Do I Need Supplemental Insurance If I Have Medicare
When you enroll in Medicare, you’ll likely see ads asking if you want to sign up for extra insurance. You might wonder why you would need supplemental insurance if you have Medicare. However, while Medicare covers a large share of your health care bills, it will not pay for everything. That’s where having some extra insurance can help. If you’re wondering why you may need Medicare supplemental insurance and how to choose it, here’s some information.
What Is Medicare Supplement Insurance
Original Medicare does not cover all costs. Medicare Supplement insurance, or Medigap, can cover what Medicare does not. Private insurance companies vetted by the federal government offer it to help manage out-of-pocket expenses. These policies do not add coverage. Instead, they help pay for what Medicare Part A and B does not, including copays, coinsurance, and deductibles.2 It does not affect which doctors you can see.
To understand the value of a Medicare supplemental plan, you need to understand what Original Medicare does and doesnt cover.
Original Medicare is made up of Part A and Part B .
Part A has a deductible you must pay before any benefits kick in for hospitalization. It covers the first 60 days of Medicare-eligible inpatient hospital care in a benefit period. After that, you pay daily coinsurance amounts, depending on the length of your stay.
Part B also has an annual deductible. Once you reach it, Part B covers 80% of eligible doctor-related, testing and medical-equipment expenses. You are responsible for the balance .
In 2021, the Part A deductible for hospitalization is $1,484 per benefit period and the Part B annual deductible is $233.3
Medicare Supplement insurance is designed to help cover these out-of-pocket deductibles and coinsurance.
What Are The Characteristics Of Medicare Beneficiaries With Different Sources Of Coverage
Traditional Medicare
Among Medicare beneficiaries in traditional Medicare, most have supplemental coverage, either through Medigap , employer-sponsored retiree health coverage , or Medicaid . But nearly 1 in 5 Medicare beneficiaries in traditional Medicare have no supplemental coverage .
Figure 2: Nearly One in Five Traditional Medicare Beneficiaries Had No Source of Supplemental Coverage in 2018
Medigap
Medicare supplement insurance, also known as Medigap, provided supplemental coverage to 2 in 10 Medicare beneficiaries overall, or 34% of those in traditional Medicare in 2018. As with other forms of supplemental insurance, the share of beneficiaries with Medigap varies by state. Medigap policies, sold by private insurance companies, fully or partially cover Part A and Part B cost-sharing requirements, including deductibles, copayments, and coinsurance. As of January 1, 2020, Medigap policies are prohibited from covering the full Medicare Part B deductible for newly-eligible enrollees however, older beneficiaries who are already enrolled are permitted to keep this coverage. While Medigap limits the financial exposure of Medicare beneficiaries and provides protection against catastrophic expenses for services covered under Parts A and B, Medigap premiums can be costly and can rise with age, depending on the state in which they are regulated. Estimated average monthly premiums for Medigap policies range from $150 to around$200.
Employer-sponsored Retiree Health Coverage
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Can I Get My Health Care From Any Doctor Other Health Care Provider Or Hospital
- Original Medicare
-
You can go to any doctor or hospital that takes Medicare, anywhere in the U.S.
In most cases, you don’t need a
referral
to see a specialist.
- Medicare Advantage
-
In many cases, youll need to only use doctors and other providers who are in the plans network . Some plans offer non-emergency coverage out of network, but typically at a higher cost.
You may need to get a
referral
-
You can join a separate Medicare drug plan to get Medicare drug coverage.
- Medicare Advantage
-
Medicare drug coverage is included in most plans. In most types of Medicare Advantage Plans, you cant join a separate Medicare drug plan. You can join a separate Medicare drug plan with certain types of plans that:
- Cant offer drug coverage
- Choose not to offer drug coverage
Youll be disenrolled from your Medicare Advantage Plan and returned to Original Medicare if both of these apply:
Who Is Eligible For Supplemental Insurance
Anyone who has Medicare Part A and Part B is eligible to apply for a Medicare supplement plan. However, you need to qualify for coverage with the private insurance company. When you first turn 65 and sign up for Medicare Part B, you have a Medigap open enrollment period that lasts six months. During this time, you could sign up for any Medigap plan in your area and the insurer must accept your application, even if you have preexisting health conditions.
After the open enrollment period, you can still try signing up for a policy, but the insurance company could ask you questions about your health for underwriting. If you have preexisting conditions, they could increase the premium or even deny giving you a policy.
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Medicare Supplement Insurance Plan Premiums
If you purchase a Medicare Supplement insurance plan, remember you might end up paying several different monthly premiums:
- The Medicare Supplement insurance plan premium
- Your Medicare Part B premium
- Your stand-alone Medicare Part D Prescription Drug Plan premium, if applicable Premiums for Medicare Supplement insurance plans can vary widely. As with any purchase or proposed purchase, it is wise to shop for the best price for the coverage you think you will need.
What Are The Benefits Of A Medicare Supplement Plan
A Medicare Supplement plan makes your out-of-pocket costs more predictable and easier to budget.
From a cost-sharing perspective, many people like it because you dont need to worry about how much is owed every time you go to the doctor or are hospitalized, said Jacobson. You can literally see any doctor around the country that you would like to see. For example, if you live in Arizona, you can fly to Minnesota to go to the Mayo Clinic.
Unfortunately, Jacobson says having this benefit tends to be much more important for people when theyre sicker. When people first go on Medicare, theyre usually relatively healthy and not thinking necessarily about when theyre sick and what type of plan would be best for them in that situation. The inability to easily switch back and forth between Medicare Advantage and Medicare Supplement makes it pretty complicated for people, she says.
For example, if you join a Medicare Advantage plan for the first time and arent happy with it, federal law grants you special rights if you return to Original Medicare within the first 12 months. After that, you can only disenroll or change plans during the Open Enrollment Period or if you qualify for a Special Enrollment Period. Depending on the type of Special Enrollment Period, you may or may not have the right to buy a Medigap policy.
At the end of the day, the decision often comes down to whether you can afford a Medigap plan, as they can be more expensive.
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Supplemental Coverage Among Beneficiaries With Basic Medicare
Employer-sponsored insurance |
19% |
In that situation, unless you have some type of employer-sponsored insurance or you get extra coverage from Medicaid, the option for mitigating your out-of-pocket costs is a Medigap policy.
Those supplemental policies, which are sold by private insurance companies, either fully or partially cover cost-sharing aspects of Parts A and B, including deductibles, copays and coinsurance. They also limit what you’ll pay out of pocket each year.
Yet about 19%, or 6.1 million, who stick with basic Medicare have no extra coverage, according to a 2018 study from the Henry J. Kaiser Family Foundation.
That’s risky, experts say. While Part A is free for most beneficiaries, it comes with a $1,364 deductible per benefit period. And although Part B comes with a low $185 per-year deductible, you typically pay 20% of the remainder for most doctor services including while you’re a hospital inpatient as well as outpatient therapy and durable medical equipment such as wheelchairs or walkers.
“That 20% is after your deductible, and there’s no limit to how much you’d pay out of pocket,” said Elizabeth Gavino, founder of Lewin & Gavino in New York and an independent broker and general agent for Medicare plans.
“If you have a heart attack, need multiple surgeries and hospital visits, you could literally end up bankrupt,” she said.
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Can You Enroll In Medicare Supplement Plans At Any Time
Medicares open enrollment period, which runs from October 15 to December 7 annually, allows you to make changes to your health and drug coverage. However, 57% of Medicare enrollees dont take advantage of the potential money-saving option to compare their Medicare coverage choices, according to data from KFFFreed M, Koma W, Cubanski J, Fuglesten BJ, Neuman T. More Than Half of All People on Medicare Do Not Compare Their Coverage Options Annually. Kaiser Family Foundation. Accessed 09/22/2021. . Older enrollees are even less likely to review their plan choices, with 66% of those 85 and older not taking advantage of open enrollment at all.
If youre past the initial open enrollment period and are interested in a Medigap plan, Jacobson provides a warning: Medigap insurers dont have to sell you a plan that you want and can charge you higher premiums if they do choose to sell you a plan depending upon where you live, your health status and your age.
There are also scenariossuch as if youre already enrolled in Medicaid or have a Medicare Advantage planin which it might actually be illegal for an insurance company to sell you a Medigap policy, according to CMS.
Different insurance companies may charge you different premiums for the same exact Medigap policy, CMS also notes, so be sure to shop around and compare policies under the same plan type and focus on what matters most to you and your situation.
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How To Sign Up For Medicare Supplement Plans
Signing up for a Medicare Supplement plan is easy. Medicare supplements may be bought through an agent or from the carrier directly, says Corujo. Since theres no annual open enrollment period, you may join at any time.
To buy a Medigap policy, its best to enroll during your Medigap Open Enrollment period, which lasts six months. This period begins the first month you have Medicare Part B and are 65 or older. You can buy any Medigap policy sold in your state during this time, even if you have health problems.
Follow the steps below to purchase your Medigap plan:
- Enroll in Medicare Part A and Part B. This step is required to purchase a Medigap plan. Remember: Medicare and Medigap plans dont cover prescription drugs, so you may also want to consider enrolling in a Medicare Advantage plan or a plan that offers drug coverage. If you choose a Medicare Advantage plan, you cannot then enroll in a Medigap plan. If youre already enrolled in a Medicare Advantage plan, consider whether a Medigap plan would benefit you if so, drop your Medicare Advantage plan before buying a Medigap plan.
- Find which insurance companies in your state are licensed to sell Medigap plans by visiting Medicare.gov.
- Compare costs between companies. Costs will vary depending on the company, state and other factors, but the coverage they offer will be the same.
- Select a Medigap plan that works best for you and purchase your policy.
Are Medicare Advantage Plans Worth It
Medicare Part C is also known as an Advantage plan. These plans include the same benefits as Original Medicare and often provide prescription drug coverage and other perks, including dental, vision, and hearing.Advantage plans can work well for some individuals.
If you have an Advantage plan, it acts as a substitute for Original Medicare, meaning you wont need Medigap. However, youll want to make sure your preferred doctors are in your network.
Also, keep in mind that youll likely need a referral from your Advantage plan to see a specialist. So, these plans are better suited to healthier individuals who dont need to see many doctors.
If youre choosing between Medigap and Advantage plans, make sure to keep your future health and budget needs in mind as well as your current circumstances.
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Can A Veteran Get A Medicare Advantage Plan
Those who have both VA benefits and Medicare Part A and Part B have the option to enroll in a Medicare Advantage plan. Private insurance companies offer these plans. When you enroll in this coverage, the carrier you choose pays instead of Medicare.
The monthly costs for Medicare Advantage plans are relatively low. Sometimes, Medicare Advantage plans even come without premiums. Thus, Medicare Advantage plans are a good option for extra coverage when you already have VA benefits. In an emergency scenario where you would need care at a civilian facility, Medicare Advantage plans can help with costs.
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Other Ways To Supplement Medicare
If Medigap and Medicare Advantage dont meet your needs, there are other ways to supplement your Medicare coverage, including:
- Group health coverage from your employer, former employer, spouses employer, or spouses former employer: Depending on the size of the employer sponsoring the health plan, Medicare may be your primary or secondary health coverage, also known as primary or secondary payer. The primary payer receives claims first and pays the healthcare provider according to the plan limits. If there are leftover costs, the secondary payer reviews the claim and pays according to its plan limits. Even with two payers, you may still have additional, out-of-pocket costs.
- Private dental and vision coverage: Original Medicare insurance does not cover these services at all, so this coverage would operate independently of your Medicare.
- Medicaid: If you qualify for Medicaid, it would be your secondary insurance and Medicare would be your primary.
- Life settlement: If you have a life insurance policy, you may be able to sell it through a transaction known as a life settlement. The process yields a payout thats an average 4-11 times higher than the cash surrender value and worth up to 60% of the death benefit. You can use the proceeds however youd like, including creating an emergency fund for unplanned medical expenses. In this sense, you can supplement you coverage with a cash safety net.
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Other Common Types Of Supplemental Insurance
Although Medigap is a common form of supplemental medical coverage, it’s only available to you if you have Original Medicare coverage.
There are many other types of supplemental health coverage that are available to people who have other types of health insurance. Your employer may offer them as a voluntary benefit, or you can purchase a plan directly from an insurance company.
General Features Of Medicare Supplement Insurance Plans
Medicare Supplement insurance plans work with Original Medicare to help with out-of-pocket costs not covered by Parts A and B. The following are also true about Medicare Supplement insurance plans:
- Predictable costs help you stay ahead of unexpected out-of-pocket expenses.
- No network restrictions mean you can see any doctor who accepts Medicare patients.
- You don’t need a referral to see a specialist.
- Coverage goes with you anywhere you travel in the U.S.
- There is a range of plans available to fit your health needs and budget goals.
- Purchasing a Medigap plan and a Medicare Part D prescription drug plan could give you more complete coverage.
- Guaranteed coverage for life means your plan can’t be canceled.
As long as you pay your premiums when due and you do not make any material misrepresentation when you apply for this plan.
For PA residents only: As long as you pay your premiums when due. You do not misstate one or more material facts when you apply for this plan. UnitedHealthcare has 2 years to act on misstatements. The 2 year limit does not apply to fraud.
Rates are subject to change. Any change will apply to all members of the same class insured under your plan who reside in your state. can provide peace of mind by helping with some of these costs.
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Do I Need Health Insurance If I Have Medicare
If you have Medicare, that counts as your health insurance and you do not need additional insurance coverage for your medical or hospital needs.
One thing to note is Original Medicare Part A and Part B do not include coverage for most prescription drugs, so youll need to enroll in a stand-alone Part D prescription drug plan for prescription drug coverage.
If you have Original Medicare Part A and B, youve enrolled in prescription drug coverage, and dont want to add Medicare Supplement or enroll in a Medicare Advantage plan, you dont need to make additional coverage changes and you have the health insurance you need.
Do I Need A Medicare Supplement If I Have Va Benefits
A Medicare Supplement plan can benefit anyone who has Original Medicare, regardless of what other coverage they may have. Medicare Part A and Part B do not cover 100% of your care. However, when you have a Medicare Supplement plan, it covers the costs Original Medicare leaves behind, leaving you responsible for few-to-no out-of-pocket costs.
When you have this type of policy in addition to your Original Medicare and VA coverage, your visits to civilian facilities and hospitals that accept Medicare will receive full coverage after you meet your Medicare Supplement plans deductible. Although the VA doesnt bill Medicare, they may bill your Medigap plan for services the plan covers .
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