To guard against sky-high medical expenses, some seniors purchase Medicare Supplement plans. But those also come at a price, and understanding the many plans and options is a daunting task.
What Are Medicare Supplement Plans?
In addition to the out-of-pocket costs associated with Original Medicare (Parts A and B), there are many essential services—like dental, hearing, and vision—that Medicare doesn’t cover. Medicare Supplement plans pick up some of those costs, potentially saving you thousands. There are two ways to supplement original Medicare coverage:
Original Medicare plus a Medigap planA Medicare Advantage plan
Medicare Advantage Plans
Also called Medicare Part C, Medicare Advantage plans bundle Medicare Parts A and B with services Original Medicare doesn’t cover. Medicare Advantage plans work similarly to private health insurance and are offered through private insurance companies that are contracted with Medicare.
Medigap Plans
Medigap plans are also sold through private insurance companies. Instead of providing comprehensive coverage (like Medicare Advantage plans), Medigap insurance simply covers your out-of-pocket costs from Original Medicare coverage, and nothing extra.
The Cost of Medicare Supplement Plans and Are They Worth It?
The most important thing to remember about traditional Medicare is this: There is no limit on your out-of-pocket costs. Consider these facts from a recent West Health and Gallup report, The U.S. Healthcare Cost Crisis:
7.5 million seniors cannot afford a prescription medicine recommended by their doctor. Over the past year, seniors reported pulling an average of $3,521 from long-term savings to pay for healthcare.
A Medicare Supplement plan steps in and pays for any coinsurance you owe, and some plans will pay for your traditional Medicare deductible. Could you save with a Medicare Supplement plan? Take a look at original Medicare costs for 2020: Money isn’t the only reason to consider a Medicare Supplement plan. Additional coverage reduces stress and worry, contributing to peace of mind and long-term health. The same West Health and Gallup survey found that 77% of seniors express anxiety over healthcare costs, and 10% have skipped necessary treatment due to cost.
How Much do Medigap Plans Cost?
Medigap plans offer various levels of coverage. Premiums vary by plan, insurance company, and location. For example, here are the costs a resident of Naples, Florida could expect to pay for a Medigap plan back in 2020 (from lowest premium to highest): For each plan, you must still pay the Medicare Part B premium of $144.60. And remember, Medigap plans don’t cover prescription drugs.
How Much Do Medicare Advantage Plans Cost?
Many Medicare Advantage plans have no-cost premiums. In fact, about 81 percent of Medicare enrollees had at least one option for a $0 premium Medicare Advantage plan, according to data from the Kaiser Family Foundation. Medicare Advantage plans are similar to private insurance. In addition to a yearly premium, you’ll be responsible for your Medicare Part B deductible, copays, and coinsurance. Medicare Advantage plans do limit your yearly out-of-pocket expenses. A sample cost breakdown for a senior in Phoenix, Arizona might look like this:
How Do I Choose a Medicare Supplement Plan?
To choose between the many options for Medicare Advantage plans and Medigap plans, carefully consider the following:
BudgetRisk toleranceHealth concernsDesired physicians/hospitalsOther coverage you may havePrescription drugs (to estimate costs)Travel (some plans offer out-of-country coverage)
Selecting a Medicare Supplement plan requires careful comparison—but you don’t have to go it alone. A knowledgeable insurance agent can help you select an affordable Medicare Supplement plan that meets your needs and your budget. Each Medicare plan and insurance product we feature has been independently selected and reviewed by the Medicare Expert USA team. If you make a purchase using the links included, Parade.com may be compensated. Next up, here’show to be a good caregiver and take good care of yourself, too.
