Medicare Supplemental Insurance: Benefits and Considerations

Doctor talking to patient who has Medicare in the doctors office
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If you are a senior on Medicare, you probably already know that it does not provide all the health insurance coverage you need. Many people consider buying a Medicare supplement plan—sometimes referred to as Medicare gap coverage—to help with medical expenses. There are many different gap coverage plans and they vary in the coverage provided, and their monthly premiums. However, one commonality is that the plans are from private providers and are not Social Security.

What Medicare Does Not Cover

You may not know that private provider Part D prescription benefits are suspended after you reach a certain dollar amount. This interrupted period is referred to as the “Medicare donut hole.”

After you reach your plan's deductible for prescription expenses, Medicare will pay for a certain percentage of your prescription drug costs. They cover a portion of the costs until you reach the donut hole level of costs. The donut hole is when Medicare Part D stops paying for prescription care and the level when your prescription costs reach “catastrophic” levels. Once you reach the catastrophic level, Medicare will pay 95% of prescription drug costs.

Many seniors stop taking their medications once they reach this gap in coverage, making them more susceptible to illness and even death. Seniors should never be put in the position of having to choose between medicine and other necessities. You do not have to worry about being without life-sustaining prescription medications if you have proper Medicare gap coverage.

Another flaw of Medicare is that it leaves seniors without important coverage for other essential services such as vision and hearing. A large percentage of all seniors who are on Medicare have vision or hearing problems. Again, here is another way where Medicare gap coverage can make the difference for seniors to be able to afford the health care services they really need.

Considerations for Buying a Medicare Supplement Plan

When choosing a Medigap Plan, you have 10 standardized plans to choose from (A, B, C, D, F, G, K, L, M, and N), and most are guaranteed renewable for life. This guaranteed renewal means that if you pay your premium on time, you won’t be canceled because of health conditions or because of age. To find the supplemental medical policy that works best to meet your medical needs, you will have to compare and carefully weigh the benefits and options provided by each plan. Here are some of the top considerations for comparing Medicare supplemental plans:

Type of Provider Plans That Are Available

You will want to find out what types of provider plans are available. This research is important. It will determine the healthcare professionals you are approved to see within each plan.

You need to know whether you can choose your healthcare provider or if you must use a doctor or health care facility that is part of a health maintenance organization (HMO) or preferred provider organization (PPO). Find out if a referral is necessary to see a specialist, and determine the cost or percentage covered by the supplemental insurance plan.

Prescription Drug Coverage

Prescription costs make up a large percentage of healthcare expenses. Compare each plan's co-pay amount. The co-pay is money out of your pocket paid before your insurer picks up a portion. Look at the dollar amount of a deductible you must satisfy before all of your prescription costs are covered.

Additional Benefits

There may be additional benefits you want that are not covered by regular Medicare. Depending on your situation, these could be very important. Some additional coverage might include hearing, dental and vision coverage.

Overall Cost of the Plan

A plan that provides you more options will generally be more expensive. You have to determine what is more important to you—freedom to choose your services and providers, or to keep monthly healthcare costs to a minimum. If you compare plans carefully, you might achieve a “happy medium”—keeping costs down and still having provider and service options you want.

Medicare gap coverage may help ease any worries you have about paying for medical care that is not covered by a Medicare plan. You become eligible to purchase a Medigap policy as soon as you reach age 65 and are eligible to enroll in regular Medicare Benefits (Parts A & B).

If you are retiring, see if your employer offers an extension of your current healthcare benefits to supplement your Medicare benefits. If you are still unsure of the amount of supplemental insurance that you might need, talk to your insurance agent. They may be able to help you find an affordable plan with the right coverage options.