Medicare Supplement Basics
Also known as "Medigap," Medicare supplement insurance plans are specifically designed to help cover some of the costs of services not covered by traditional Medicare Part A and Part B plans. Qualifying “gap” expenses include copayments, coinsurance amounts and deductibles.
Medicare supplements work in tandem with your Medicare policy. When a provider or hospital sends a bill to Medicare, the plan pays its required share of the bill first. Your Medicare supplement then pays any of the remaining charges that qualify for coverage. For this to happen, you must have Medicare Part A and Part B and pay the separate monthly premium for the supplemental policy.
Medicare Supplements vs. Medicare Advantage Plans
Both Medicare supplements and Medicare Advantage plans provide coverage to fill in the gaps left by traditional Medicare coverage, but they work a little differently. You can't have both types of coverage, according to the official Medicare website, so it’s important to understand all the differences before choosing.
In the simplest terms, Medicare supplement plans work in conjunction with your Medicare Part A and Part B coverage, while Medicare Advantage plans work as an alternative to Original Medicare. If you enroll in Medicare Advantage, you get your coverage benefits through that private insurer’s plan instead of through the federal government’s traditional insurance program.
Medicare Advantage offers the same levels of Medicare Part A and Part B coverage, but it usually includes prescription drug coverage — known as Medicare Part D — as well. Many Medicare Advantage plans also come with extras like dental, vision and hearing coverage along with wellness benefits like nutrition counseling and gym memberships.
As the name suggests, Medicare supplemental plans simply supplement the coverages you already have. When you enroll in a Medicare supplement, you keep your Original Medicare coverage, and it will serve as the primary insurance for paying your healthcare bills, with the supplement picking up the tab for extra costs that qualify for the plan.
Characteristics of Medicare Supplements
Medicare supplements are available through any licensed insurance company that has been approved by Medicare, but the exact companies that are available to you will vary from state to state. It's also important to note that any standard supplemental policy comes with a guarantee for renewal, even if you already have or later develop potentially costly health conditions. As long as you pay your monthly premiums, you will continue to have your supplemental coverage.
You will have numerous plan options to choose from, no matter which state you live in, and different plans will come with different coverage options. Before choosing a plan, you should decide which benefits are most important for your personal circumstances. For example, if you have chronic health conditions that frequently require expensive care, such as hospitalization, then finding a plan with the highest percentage of coinsurance payments for Medicare Part A and Part B may be your top priority.
If paying your monthly Medicare premiums already stretches your budget, then you may find it challenging to cover the cost of even the simplest medical expenses, such as doctors’ visits. If that’s the case, then you may want a supplement that pays the cost of charges that are used to meet your deductible — charges that you would otherwise have to pay out of pocket yourself.
In some very rare cases, Original Medicare covers emergency medical expenses incurred in a foreign country, but these costs are far more likely to be covered by a Medicare supplement. However, specific rules apply to different coverage plans. If you frequently travel outside the U.S., you might want to consider choosing a Medigap supplement that provides medical coverage for emergencies that occur during travel to foreign countries.
Do I Need a Medicare Supplement?
It’s not necessary for everyone to sign up for a Medicare supplement, but if you have reason to be concerned about the level of financial responsibility you could be left with after an illness or accident occurs while you’re on Original Medicare, you may want to seriously consider your options. These plans are specifically designed to help those who frequently use medical services save money by paying much less out of pocket.
On the other hand, if you don't have any known health issues and you have rarely needed or used your medical benefits throughout your life, you may feel the cost of a Medicare supplement plan outweighs the benefits. The alternative option of choosing Medicare Advantage instead of the Original Medicare/Medicare Supplement combo is also appealing to many seniors.
