Medicare is structured similarly to any health insurance plan in that it has deductibles and coinsurance amounts, or copayments, which are the patient’s responsibility at the point of service. Because many on Medicare are also on fixed incomes, supplemental insurance is a popular way to limit out-of-pocket costs to more predictable amounts that the patient can manage more easily. There are eleven Medicare supplement plans available on the market today. These health plans are also sometimes called Medigap insurance, because they fill in some of the gaps in original Medicare.
Why do you need a Medicare Supplement?
When a Medicare beneficiary is admitted to the hospital, there is a deductible of $1288. If the hospital stay is longer than sixty days in length, there are additional daily charges of $322 for days 61-90 of the hospital stay. If the stay is long enough to require using any of the patient’s sixty lifetime reserve days of hospital care, the daily coinsurance increases to $644. Clearly, without a supplemental plan, a long hospital stay could easily deplete even the most robust savings account! Any Medigap policy will pay the full charges for days 61 and on as standard benefits, as well as covering an additional 365 lifetime reserve days of hospital care. What’s more, nearly all Medigap health policies pay half of, or all of the hospital deductible, so the patient has very little out-of-pocket cost for hospital care.For outpatient care, such as doctors’ visits, Medicare Part B has an annual deductible of $166. After the deductible has been met, Medicare pays 80%, and the patient is responsible for the other 20%. For a surgery or an expensive test, of course, that 20% could be quite pricey. Fortunately, Medicare supplement plans will typically cover the entire 20% balance that remains on any Medicare-eligible claim, so the patient will not have any copays at all. Some plans aim to offer lower premiums, and will not pay the full balance until you have met a high deductible, or an out-of-pocket maximum.There are other details to consider when shopping for Medigap insurance. One of the best features is that all supplement plans let the patient choose any doctor or hospital that accepts Medicare, anywhere in the country, and some even have benefits for foreign travel. While supplement plans are not inexpensive, they can offer freedom of choice, low out-of-pocket cost, and predictability.