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Medicare Supplemental Insurance

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Medicare Supplemental Insurance

It’s time for Medicare. In most cases this means that you are turning 65. You are now entitled to the benefits that you have been paying for your entire working life. This is a crucial time to make decisions on your healthcare. It’s nearly impossible to make these decisions if you don’t understand how exactly Medicare works. There is an exorbitant amount of information available, and unfortunately almost as much misinformation.  So what’s next?

You may have heard of Medicare Part A and B. You are entitled to Medicare Part A (Hospital Coverage) at no cost if you have paid Medicare taxes for more than 30 quarters.  There will a premium for your Part B.  The standard Part B premium is $134, but you could pay more based on income. There is a chart to determine what your Medicare Part B premium will be: https://www.medicare.gov/your-medicare-costs/part-b-costs

Now you are enrolled in Medicare Parts A & B.  Done? Not quite. Medicare A & B will only cover 80% of your medical costs. You will need something to cover the other 20%. This can be done by enrolling in a Medicare Supplement or a Medicare Advantage plan. Which option is best for you? That depends on your specific situation and healthcare needs. There is no one size fits all plan.

You may have even heard that you need Plan F, because it is the “Cadillac” of supplement plans.  However, Plan F is going away in 2020.(2) https://www.kiplinger.com/article/retirement/T039-C001-S001-two-medigap-plans-to-be-phased-out.html

Should this be a concern? No. Plan G has always been the most cost-effective plan in most areas. The only difference between Plan G and Plan F is Plan F covers the Part B Deductible. The Part B Deductible is $183 and the difference in premium you save by enrolling in Plan G over Plan F is more than that in most areas.

Now you are enrolled in Medicare Parts A & B.  Done? Not quite. Medicare A & B will only cover 80% of your medical costs. You will need something to cover the other 20%. This can be done by enrolling in a Medicare Supplement or a Medicare Advantage plan. Which option is best for you? That depends on your specific situation and healthcare needs. There is no one size fits all plan.

You may have even heard that you need Plan F, because it is the “Cadillac” of supplement plans.  However, Plan F is going away in 2020. https://www.kiplinger.com/article/retirement/T039-C001-S001-two-medigap-plans-to-be-phased-out.html

Should this be a concern? No. Plan G has always been the most cost-effective plan in most areas. The only difference between Plan G and Plan F is Plan F covers the Part B Deductible. The Part B Deductible is $183 and the difference in premium you save by enrolling in Plan G over Plan F is more than that in most areas.

There are 10 Standardized Medicare Supplement plans, also known as Medigap plans.

https://www.medicare.gov/supplements-other-insurance/how-to-compare-medigap-policies

Not all plans are offered in all states by all insurance companies. The most sold Medicare Supplement plans are F, G and N. These plans allow for the most predictable out-of-pocket costs throughout the course of the year. Plan F you pay your premium and you won’t have any co-payments for Medicare covered services.

This is the same for Plan G, except for the Part B deductible of $183 is paid first. Plan N covers the same as G but there will be copayments for doctor and ER visits.

So now you have Medicare A&B and have selected a supplement plan. Done? I wish you were, but not quite. No Medicare Supplement plan covers prescription drugs so you will need a Stand Alone Part D plan. There are numerous carriers that offer these plans. They cover various prescriptions at varying costs.  Again, there is not a one-size fits all plan. The plan that best fits your needs will be based on the prescriptions you take.  There are databases where you can input your prescriptions and it will generate the most cost-effective options.

Your most comprehensive coverage will be to have a Medicare Supplement Plan F or G and a stand-alone prescription drug plan.  The national average for a Plan F premium is $183.67 per month and Plan G is $148.83 per month. (Weiss Ratings Medigap)  Prescription plans will cost anywhere between $16 to $100 depending on the prescriptions you’re taking.  Keep in mind these premiums will be an addition to the Medicare Part B premium.  Medical costs will be very predictable after paying these premiums, which is very appealing to many. There are also no networks to consider if you choose a Medicare Supplement plan. You can see any doctor anywhere, as long as they accept Medicare.

What if you can’t afford the premiums?

Don’t worry; you can still get a plan that will protect you from the 20% exposure that Medicare doesn’t cover.  These are Medicare Advantage plans and are often $0 premium plans. You will still have to pay your Medicare Part B premium to enroll in an Advantage plan. However, there are plans in some areas that will also rebate your Part B premium, which means you could be paying as low as $30 per month for full coverage insurance. The downside to these plans is they are co-payment/co-insurance based and use networks. Most Medicare Advantage plans are $0 deductible and also include prescription coverage. The MOOP (Maximum Out-of Pocket) for these plans can be up to $6700 per the year.  Depending on your situation, these can be a very good option for you as they also include additional benefits i.e. dental, vision, gym memberships etc. that original Medicare doesn’t cover.

Why is it so important to find the most suitable plan when you’re first eligible for Medicare?

This may be the only time that you have Guaranteed Issue (GI) rights to purchase a Medicare Supplement plan. GI means you don’t have to answer any health questions and all pre-existing conditions are covered.  You also won’t pay a higher rate if you do have pre-existing conditions.  If you do have health issues, you may not be approved for a Medicare Supplement anytime outside of your GI period. https://www.medicare.gov/supplements-other-insurance/when-can-i-buy-medigap

Do you have any options if you are already in a Medicare plan and believe you are paying too much?

Yes. You can apply for less expensive Medicare Supplement plans any time throughout the year. You also have the opportunity to enroll into a Medicare Advantage plan during the Annual Enrollment Period, which is from October 15 – December 7th

To say the least, there are many options available and it can be overwhelming, but it doesn’t have to be. There are plenty of good resources to find all the information you need to help you make the most cost-effective decision based on your individual needs.  If you rather use a professional, a good, experienced independent advisor can let you know ALL of your options, and your best option in under an hour.

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What is COVERED by Medicare supplement?

  • Part A coinsurance, and most plans pay the Part A hospital deductible
  • Cost of 365 extra hospital days after you’ve used up your Part A benefits

About 20% in out-of-pocket expenses not paid by Medicare Part B for doctor and outpatient medical expenses (after the annual deductible is met)

Benefits and costs vary depending on the plan you choose.

Medicare Supplement Insurance Provides

Choice

Choose any hospital or doctor that accepts Medicare patients

Control

Visit any specialist that accepts Medicare patients, with no referrals

Freedom

Coverage that goes with you anywhere in the U.S. when you travel

Flexibility

Choose from a number of standardized plans

Value

Help with some out-of-pocket medical expenses

Already 65?

Apply anytime.

Medicare Supplement Benefits

Medicare Supplement Benefits side-by-side view of all 10 standardized plans
Medicare Supplement Benefits A BCDF*GKLMN
Medicare Part A coinsurance and hospital costs up
to an additional 365 days after Medicare benefits are exhausted
YesYesYesYesYesYesYesYesYesYes
Medicare Part B coinsurance or copaymentYesYesYesYesYesYes50%75%YesYes**
First 3 Pints of bloodYesYesYesYesYesYes50%75%YesYes
Medicare Part A hospice coinsurance or copaymentYesYesYesYesYesYes50%75%YesYes
Skilled Nursing Facility (SNF) coinsuranceNoNoYesYesYesYes50%75%YesYes
Medicare Part A DeductibleNoYesYesYesYesYes50%75%50%Yes
Medicare Part B DeductibleNoNoYesNoYesNoNoNoNoNo
Medicare Part B Excess ChargesNoNoNoNoYesYesNoNoNoNo
Foreign Travel Emergency (Up to Plan Limits)NoNo80%80%80%80%NoNo80%80%
Out-of-Pocket Limit***NoneNoneNoneNoneNoneNone$5,240$2,620NoneNone
*Plan F is also available in a high-deductible version. With the high-deductible Plan F, you pay for all Medicare-covered costs until you reach the deductible of $2,240 in 2018 before your Medigap plan pays anything.
**Plan N pays 100% of the Medicare Part B coinsurance. There are a few exceptions: Certain office visits may require a copayment of up to $20; and emergency room visits that don’t result in your being admitted as an inpatient may require a copayment of up to $50.
***Once you have reached the annual out-of-pocket spending limit and your Medicare Part B deductible, your Medigap plan pays 100% for Medicare-covered costs for the remainder of the calendar year.

COMPARISON CHART BENEFIT EXPLANATION

  • Medicare Part A Coinsurance and Hospital Costs: For most hospital stays, Medicare pays all of the first 60 days except for a deductible, all but $329 per day of the 61st through the 90th day, all but $658 per day of the 91st through the 151st day (one time), and nothing after the 151st day. All plans pay for these copays as well as 100% of an additional 365 days.
  • Medicare Part B Coinsurance or Copayment: Generally, Medicare pays 80% of these costs. All plans pay for some or all of the remaining 20% as indicated on the comparison chart.
  • Blood, First Three Pints: All plans pay for some or all of the fist three pints as indicated on the Comparison Chart. Medicare pays 100% of any additional blood needed.
  • Part A Hospice Care Coinsurance or Copayments: All plans pay for some or all of the Medicare copayment or coinsurance as indicated on the  Comparison Chart. Medicare pays for all remaining approved hospice care costs.
  • Skilled Nursing Facility Care Coinsurance: This is a facility that handles the required daily involvement of skilled nursing or rehabilitation staff. Examples of skilled nursing facility care include intravenous injections and physical therapy. Medicare pays all of the first 20 days, all but $164.50 per day of the 21st through the 100th day of approved costs. Medicare pays nothing after the 100th day.  The plans pay all, some or none of the first 100 days deductibles or copays as indicated on the Comparison Chart.
  • Part A Deductible: This is a hospital stay deductible. The amount in 2017 is $1316 per stay. The plans pay for all, some,  or none of the deductible as shown on the Comparison Chart.
  • Part B Deductible: This is a yearly deductible you must pay before receiving any covered Part B benefits like doctor visits and most other outpatient services. For 2017 this deductible is $183. Only Plans C and F pay for this deductible as indicated on the Comparison Chart.
  • Part B Excess Charges: This is an amount that a health care provider is allowed to charge above the Medicare approved amount.  Only  Plans F and G  pay this benefit as shown on the Comparison Chart.
  • Foreign Travel Emergency: This is medically necessary emergency care not covered by Medicare. The benefit is generally 80% to a lifetime maximum of $50,000 with a $250 deductible. Some plans pay this benefit as indicated on the Comparison Chart.
Medicare Supplemental Insurance
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