Is Medicare Supplement Insurance Right for You?

Every day, nearly 10,000 people in the United States celebrate their 65th birthday, adding to the nation’s growing population of more than 54 million seniors.

The vast majority of these older adults age 65+ will have access to Medicare. Of all Medicare beneficiaries, 54.5% are enrolled in Original Medicare, which includes Medicare Parts A and B.

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Facts on Original Medicare

Medicare Part A is hospital insurance. It includes hospital care, home health care, skilled nursing care, surgery, and other inpatient health services.

Meanwhile, Medicare Part B covers a range of medically necessary services and preventive services—including lab tests, vaccinations, clinical research, ambulance services, durable medical equipment, mental health care, and other outpatient services.

However, there is a long list of things that are not covered by Original Medicare – such as long-term care, dental care, vision care, foot care, hearing aids, and more. In addition, both Medicare Parts A and B come with cost-sharing fees and other out-of-pocket costs that you will have to cover yourself.

For example, even though you don’t have to pay a monthly premium for Medicare Part A, you are still responsible for each benefit period and all co-payments per benefit period.

Similarly, Part B comes with a monthly premium of at least $170.10 (and up to $578.30, depending on your income) — in addition to the $233 annual deductible and 20% coinsurance split. These are all costs that you must pay out of pocket before Original Medicare pays anything.

What is Medicare Supplemental Insurance?

For these reasons, a March 2022 report by the Department of Health and Human Services (HHS) estimated that 32.9% of original Medicare enrollees also have Medicare supplemental insurance.

Commonly known as Medigap insurance, Medicare Supplements are self-purchased private health plans that provide coverage for health services not covered by original Medicare. Depending on the Medigap plan you purchase, you may receive coverage for some or most of the out-of-pocket costs associated with Medicare Parts A and B.

You can shop for a Medigap plan at Medicare.gov, contact your state’s Health Insurance Assistance Program (SHIP), or buy directly from health insurance companies. United Healthcare (UNH 0.57%), the human (HUM 0.80%)or song (Now highness) (Theory 2.39%).

Regardless of where you get your Medigap insurance, all plans are standardized, and you can choose from eight different plans lettered A through N. There used to be 10 plans, but Medigap plans C and F have been discontinued and are no longer available to beneficiaries. Who became eligible for Medicare starting January 1, 2020.

Some benefits are common to all supplemental insurance plans. For example, each Medigap plan covers Medicare Part A co-insurance costs and extends hospital coverage for an additional 365 days after Medicare benefits end. However, coverage of other items such as coinsurance for skilled nursing care or the Part B deductible will vary depending on the Medigap plan you choose.

As a result, it is difficult to say how much your Medigap plan will cost because pricing will vary significantly based on your plan type, insurance provider, state, age, marital status, and other factors. Generally, however, premiums for Medicare supplemental insurance range between $50 and $500 per month, while the national average monthly premium stands at about $150.

Do you need Medicare supplemental insurance?

While Medicare supplement insurance isn’t cheap, it can be right for seniors who expect to be heavy users of healthcare. Medigap can also come in handy if you want coverage for services not covered by Medicare.

In short, Medigap can help lower your out-of-pocket healthcare costs in general. Some Medigap plans — like Plans K and L, for example — limit annual out-of-pocket spending on covered services to $6,620 and $3,310, respectively, in 2022.

Of course, it’s no surprise that Medigap plans with more comprehensive coverage will also come with higher monthly premiums, so you should carefully weigh the trade-offs between heftier premiums and more comprehensive coverage.

That said, not all Medicare beneficiaries need a self-purchased Medigap plan. In fact, the same HHS report notes that a slim majority — about 51.1% of beneficiaries — do not have Medigap insurance.

Because they have other Forms of supplemental coverage such as Medicaid, Tricare, or an employer-sponsored retiree insurance plan. If you’re part of this group and already have supplemental coverage, you probably don’t need to buy a Medigap plan with your own money.

On the other hand, about 15.9% of original Medicare enrollees have no supplemental coverage at all. If you are healthy and don’t think you need to use many health services, you can go without Medigap insurance. After all, it’s not mandatory, and forgoing a self-purchased supplemental plan means saving thousands of dollars per year.

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