Medicare Supplement Plans
Medicare is a federal health insurance program for people age 65 and older and those who are disabled. The program consists of Parts A, B, C, and D, plus supplemental plans provided by private insurers to help eliminate gaps in coverage:
Medicare Supplemental Plans can only be purchased by people who have Original Medicare, which consists of Parts A and B (and sometimes, Part D). Some Medicare Supplemental Plans include prescription drug coverage, while others do not. For people with Medicare Supplement Plans that do not include drug coverage, it is possible to purchase both Medicare Part D and a Medicare Supplement Plan.
Medicare Supplement Plans Overview
Medicare Supplement Plans offer additional coverage for people with Original Medicare. They may help cover coinsurance and copayments, deductibles, and other costs. They also may provide additional services that are not covered under Original Medicare, such as prescription drug coverage. Medicare Supplement Plans are also referred to as Medigap Plans.
Coverage under Medicare Supplemental Plans is standardized, meaning that it is required by law to include certain services. However, some Medicare Supplement Plans provide additional coverage beyond the minimum required. Medicare Supplement Plans are identified by letters A through D, F and G, and K through N.
When you compare Medicare Supplement Plans, the letter that the plan is identified by indicates the types of coverage the plan provides. The best Medicare Supplement Plans are thus different for each person, depending on your needs.
Are Medicare Supplemental Plans Part Of Social Security?
If you receive Social Security benefits, you will automatically receive Medicare Parts A and B when you turn 65. For most people, Part B requires paying a premium, which is usually deducted from your Social Security benefits. This coverage, including the premium, begins automatically unless you choose not to accept it. People who are not receiving Social Security benefits need to sign up for Medicare a few months before they turn 65 in order to receive benefits.
In both cases, choosing not to sign up for Part B and then changing your mind results in penalties. These are called late enrollment penalties, and you may be required to pay them for as long as you have Part B. There may also be a delay when attempting to re-activate your coverage.
Free Medicare Part A is available to people who paid Medicare taxes for enough years, as well as their spouses. If you did pay enough taxes to receive coverage, you may be able to purchase it. Generally, people who must buy Part A must also buy Part B.
What Medicare Supplemental Plans Are Available
Medicare Supplemental Plans are identified by letter. Each letter indicates a standardized type of coverage that is provided by the plan. When you compare Medicare Supplement Plans, every plan that is identified by the same letter must provide the same minimum services and coverage. Your Medicare supplement cost depends on the type of coverage provided but also includes other factors.
Costs that are typically covered by Medicare Supplement Plans include coverage for all or part of the copayments and coinsurance required under Medicare Parts A and B, coverage for blood products, and hospice care. Many of the plans also cover part of the costs for a skilled nursing facility and Part A deductibles. Two of the types of plans cover Part B deductibles.
Most Medicare Supplement Plans do not include services such as dental and vision care. You may receive prescription drug coverage through your Medicare Supplemental Plan or through Medicare Part D, but you cannot have coverage through both. Medical Supplemental Plans require you to have Medicare Parts A and B coverage and also require a monthly premium to be paid in addition to the premium for Part B. Spouses are not covered, so your Medicare supplement cost must be calculated using one plan for each person who needs coverage.
Are Medigap Plans Different Than Medicare Advantage?
Medigap plans, also known as Medicare Supplement Plans, provide additional services beyond those available through Original Medicare (Parts A, B, and D). Medicare Advantage is another name for Medicare Part C.
Medicare Advantage plans cover all of the same services as Original Medicare but typically provide them through an HMO or PPO network. You cannot be sold a Medicare Supplemental Plan while you belong to a Medicare Advantage program, and if you switch to a Medicare Advantage program, you should drop your Medicare Supplement Plan because it will not cover any of your future costs.
How To Choose A Medicare Supplement Plan
There are a number of issues to consider when choosing between Medicare Supplemental Plans:
- Type of coverage you anticipate needing.
- Whether you prefer to pay more upfront or more in copays and coinsurance.
- How you want to receive your prescription drug coverage (Medicare Supplement plan or Medicare Part D).
The best Medicare Supplement Plans are not the same for every person. Even features such as cost can vary by year, age, and geographical region. Your Medicare supplement cost can be different for the same coverage from different companies, so it is important to compare Medicare Supplement Plans when shopping for this type of coverage.
When you compare Medicare Supplement Plans, be sure to consider what coverage is provided by each. Cheaper plans may initially reduce your Medicare supplement cost, but they may ultimately cost you more money. If you buy a very comprehensive plan but you are very healthy, you may spend more than you need to. The best Medicare Supplement Plans are those that meet the needs of the individual rather than some arbitrary standard, which is why it is so important to understand the process, as well as shop around.