Do I Really Need Supplemental Insurance With Medicare?
Are you a Medicare beneficiary? If so, you may want to consider purchasing supplemental insurance, also known as Medigap, to fill the gaps in your coverage. According to a report from AHIP, a national health insurance trade association, about 41% of Original Medicare beneficiaries had Medigap in 2021. For the remaining 59%, Medicare’s “gaps” could potentially result in costly out-of-pocket expenses.
The Costly Gaps in Medicare
Medicare has several gaps in coverage that can lead to significant expenses for beneficiaries who don’t have Medigap. Kelli Jo Greiner, the director of the Minnesota State Health Insurance Assistance Program, explains that these costs can add up to thousands of dollars per year.
While Medigap is not mandatory, it can be a wise investment to cover the gaps in Medicare Part A and/or Part B. It’s important to note that Medigap does not work with Medicare Advantage policies.
Deductibles: The First Gap to Consider
Medicare Part A has a deductible of ,632 in 2024, which beneficiaries must pay before Medicare begins covering inpatient hospital care. Joanne Giardini-Russell, CEO of Giardini Medicare, emphasizes that even a single hospital stay can quickly accumulate this deductible expense. However, most Medigap plans cover the Part A deductible. In fact, some plans with premiums below 6 per month can save you money just based on this benefit alone. It’s worth noting that new Medicare members cannot purchase Medigap plans that cover Part B’s smaller deductible of 0 in 2024.
Coinsurance and Copays: More Out-of-Pocket Costs
After meeting your deductible, you may still have out-of-pocket costs for various Medicare services. For example, most medically necessary outpatient services covered by Part B require a 20% coinsurance payment from the beneficiary. Additionally, Medicare Part A copays come into play after your 60th day in the hospital, starting at 8 per day in 2024 and increasing for longer stays.
All Medigap policies provide at least some coverage for Part A and Part B coinsurance and copays. If you anticipate using a significant amount of healthcare services, this coverage could result in substantial out-of-pocket savings.
No Out-of-Pocket Caps: The Peril of Unlimited Costs
Unlike many other types of insurance, Medicare Part A and Part B do not have maximum out-of-pocket caps. This means that as your copays and coinsurance accumulate, there is no limit to what you could owe. Michael Dayoub, a certified financial planner, warns that relying solely on Original Medicare without Medigap can be perilous due to the lack of an out-of-pocket limit. Purchasing a Medigap policy can help cap your yearly costs and potentially save you money in the long run.
Is Medigap Worth the Cost?
When considering Medigap, it’s essential to understand the associated expenses. The most popular plan, Plan G, can cost between 0 and 0 per month for a 65-year-old enrollee. Premiums can vary based on factors such as plan type, age, location, and sometimes health status.
Given the significant added expense, you might wonder if Medigap is worth it. Joanne Giardini-Russell compares Medigap to car insurance – you pay for it each month, hoping you won’t need it. The decision ultimately comes down to the psychology and peace of mind it provides. Are you willing to pay 0 per month for that peace of mind?
Kelli Jo Greiner emphasizes that beneficiaries are generally satisfied with their Medigap policies. According to her, Medigap is worth the cost if you can afford the premiums along with your Medicare Part B and Medicare Part D prescription drug plan premiums. However, if Medigap is not financially feasible for you, there are other programs available to help with Medicare costs, such as Medicare Savings Programs and Extra Help subsidies.
If Medigap premiums are not affordable, Michael Dayoub suggests considering Medicare Advantage as an alternative. Medicare Advantage plans are comprehensive alternatives to Original Medicare offered by private insurance companies. These plans have out-of-pocket limits, but it’s important to consider trade-offs such as limited provider networks.
Enrollment Time Limits: Don’t Miss Your Chance
If you decide that Medigap is the right choice for you, it’s crucial to be aware of the enrollment time limits. The best and easiest time to purchase a Medigap policy is during your six-month Medigap open enrollment period, which begins when you turn 65 and are enrolled in Medicare Part B.
During this period, insurance companies cannot charge you higher premiums or deny coverage based on your health or medical history. After this window closes, obtaining a Medigap policy can become more expensive or even impossible.
To ensure that you don’t miss out on this opportunity for peace of mind, be proactive and compare your options on Medicare.gov, shop online, or work with an agent or broker to find the best policy for your needs.
This article was originally published by The Associated Press.
