is Plan A (not to be confused with Medicare Part A). Medicare Supplement insurance Plan A may help pay for:
- Medicare Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up
- Medicare Part B coinsurance or copayment
- Blood (first 3 pints)
- Part A hospice care coinsurance or copayment
The most comprehensive of the 10 standard Medicare Supplement insurance plans is Plan F*, which typically includes the same four benefits as Plan A, listed above, as well as five additional benefits. These benefits are:
- Skilled nursing facility care coinsurance
- Part A deductible
- Part B deductible*
- Part B excess charge
- Foreign travel at 80% up to plan limits
*Medicare Supplement Plan F (including high-deductible Plan F) is being phased out, along with Medicare Supplement Plan C. These are the only Medicare Supplement plans in most states that may cover the Medicare Part B deductible. As of January 1, 2020, you won’t be able to buy Plan F if you don’t qualify for Medicare until that date or later. If you qualify for Medicare by the end of 2019, you might still be able to buy Plan F (or Plan C). If you already have Plan F or Plan C, you can generally keep your plan.
A high-deductible version of Medicare Supplement Plan G might be available in 2020.
Doctor visits: How Medicare Supplement insurance plans can help
All the standardized Medicare Supplement insurance plans generally pay for Medicare-covered doctor visit copayments at least 50%. A Medicare Supplement insurance plan could be useful if you know that you will have a lot of doctor visits. If you visit the doctor frequently, the copayments could add up. The Medicare Part B (medical care) deductible is $185 in 2019 (estimated to be $197 in 2020, per CMS). After your deductible is met, you typically pay 20% of the Medicare-approved amount for most doctor services. If you know that you will be visiting the doctor multiple times a month, the amount you could save on copayments by having a Medicare Supplement insurance plan could exceed the cost of the additional insurance plan.
Durable medical equipment: How Medicare Supplement insurance plans may help
Durable medical equipment comes with a Part B coinsurance that could be paid for by a Medicare Supplement insurance plan. Durable medical equipment could be a walker, wheelchair, hospital bed, or other medical equipment ordered by your doctor for use in the home. For example, a hospital bed that costs $2,000 might have a coinsurance amount of $400 (the Medicare Part B coinsurance is typically 20%). A Medicare Supplement insurance plan may pay for this coinsurance. Again, different plans have different basic benefits, so you may want to compare Medicare Supplement insurance plans.
Extensive hospitalization: How Medicare Supplement insurance plans may help
Medicare Supplement insurance could also save you money if face extensive hospitalization. If you are hospitalized 1-60 days, you pay $0 coinsurance for each benefit period under Medicare Part A. According to CMS (Centers for Medicare & Medicaid Services) estimates:
- For days 61-90 of hospitalization you pay $355 per day of each benefit period in 2020.
- For days 91 and beyond, you pay $710 coinsurance in 2020 per each lifetime reserve day for each benefit period, up to 60 days over your lifetime.
This means that a 70-day hospitalization could cost you $3,550, and a 95-day hospitalization could cost you $14,200. A Medicare Supplement insurance plan might help pay for those costs.
Please note that these 2020 costs are only estimates and might not be the final Medicare Part A costs, which were not available when this article was published.
Travelling: How Medicare Supplement insurance plans may help
Another potential benefit of certain Medicare Supplement insurance plans is if you are planning on some foreign travel. Travelers are not immune from health problems and you could find yourself in a hospital overseas. In general, Medicare doesn’t cover health care you get outside of the U.S. (Puerto Rico, the U.S. Virgin Islands, Guam, the Northern Mariana Islands and American Samoa are considered part of the U. S.) Six Medicare Supplement insurance plans may help with foreign travel medical emergencies at 80% (up to plan limits): Plans C*, D, F*, G, M, and N.
Perhaps the best way to determine if you should buy a Medicare Supplement insurance plan is to think about whether you may need the basic benefits of one plan versus another, and how much you would pay out-of-pocket for those services. If you realize that you could pay more out-of-pocket for Medicare-covered services than the plan’s monthly premium would cost you, then applying for a Medicare Supplement insurance plan could be a good choice.
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