Let’s say you’re 65 years young, you decided to sign up for Original Medicare with its standard Part A (hospital) and Part B (outpatient doctor and specialist care) plans, and are receiving medical insurance benefits as we speak. Well done! But now that you’re making regular doctor and specialist visits, you realize the coverage might not be enough, and it's draining your monthly budget. How did that happen?
Medicare Part A is free if you or your spouse paid Medicare taxes while working, and the monthly premium for Medicare Part B is relatively low (around $121.80, in most cases).
But the combination of copayments (usually a flat fee, like $20 per visit to a health care provider), coinsurance (your portion of the bill for covered services, usually something like 20 percent), and the deductible (which is the set amount you pay for all your health care services before the insurance company starts to kick in and pay, too—a modest $166 in 2016 for Part B, but $1,288 for Part A) may be too expensive to get the care you need or want.
A $166 deductible may not be the fee that breaks you. But copayments add up, and 20 percent of the bills for doctor, specialist and hospital visits—of which many of us need more and more of as we get older—can add up. Add in your hospitalzation deductible, and we could be talking about thousands of dollars. To ease the financial burden of these out-of-pocket extras, known as the coverage “gap”, you may choose to sign up for Medicare supplement insurance, which is also called Medigap.
Medicare supplement insurance, or Medigap insurance, is sold by private insurance companies and helps pay for copayments, coinsurance, and deductibles, and sometimes additional services, depending on the plan. Most Medigap monthly premiums hover in the $100 and $200 range, but can cost more or less depending on the deductible and where you live.
In most zip codes, there are 10 types of Medigap plans. Examine each one carefully to make sure the plan you choose best meets your specific needs. In general, Medicare Supplement plans cover:
Medicare Supplement Part A coverage:
Medicare Supplement Part B coverage:
Note: Medicare Supplement policies typically don't cover long-term care, vision or dental care, hearing aids, eyeglasses, or private nursing care.
Anyone who has Medicare Parts A and B can buy a Medicare Supplement policy, but Medicare Supplement has a limited open enrollment period—and missing it means you may get turned down. If you buy Medicare Supplement insurance within six months of turning 65, you are guaranteed enrollment in a policy, regardless of any existing health problems you might have. (And provided you faithfully pay your monthly premium, Medicare Supplement policies are guaranteed renewable and generally continue year after year automatically.)
After your six months of open enrollment are up, the companies that sell Medicare Supplement policies are perfectly within their rights to deny you coverage, if you don’t meet their underwriting requirements. To find out how you can get Medicare Supplement coverage if you miss open enrollment, visit Medicare.gov.
Got all that? Good! Hopefully your health insurance decisions will be a little easier to make. Need more guidance? Download the AGA's simple to use Guide to Understanding Medicare.
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