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About The Plans

How does Medicare supplement insurance work?

While Medicare Parts A and B (also called "Original Medicare") cover some health care costs, they don't pay for everything. That's where a Medicare Supplement Insurance policy may help. Medicare supplement insurance policies (also called "Medigap") from private insurers complement your Medicare coverage. These policies help cover some of your out-of-pocket expenses not paid by Medicare.

Standardized Medicare supplement insurance policy benefits are set by the federal government. That means the basic benefit structure for each policy is the same, no matter which insurance company is selling it to you.

Some plan features are:

  • A choice of policies to meet your needs and budget now and in the future.
  • You're able to keep your own doctor without network restrictions, as long as they accept Medicare patients.
  • Coverage goes with you when you travel in the U.S.
  • You are guaranteed coverage for life.
  • Rates are subject to change. Any change will apply to all members of the same class insured under your plan who reside in your state.

The benefits of a Medicare supplement policy.

Policy costs vary depending on the policy benefits you choose. You may choose among policies that provide a benefit for:

  • Part A coinsurance (and most policies provide a benefit for the Part A deductible)
  • Some of the out-of-pocket costs not paid by Part B (some policies also cover the Part B deductible)
  • Cost of blood transfusions (first 3 pints)
  • Cost of up to 365 extra hospital days after you've used up your Part A benefits
  • Skilled nursing facility coinsurance or copayment
  • Part A hospice/respite care coinsurance or copayment

You pay a monthly premium and some out-of-pocket costs for your Medigap.

So, what is Original Medicare?

Medicare Parts A and B are also called Original Medicare. This part is pretty simple: Medicare is a health insurance program for people age 65 and over, people under the age of 65 with certain disabilities, and people of any age with End-Stage Renal Disease (ESRD).

Are you wondering if you're eligible? Let's take a closer look.

If you're turning 65 you can enroll in Medicare. Enrollment begins three months before the month you turn 65, includes the month of your birthday, and continues for three months after your birth month. Whether that birthday is approaching or if you're already 65, you're eligible if:

  • You (or your spouse) have worked for 10 years in Medicare-covered employment; and
  • You're a U.S. citizen or permanent resident for at least five years.
  • Even if you're not collecting Social Security yet, you're eligible to join at age 65 or later.

If you're under 65 and have a disability you're eligible if:

  • You're a U.S. citizen or permanent resident for at least five years; and
  • You have a disability or End-Stage Renal Disease (ESRD), and you get disability benefits from Social Security or certain disability benefits from the Railroad Retirement Board (RRB) for 24 months.

What is covered by Medicare Parts A and B?

Now that we've reviewed what Original Medicare is and who is eligible, let's take a quick look at exactly what is covered.

Medicare Part A is hospital coverage. It covers:

  • Inpatient hospital stays and skilled nursing facility stays
  • Hospice care and respite care
  • Inpatient care in a religious nonmedical health care institution

Medicare Part B is medical coverage. It covers:

  • Doctor visits
  • Outpatient care, such as lab tests
  • Services not covered by Part A, such as physical therapy
  • Some home health care services, in some cases
  • Some preventive services
  • Durable medical equipment

While Medicare Parts A and B help to cover some of your health care costs, they won't cover everything (you may have to pay copayments, coinsurance, and deductibles). You may want to complement your Medicare coverage. That's where a Medicare Supplement Insurance policy may be able to help defray expenses.

What is Medicare Part C (Medicare Advantage)?

Medicare Advantage plans are Medicare-approved, but offered by private insurers. These Medicare plans combine Part A and Part B, and often Part D prescription drug benefits into one plan. Some Medicare Advantage plans also offer vision, dental, hearing and/or health and wellness programs at an extra cost.

There are a few key things you should know about Medicare Advantage plans:

  • They often require you to pay copays
  • Doctors and hospitals you visit will usually need to be a part of a network
  • You may need a referral to see a specialist

Medicare Advantage plans pay a fixed dollar amount for covered services, but you will still need to pay your Part B premium and (depending on your plan):

  • Part A premium
  • A premium for the Medicare Part C plan itself (some plans have low or no premiums)
  • Copays and coinsurance
  • Any deductibles

Note: If you are enrolled in a Medicare Advantage plan, you cannot also have a Medicare Supplement Insurance policy. If you have a Medicare Advantage Plan, you can still apply for a Medigap policy. You simply have to leave the Medicare Advantage Plan before your Medigap policy begins.

What is Medicare Part D (Prescription Drug Coverage)?

Once you have Medicare Parts A and/or B (Original Medicare), you are able to purchase a Part D plan separately. These plans exist to help cover prescription drug costs. Costs vary from plan to plan, since various Medicare-approved private insurers offer these plans. Part D works with a Medicare supplement insurance policy or on its own, and you can get Part D benefits through some Part C plans.

There are some important things to know about coverage and payment with Part D plans. Each year Part D pays for:

  • Covered prescriptions included on the formulary (a list of covered drugs based on the plan you select)
  • Varying shares of other covered prescription costs until you reach the coverage gap
  • Most of the other covered prescription costs after you are out of the coverage gap

You will be responsible for paying:

  • A monthly premium
  • Varying shares of covered prescription costs until you reach the coverage gap
  • Varying shares of the cost of generic and brand name drugs while in the coverage gap
  • Low (or sometimes zero) copays or coinsurance for prescription drug costs after you are out of the coverage gap

Now that you've gotten an overview of the different types of Medicare and Medicare-related insurance plan options available, let's see how a Medicare Supplement Insurance policy may be able to help you out.