Medicare Supplement plans, also known as Medigap, are health insurance policies sold by private insurance companies. Medicare Supplements are designed to be paired with Medicare Parts A and B to “fill in the gaps” that Medicare does not cover (like copays, coinsurance and deductibles). Many retirees like Medicare Supplements, because they can help protect you from high medical expenses and you rarely receive bills. However, you will likely pay a higher monthly premium for a Medicare Supplement compared to a Medicare Advantage plan.
If you chose to purchase a Supplement, your coverage from both Medicare and your Supplement work together. In other words, Medicare pays its share of approved covered health care costs and then sends the remaining balance to your Supplement insurance company.
Because Medicare Supplements do not offer Part D benefits, you will need to enroll in a stand-alone Medicare Part D prescription drug plan or another form of creditable drug coverage (meaning coverage equal to or greater than Medicare’s minimum standards of coverage).
How Much Do Medicare Supplements Cost?
Many health insurance companies sell Medicare Supplements. However, each plan can vary in levels of coverage and cost. Medicare Supplements’ plan benefits and costs can also change each year, but unlike Medicare Advantage plans, these changes are not tied to Medicare’s open enrollment. Rather, these changes are unique to your plan and insurance company. While the majority of Supplement enrollees do not receive bills for health care expenses, you do pay a monthly premium.
How is a Medicare Supplement Different from a Medicare Advantage Plan?
Supplement plans differ from Medicare Advantage (MA) plans in their benefit structure and the way that your health care is covered. MA plans are a way for you to receive your Medicare Part A, Part B and sometimes even Part D benefits all in one plan. A supplement plan only supplements these benefits—meaning you must receive your Part A, Part B and Part D benefits through another source. Medicare Advantage plans feature “networks,” meaning you typically have a set list of doctors and facilities you can visit and still receive insurance coverage. Medicare Supplements do not have networks, allowing you to visit any doctor, hospital or facility, as long as they accept Medicare.
How Do I Sign Up for a Medicare Supplement?
To apply for a Supplement, you must have Medicare Part A and Part B coverage. You may apply for a Supplement plan while you are enrolled in a Medicare Advantage plan. However, you will need to call the insurance company to cancel your MA plan before your Supplement coverage begins to ensure you aren’t paying for two plans. Every Supplement covers only one person, so if you and your spouse both want Medicare Supplement coverage, you will need to purchase two policies.
Many health insurance companies sell Medicare Supplements. However, each plan can vary in levels of coverage and cost, so be sure to research your options before purchasing a plan.
Medicare Supplements & Prescription Drug Coverage
Because Medicare Supplements do not offer Part D benefits, you will need to enroll in a stand-alone Medicare Part D (prescription drug) plan or another form of creditable drug coverage (meaning coverage equal to or greater than Medicare’s minimum standards of coverage). If you choose not to pair drug coverage with your Supplement, you could be charged a Late Enrollment Penalty (LEP) the next time you try to sign up for a drug plan.
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