A Medicare supplement plan has always been a wise investment for aging adults to help bridge the gap between what original Medicare plans pay and what they don’t, such as deductibles, copayments, and coinsurance. In today’s political climate, with the future of government-sponsored health insurance plans so uncertain, Medicare supplements are more important than ever. If you’re paying attention to the news, you’ve probably wondered, “Do I need a supplement to Medicare to pay for my health care needs?” If so, here are the factors you should consider.
What Is Medicare Supplement
Also known as a Medigap policy, a Medicare supplement is a private insurance policy that pays for a portion of the health care costs that your basic Medicare policy will not cover. Typically, supplements cover costs like deductibles and copayments, but they may also cover medical services that your Medicare policy doesn’t cover. For example, if you travel outside the United States, your Medicare supplement may cover any health care costs you incur. A Medicare supplement covers only one person, so it will not apply to your spouse.
Keep in mind that Medigap policies are different from Medicare Advantage plans. Advantage plans help you secure Medicare benefits in the first place, while Medigap policies supplement the Medicare coverage you already have. You cannot have both a Medicare Advantage plan and Medigap; you’ll need to leave Medicare Advantage to purchase Medigap coverage. You can then start your Medigap policy the day after your Medicare Advantage plan coverage expires. Finally, to qualify for Medicare supplement plans, you must have Medicare Part A and Part B.
Advisor Video: What is Medicare Supplement?
Do I Need A Medigap Policy?
The most common reason for purchasing a supplement with Medicare is that most aging adults are on a fixed income and don’t want to dip into their nest egg to pay for health care expenses that are not covered by their original Medicare policies. Medigap policies typically pay the majority or all of the remaining Medicare-approved charges after the primary policy pays. For instance, Plan F, a type of Medicare supplement, pays all Part A and B deductibles in addition to hospital and doctor coinsurance amounts.
Second, in the event that your health takes a turn for the worse, a Medicare supplement is renewable for life so long as you pay the premiums. These policies have no lifetime maximums, and your insurer cannot cancel your policy due to the frequency or amount of your claims.
In other words, a Medigap policy can help protect your retirement savings in the event of a major health crisis that Medicare does not fully cover. Similarly, depending on when you choose to purchase your Medigap policy, the insurer must accept you even if you have health issues and can’t charge you higher premiums because of your health conditions.
Third, investing in a Medigap policy opens up a world of options, allowing you to customize your health care coverage to your unique needs. A Medicare supplement also gives you the option of adding prescription drug coverage independently. In this case, the prescription drug coverage is not technically part of your Medigap policy but still works alongside your original Medicare policy. Prices for Medigap coverage vary widely depending on the coverage level, so you’ll be able to find a policy appropriate for your budget. The more coverage you want, the higher your monthly premiums will be.
Finally, Medigap policies will cover you in foreign countries if you plan to travel in your retirement. If you relocate within the U.S., you will be able to keep the same Medicare supplement policy in most cases.
Investing in a Medicare supplement is just one of the things you can do to safeguard your health and your financial security. With the future of the Affordable Care Act and Medicare program uncertain, it’s also important to stay informed of changes in health care legislation and benefits. To get the latest Medicare and Medigap information sent right to your inbox, subscribe to our mailing list today for free.