Original Medicare is great insurance and if you can supplement it with a Medigap plan, you will be in a great place heath insurance wise. But as we always say, there is no one size fits all solution to health insurance. Here are three reasons not to get a Medigap plan.
What is Medigap
What exactly are medicare supplements? Medicare supplement plans supplement the financial gaps of Original Medicare. Original Medicare will cover most of your medical needs for hospital stays, inpatient and outpatient procedures, doctors and specialist visits, and vaccinations. However, there are copays or coinsurance as well as deductibles.
Because there are no out of pocket maximums with Original Medicare, these copays or coinsurances can be rather significant if you have major medical needs. Medicare supplement plans cover these out-of-pocket costs and may even help with an out of pocket maximum if necessary.
But remember, Medigap plans do not offer additional benefits not already offered by Original Medicare such as dental, vision, hearing, and prescription drugs. They are simply a financial solution to unknown and potentially large costs.
Because they provide such comprehensive health coverage, they are an extremely popular option amongst many Medicare beneficiaries. So why wouldn’t you want one?
Medigap is Too Expensive!
They can just be too expensive! Many people are surprised to learn that they have to pay for Medicare at all. And yes, that is true, you do have to pay a monthly premium (at least for Medicare Part B). Most people qualify for premium-free Medicare Part A, but if you don’t qualify through yours or your spouse’s work history, there may be a premium for that as well. In 2023, the base premium for Part B is $164.90 or more based on your income. And if you do have to pay for Part A, it can be up to $506! But again, that is usually not the case.
Medigap plan monthly premiums are determined by your age, gender, and where you live. If you have to undergo medical underwriting, your premiums could also be higher. Of course, there are 10 different plans to choose from and plans with more coverage tend to have higher premiums. So, there are a lot of factors to take into consideration. You can expect to pay anywhere between $50 to possibly over $300 per month for a supplement plan.
You can see why it may just be too expensive for many people to enroll in a Medigap plan. Based on your income, you may qualify for programs that can help you save money.
For example, there are medicare savings savings programs that can help you to pay for Part B and Part A if applicable. They may also offer you Extra Help with your Part D plan which is prescription drug coverage. These plans are based on strict income and asset criteria.
Also, if you are eligible for Medicaid in addition to Medicare, you have dual eligibility. In this case, you can enroll in a DSNP which is a dual eligibility special needs plan. These are a type of Medicare Advantage plan that offer all of the benefits of Medicare PLUS Medicaid and many additional benefits thrown in as well.
Medicare Advantage
You may decide not to enroll in a Medigap plan if you have a quality Medicare Advantage option instead.
A word of caution here: most people prefer their supplement plans to advantage plans. Often people don’t find out just where their Medicare Advantage plan falls short until they have extensive medical needs. So, please if you decide to go for a Medicare Advantage plan, work with a qualified broker who can really go over the plan details with you to ensure it is the right plan for your needs.
Medicare Advantage plans replace Original Medicare entirely. They must offer at least the same benefits but you will operate through a private carrier and will therefore have to deal with network restrictions as well as pre authorization and possibly referrals. However, often when compared with Original Medicare alone, the copays and deductibles may be lower and offer out of pocket maximums. They may also offer additional benefits like dental, vision, hearing, and prescription drugs amongst others.
These plans will usually have lower premiums that Medigap plans and may not have an additional premium at all other than your Part B premium. However, in most cases, despite how it may seem, you may really be giving up quite a bit to opt for a Medicare Advantage plan instead of Original Medicare and a Medigap. Some plans may be wonderful, but others not so much. Also, in certain areas of the country, like Florida, Medicare Advantage plans are excellent.
Retirement Insurance
Some jobs may offer some type of retirement insurance benefits. Although we wouldn’t know the specifics of what may or may not be offered to you, you should definitely compare any benefits offered through your job or union to see if there is any reason to purchase a Medicare Supplement Plan. You don’t need to pay additional premiums just to be “overinsured”.
For example, if you are in the military and have tricare, when you become Medicare eligible, you would switch to tricare for life. When combined with Medicare, this will likely cover all of your needs. In this case, it would be unlikely that you would need or want a Medicare Supplement Plan.
Remember although medicare supplement plan enrollment is year round, you are best served to enroll when you first become eligible. This is the 6 month window after you turn 65 and enroll in Part B. During this time, you will not be subject to medical underwriting which means you cannot be charged more or denied. After this window, you may be subject to medical underwriting which could impact your ability to enroll in a Medigap plan.
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.
