Tue, Dec 8, 2020

Are Medicare Supplement plans worth it? The answer is unequivocally YES.

Because we have many options for covering the gaps, there is no need to run around without supplemental coverage.

If you find yourself asking whether you really need a Medicare supplement, ask yourself if you can afford to pay 20% of a $50,000 knee replacement or 20% of eight weeks of cancer chemotherapy.

If you are like most of us, you can’t pay that much out of pocket. So yes, then you need a Medicare supplement to fill the gap in Original Medicare.A Medigap plan is a wise investment to protect you from catastrophic medical spending.

Is there any downside to having no supplemental coverage? Is Medigap necessary? What are the risks if I choose to have just Medicare Parts A, B, and D?”

You might be wondering this yourself. Are Medicare supplements worth it? When Americans reach retirement age and start their Medicare coverage, many are shocked to realize that Medicare is not free. If you didn’t know to save for Medicare Part B premiums during your retirement, you may find that money is tight.

However, going with just Original Medicare and no supplemental coverage is not wise.

The gaps in Medicare are substantial, leaving you to pay for expensive deductibles and 20% of all your outpatient coverage. If you don’t have a Medicare Supplement plan, often referred to as Medigap coverage, or a Medicare Advantage Plan, you’ll have to come up with the difference yourself.

The gaps in Medicare are substantial, leaving you to pay for expensive deductibles and 20% of all your outpatient coverage. If you don’t have a Medicare Supplement plan, often referred to as Medigap coverage, or a Medicare Advantage Plan, you’ll have to come up with the difference yourself.

So are Medicare supplement plans worth it? 

Yes, they are. Let’s look at how they can help you.

The Good News

The best thing about your options for covering the gaps in Medicare is that there is something for everyone no matter what your budget is. We have Medigap plans which cost a bit more but have full coverage. Then we have Medicare Advantage plans which in some counties can cost as low as $0 for the plan itself.

Let’s look at a few basic facts so you can judge if you need a Medicare Supplement plan or if a Medicare Advantage plan is right for you.

Covering the Gaps in Medicare Parts A and B

Just like with your current insurance, Medicare has deductible, copays and coinsurance for which you are responsible. Medicare Part A covers up to 60 days of hospitalization, but you pay a deductible of $1,408 in 2020.

If you are in the hospital longer than 60 days, you begin paying an expensive daily copay for your hospital care. If you are in the hospital 150 days, your hospital coverage runs out altogether.

Your cost-sharing under Part B is similar. You are responsible for paying your Part B deductible, which is $198 in 2020. Then Part B Medicare only pay 80% of approved services. This means you are responsible for paying 20% of all your doctor visits, your ER visits, blood tests, X-rays, surgeries, durable medical equipment and even high-priced things like chemotherapy.

It gets worse:

There is no cap on your 20% like you’ve had on your prior insurance plans.  You pay that forever. Paying 20% of the cost of a knee replacement will hurt a lot. But it will pale in comparison to paying 20% for the treatment of an illness like cancer.Even for smaller items like CT scans, your 20% can be a burden.

How a Medicare Supplement Plan Can Help

Medicare supplements plans were designed to fill the gap in your medical coverage left by Medicare. You need a Medicare supplement to provide you peace of mind, knowing that if the unexpected happens, you won’t have your credit ruined because of unpaid medical bills.

Medicare supplements take care of things like co-payments, deductibles, and coinsurance that you are responsible for, and some plans even cover you if you travel outside of the United States.

There are 10 standardized Medicare supplements Plans (A, B, C, D, F, G, K, L, M and N) and one high-deductible plan.  Most Medigap plans are guaranteed renewable for life meaning that if you pay your premium, you are covered and cannot be denied coverage because of any health issues or because of your age.

Once your Medicare plan has paid its part, your Medigap coverage will pay most of what’s remaining for any Medicare-approved charges. You can see any doctor that participates in Medicare, too, which is one of the best features about Medigap plans.

Here are a few of the benefits that a Medigap plan can help pay for:

  • Medicare Part A coinsurance hospital costs after initial Medicare coverage is exhausted
  • Medicare Part B copayment
  • Blood (first 3 pints are free)
  • Hospice care (coinsurance or co-payment)
  • Skilled nursing facility care (SNF) coinsurance
  • Part A and Part B Deductibles
  • Foreign travel emergencies
  • Part B excess charges
  • Preventive care coinsurance (Medicare Part B)

Plan G is also a very popular plans for seniors. These plans offer lower premiums than Plan F, and you do a little bit of cost-sharing on the back end of your policy. Many people don’t mind paying the Part B deductible out of pocket in return for the lower premiums that Plan G can give them. It is important to note that Plan F was phased out at the end of 2019. If you were eligible for Medicare prior to 2020, you are grandfathered in and able to get Plan F beyond 2020.

That’s one strategy, but looking at Plan G is a good idea. You can save on premiums and have the confidence that your plan is not being discontinued anytime soon.

Open Enrollment vs Annual Election Periods

Don’t confuse your Medicare Supplement Open Enrollment with the Annual Election Period in the fall. The period that runs from October 15th – December 7th every year is for changing your Part D drug plan or Advantage plan.

Here’s what it’s NOT:

It is NOT a time when you can apply for any Medigap plan and get approved without having to answer health questions. No annual period for that exists. Your only period to do that in most states is the one-time 6-month window that I mentioned above.

In a couple of states of like California and Oregon, there is an annual 30-day period when you can enroll in a Medigap plan without health questions, but ONLY if you already have a Medigap plan and are switching to an equal or lesser plan. It does NOT apply to people who want to switch from no coverage or Medicare Advantage coverage over to Medigap coverage. That kind of switch generally requires you to complete a full application with health questions.

Medigap Costs

Each Medigap insurance company sets their own rates. You can compare plans based on their premiums. Be sure to also look at the plan’s history of rate increases. You want to enroll with a carrier that has competitive rates now and a low rate trend.

There are a lot of consideration when choosing a Medicare Supplement plan. The good news is that you don’t have to search for Medicare plans on your own. At FirstCommunity, we are happy to sit down with you and go over your current situation and see what Medicare plan works best for you. Just give us a call at 256-532-2783 or 256-532-2785 or 1-800-734-7826.


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