Medicare Supplement Plan

A Medicare Supplement Insurance (Medigap) policy, sold by private companies, can help pay some of the health care costs that Original Medicare doesn’t cover, like copayments, coinsurance, and deductibles.

Some Medigap policies also offer coverage for services that Original Medicare doesn’t cover, like medical care when you travel outside the U.S. If you have Original Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for covered health care costs. Then your Medigap policy pays its share.

A Medigap policy is different from a Medicare Advantage Plan. Those plans are ways to get Medicare benefits, while a Medigap policy only supplements your Original Medicare benefits.

 

8 things to know about Medigap policies

  1. 1. You must have Medicare Part A and Part B.
  2. 2. If you have a Medicare Advantage Plan, you can apply for a Medigap policy, but make sure you can leave the Medicare Advantage Plan before your Medigap policy begins.
  3. 3. You pay the private insurance company a monthly premium for your Medigap policy in addition to the monthly Part B premium that you pay to Medicare.
  4. 4. A Medigap policy only covers one person. If you and your spouse both want Medigap coverage, you’ll each have to buy separate policies.
  5. 5. You can buy a Medigap policy from any insurance company that’s licensed in your state to sell one.
  6. 6. Any standardized Medigap policy is guaranteed renewable even if you have health problems. This means the insurance company can’t cancel your Medigap policy as long as you pay the premium.
  7. 7. Some Medigap policies sold in the past cover prescription drugs, but Medigap policies sold after January 1, 2006 aren’t allowed to include prescription drug coverage. If you want prescription drug coverage, you can join a Medicare Prescription Drug Plan (Part D).
  8. 8. It’s illegal for anyone to sell you a Medigap policy if you have a Medicare Medical Savings Account (MSA) Plan.

Overview

Medicare is health insurance through the US Federal Government for people over 65, people under 65 with certain disabilities, people of any age with End State Renal (Kidney) Disease.

It is separated into four parts represented by the letters A, B, C, and D.

  • Part A – Hospital Insurance – helps cover inpatient care in hospitals as well as skilled nursing, hospice, and home health care. Part A & B together make up with is termed ‘Original Medicare’.
  • Part B – Medical Insurance – helps cover doctor’s services, hospital outpatient care, and home health care. Also helps cover many preventive services to maintain health and keep certain illnesses from getting worse. Part A & B together make up with is termed ‘Original Medicare’.
  • Part C – Also known as Medicare Advantage, these are health plans run by Medicare approved private insurance companies. They typically encourage the use of certain doctors or hospitals in an HMO (Health Maintenance Organization) or PPO (Preferred Provider Organization) arrangement.
  • Part D – Prescription Drugs – an option for Medicare Participants to help with prescription drug costs, run by private insurance companies.

So, why would someone need a Medicare Supplement policy?

Medicare A and B ‘help’ to pay the health care costs for Medicare participants. There are, however, a number of gaps that require a participant to pay out of pocket. In some cases these out of pocket costs can be significant, even many thousands of dollars. Some examples are below.
 

  • Copayment – An amount you may be required to pay as your share of the cost for a medical service or supply, like a doctor’s visit or a prescription. A copayment is usually a set amount, rather than a percentage. For example, you might pay $10 or $20 for a doctor’s visit or prescription.
  • Co-Insurance – An amount you may be required to pay as your share of the costs for services after you pay any deductibles. Coinsurance is usually a percentage (for example, 20%).
  • Deductible – The amount you must pay for health care or prescriptions, before Original Medicare, your prescription drug plan, or your other insurance begins to pay.
  • Excess Charges – If you have Original Medicare, and the amount a doctor or other health care provider is legally permitted to charge is higher than the Medicare-approved amount, the difference is called the excess charge.

Medicare Supplement plans exist to ‘fill in’ these gaps and help protect Medicare Participants from high and at times unexpected medical payments.