What is a Medicare Supplement Plan?
A Medicare Supplement (or Medigap) policy is private health insurance designed to supplement original Medicare. This means that the supplement plan will help pay for some of the costs that would not otherwise be covered by Original Medicare, like certain co-payments, co-insurance, and deductibles. In other words, it works alongside Original Medicare to provide supplemental, not stand alone coverage, and is designed to fill in the “gaps” in your Medicare coverage.
In 47 states, there are 10 standardized Medicare Supplement plans available, although the private insurance companies are not required to, and generally do not, offer all 10 plans in any given state. The Plans are labeled A through N and each of the plans offer different levels of coverage. Every insurance company wanting to write Medicare Supplement business in a state must offer at least a Plan A, and if an insurance company offers any other plans they must also offer a Plan C or a Plan F.
There are 3 states, Massachusetts, Minnesota, and Wisconsin that standardize their Medicare Supplements a little differently. The benefits are offered separately and the policyholder essentially “builds” their own Medicare Supplement plan with the end result looking very similar to one of the regular, standardized plans available in the other 47 states.
Plans E, H, I, and J are no longer sold, but, if you already have one of these plans, you can keep it as long as you continue to pay your premiums.
Medicare Supplements only cover one person. If a couple wants Medicare Supplement coverage they would each need to purchase a separate policy.
All Medicare Supplement policies are guaranteed renewable, meaning that your policy cannot be cancelled as long as you pay your premiums on time, regardless of any changes in your health.
Let’s take a moment to talk about what a Medicare Supplement plan covers and what it doesn’t cover.
Original Medicare generally covers approximately 80% of the costs for all Medicare approved charges with a Medicare Supplement plan paying the remaining 20%.
Original Medicare is divided into two parts, parts A and B. Part A of Medicare covers those costs associated with inpatient healthcare, such as hospital stays and all related charges, like surgery, lab tests, and medications received while an inpatient. Part A also covers in-patient skilled care, and hospice care.
Part B of Medicare covers medically necessary doctors’ visits and services, preventive care, hospital outpatient services, lab tests, x-rays, ambulance services, and mental health care.
Conversely, Medicare does not cover long-term care (AKA custodial care), most dental care, eye exams, dentures, cosmetic surgery, acupuncture, hearing aids and exams, and routine foot care.
The most popular and most purchased Medicare Supplement plans are Plans F and G. These 2 plans provide the most comprehensive coverage out of the 10 different plans available.
9 out of the 10 plans will cover all or part of your Part A deductible. This is the amount of out-of-pocket deductible that you are responsible for before Medicare pays its share. For 2016 the Part A deductible is $1,288, and this deductible is per occurrence, meaning that if you were to have 3 separate hospital stays in a given year, you would be required to pay the full Part A deductible amount for each hospital stay.
It’s easy to see how that can really add up fast!
Thankfully, except for Plan A, your Medicare Supplement plan would cover each of those deductibles.
Part B of Medicare also has a deductible. For 2016 it is a one-time annual deductible of $166.
2 of the 10 Medicare Supplement plans, Plans C and F, will cover the Part B deductible.
Medicare supplement plans make good sense for your clients. With Medicare paying most of the cost of your client’s healthcare and a Medicare supplement covering all, or nearly all, of the remaining balance really gives your clients peace of mind knowing that the total annual out-of-pocket costs of most of your client’s healthcare will be the annual premiums that they pay for their Medigap plan.
If you have any questions when it comes to helping your client choose the best Medicare Supplement policy for their needs please don’t hesitate to give us a call here at Financial Brokerage. Our job here is to help our agents to save time and write more business.