A Medicare supplement is a type of health insurance sold by private insurers to cover the gaps in Medicare. This is why the plans are also referred to as “Medigap Plans.”
An easy way to think of a Medicare supplement is to picture it as a card that sort of bolts onto the back of your Original Medicare and serves to pay for the costs that normally Medicare would pass on to you. Medicare has gaps, like coinsurance, copayments, and deductibles, that you must pay for when accessing medically-approved services.
If you have a Medicare supplement, Medicare will first pay its share of your medical expenses, and then your Medicare supplement will step in and pay its share. This is usually the remainder of your bill, but it depends on which Medicare supplement policy you choose.
The 10 Standard Medicare supplements
Every Medicare supplement has to match the outlines created by Medicare itself when it standardized these plans in 1990. Each standardized Medicare supplement is identified by a letter, such as A, B, C, D, F, G, K, L, M and N. Each one of these lettered policies is required to provide the same set of benefits from company to company.
This means that price, or monthly premium, is the main difference between Medicare supplements with the same letter offered by multiple insurance carriers.
The supplement plans that we get the most requests for quotes for are:
Medicare supplement – Glossary of Terms
Perhaps the most difficult thing about Medicare supplements is the terminology, so let’s look at the benefits as described by Medicare.
Medicare Part A coinsurance – all Medicare supplements offer this benefit. It covers the very expensive daily hospital copays that you begin accruing after your 60th day in the hospital.
Medicare Part B coinsurance or copayment – every Medicare supplement also covers this benefit, which is one of the most important. Generally, since Medicare only covers 80% of your Part B outpatient expenses, this benefit is what pays the other 20% for you. This can be crucial for high-ticket items like cancer treatments or dialysis.
Blood (First 3 pints) – this benefit, which is also covered under every Medicare supplement, pays for the first 3 pints of blood in a blood transfusion, since Medicare only pays for the 4th pint and above. Blood is very expensive, so this is a good benefit.
Part A Hospice care coinsurance or copayment – Medicare supplements pay for the parts of hospice that Medicare doesn’t under this benefit.
Skilled Nursing Facility coinsurance - Medicare allows for 100 days of skilled nursing facility (SNF) care after you have been in a hospital and need nursing care while you recover. However, Medicare only pays for the first 20 days. A Medicare supplement with SNF coverage will pay for the other 80 days.
Medicare Part A deductible – the 2013 Part A deductible is $1,184. You can pay this more than once a year if, for example, you have two inpatient hospital stays more than 60 days apart.
Medicare Part B deductible – in 2013, the Part B deductible is $147/year. You will pay the Part B deductible once per year for services such as doctor’s visits, lab-work, or physical therapy unless your Medicare supplement provides this benefit.
Medicare Part B excess charges - Medicare providers can either accept Medicare’s assigned rates for each service, or, if they choose, they can charge you an excess charge that can be up to 15% above the assigned rate. This can be pricey for items like diagnostic imaging or surgery, so you may wish to choose a medicare supplement that covers this expense.
Foreign travel emergency - Since Medicare is a U.S. health insurance program, it does not offer you coverage outside our country. Some Medicare supplements include a foreign travel benefit that will pay 80% of your expenses up to $50,000 after a small deductible.
Choosing a Medicare supplement
Since Medicare supplements are standardized, you will be able to choose your supplement and know exactly which benefits you are purchasing. There are several factors which you will want to know about each insurance carrier before you choose your supplement though:
- Rates – what premium are they offering to you and is it competitively priced?
- Rate trend history – most Medicare supplements will have an annual rate increase to keep up with medical inflation. What kind of rate increases has the carrier you are considering had over the last 3 years? Are the rate increases reasonable or significantly higher than the competitors?
- Financial ratings – insurance carriers are analyzed by a number of companies that dig into their financial stability and give reports, or grades, on the fiscal health of the insurer. Ask your agent what the A.M. Best and Weiss Ratings are for each carrier, and consider this information when making your selection.
For a personalized analysis of which Medicare supplement insurance carrier in your area offers not just good pricing but also good financial ratings and a steady rate trend history, please contact our friendly agent team to request an analysis using this link: medicare supplement plans. You can also call us at the toll free number found at the top of this page.