Do I Need a Medicare Supplement Plan?

Although Original Medicare provides excellent coverage, many Americans still find themselves dissatisfied with their health insurance.  This is largely due to the gaps between Original Medicare and the out-of-pocket costs.  But, is it worth it to pay extra for a Medicare Supplement plan?  

Original Medicare

Original Medicare is Medicare Part A, which is your hospital insurance, and Medicare Part B, which is your outpatient insurance.  

Medicare Part A

Medicare Part A covers your hospital insurance.  It will cover:

  • Inpatient care in a hospital
  • Nursing facility care
  • Nursing home care
  • Hospice care
  • Home Health Care

Medicare Part B

Medicare Part B helps to cover your outpatient insurance, namely medically necessary services, and preventative services.  It will cover:

  • Doctors Visits
  • Mental health services
  • Outpatient Surgery
  • Ambulance services
  • Durable medical equipment, like wheelchairs or walkers.  
  • Limited outpatient prescription drugs such as injections you get in a doctor’s office, certain oral cancer drugs (like Chemotherapy) 

Medicare parts A & B do not cover coinsurance, copayments, or deductibles and these costs can stack up. This is why many people consider enrolling in a Medicare supplement plan (also known as Medigap) or Medicare Advantage.  Additionally, Medicare parts A & B do not cover long-term care, dental, vision, or hearing. Coverage for all of these items is available separately.

Costs Without a Supplement Plan

Without a Medigap Plan, you’ll be responsible for deductibles and coinsurance.  These out of pocket costs can stack up, so you need to be aware of potential costs.  

Medicare Part A

In 2021, the deductible for Medicare Part A is $1484.  As a reminder, your deductible is the amount that you must meet out of pocket before your insurance kicks in.  This is not a once-yearly deductible.  It is applied to each hospital stay.  So, if you have to visit the hospital for an overnight stay more than once in a given year, you will be responsible for meeting that deductible each time (even if it is only for one night).

For the first 60 days in the hospital, you will not be charged (after you’ve met your deductible). After that, you will be charged coinsurance based on your length of stay.  Honestly, it’s very unlikely that you would be held in the hospital for such an extended period of time.  You would most likely be transferred to some type of skilled nursing facility and for that, there can be charges.

Medicare Part B

Medicare Part B also has a deductible and coinsurance to be aware of.  In 2021, the deductible for Medicare Part B is $203.  Unlike Part A, this is a once-annual deductible, so it’s really not that big of a deal.  You really need to be aware of Medicare Part B coinsurance.

Medicare Part B is your outpatient insurance.  Original Medicare will cover approximately 80% of the costs, leaving you with about 20% of the costs.  Honestly, if you really and truly are in good health and only visit your doctor twice a year (the minimum recommendation for seniors), 20% is not that big of a deal.  BUT, there are other costs to take into account.  Medicare Part B covers, not just doctor’s visits, but also outpatient surgery, ambulance services, diagnostic tests (like CT scans & and X-Rays), and even Chemo drugs.  20% of these types of services can definitely be costly.  

Finally, be aware that with Original Medicare, there is no out-of-pocket maximum.  

What Do Supplement Plans Cover?

There are many different Medicare Supplement Plans all with different levels of coverage.  Medicare Supplement Plans offer benefits such as:

  • Part A Coinsurance for Inpatient Procedures, Hospice or Skilled Nursing Facilities
  • Part B Coinsurance
  • Part B Excess Charges
  • Blood for Transfusions
  • Part A Deductible
  • Foreign Travel Exchange

And, of course, all Medigap Plans limit your pocket costs by either imposing an out-of-pocket limit or covering all coinsurance and copays.  You can view the plans available here.

How Do I Enroll?

So, is a Medicare Supplement Plan right for you?  It’s a personal decision.  Medicare Supplement Plans buy you peace of mind and can limit your out of pocket spending should you be in need of medical care.  As you get older, your medical needs will increase. Although you may be able to put off supplemental coverage for a while, you should be prepared.  Unexpected emergencies can happen even if you are in excellent health.  If a Medicare Supplement Plan isn’t right for you, you may want to think about a Medicare Advantage Plan, and don’t forget about prescription drug coverage (Medicare Part D). 

You can log on to Medicare.gov to see the range of prices for different plans in your area.  Prices can vary quite a bit, but it all depends on your carrier, plan, and state.  From there you’ll need to contact the carrier directly or a broker.  You will not receive any type of discount or incentive by contacting the carrier.  Remember, agents of the carrier work for the insurance company so they cannot help you comparison shop other carriers.  That’s why we recommend working with a licensed broker.  Many brokers do not charge for their services (commissions are already baked in whether you contact the carrier directly or the broker).  A broker works for you, not the carrier, and can help you a one-stop comparison shop. 

If you’d like our assistance, you can reach us here at iHealthBrokers at 888-918-0518 or schedule a call today

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Jesse Smedley is the Principal Broker for iHealthBrokers and the founder, president, and CEO of Smedley Insurance Group, Inc. and iHealthBrokers.com. Since the inception of SIG in 2007, Jesse has been dedicated to helping people save money on their health insurance by providing them with resources to educate themselves on all their health insurance options, both under age 65 and Medicare beneficiaries. He is featured in many publications as well as writes regularly for expert columns regarding health insurance and Medicare.

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