The Pros and Cons of a Medicare Supplement Plan

Getting sick every once in a while is very stressful, that’s why you have to have a health plan. A health plan needs to be an integral part of your financial budgeting. No one ever plans to get ill nor knows when they might need medical attention.

With rising costs of medical treatments plus a greater risk of getting sick as we age, Medicare only covers so much and many people opt to get an additional Medicare supplement plan known as Medigap.

How Medicare works

When you reach the age of 65, you become eligible for Medicare. The Original Medicare plan is provided by the federal government. Most people, if enrolled in the plan, have Part A and Part B of their Medicare.

Part A is hospital insurance and mainly helps with in-patient hospital treatment. Part B, which is more costly, is medical insurance and helps you to pay for out-patient doctor visits, preventative services, lab tests, physical therapy, among other things. In most cases, you will pay out-of-pocket 20% of the approved amount of Medicare Part B and Medigap pays the remaining 80%.

Medicare also has a Part C and D. Part C is known as Medicare Advantage, while Part D covers prescription drugs. Usually, healthcare insurance agents will package together parts A and B and most likely D into one comprehensive plan for you. You would need to sign up separately for several plans to be covered for all your medical needs.

Medicare Supplement Plan (Medigap)

Medigap covers what the Original Medicare doesn’t cover; it is extra health insurance.  As you have previously read, for more coverage you would have to buy separate plans under Original Medicare.

If you already have Medicare A and B can you enroll in a Medigap policy, however, if enrolled in the Medicare Advantage plan, you cannot get a Medigap plan? Like everything else, Medigap has its pros and cons.

Pros

Several plans to choose from: Insurance companies that cater to Medigap have several plans from which you may choose from. What makes the choice simpler is that all companies that offer these plans must offer exactly the same benefits for a particular plan, as specified by Medicare.

On this website, you will find an infographic of how Medigap plans are lettered (A-N) and what each lettered plan covers. You can then go into further details about each individual plan and their coverage. All plans are strictly regulated by state insurance regulators.

Nationwide

If you travel from state to state, you will find it useful as it provides nationwide coverage. The 10 categories are used all over the country, unlike other policies that have rules and regulations that can differ from state to state. Furthermore, some plans may provide coverage if you’re traveling outside the USA.

Out of pocket costs

Medigap pays for such things as copayments, coinsurance, and deductibles. It can also pay for emergency health coverage if you are traveling abroad.

Choose any doctor

Medigap policies allow you to choose any doctor of your choice, as long as they accept Medicare. Unlike Original Medicare, you’re not tied down to the Health Maintenance Organization, (HMO) a network of providers who agree to supply services to members. Under HMO, you would first need to get a primary care physician to refer you to a specialist. With Medigap, you can simply go to a specialist from the start. 

Cons

More costly

Monthly premiums can be pricey since the plans are sold by private insurance companies. There is a premium that must be paid, and this premium is subject to yearly change. The price of the premium can also be based on gender and health and may go up as you age.

If you switch medicare plans then you’ll have enough money to save.

Previous medical history

You might not be eligible if you have a past history of major health issues such as stroke or cancer. Each provider will have different rules on which they base their decision on, but often recent diagnosis and current treatment are factored in. If you’re over 65, you’ll have to answer medical questions, and some insurance companies will accept you while others will decline your application. 

Covers only one person

If you have a spouse, each of you will need to buy their own separate policies/premiums. When you are young you will probably take healthcare plans lightly, but as you age and become more prone to illnesses and have more doctor visits, you will want a good health plan in place.

Knowing your current medical condition and learning about the different supplement plans in more detail will help you decide what is best for you.