Medicare is great. Having this program in place means that seniors don’t have to worry about getting the basic healthcare that they need. But it’s also not a perfect program. If you’re getting ready to enroll, you might be thinking that you’ve paid into the pot your whole working life and now you can just sit back and enjoy the benefits, but it’s not that simple. “Basic care” is sometimes not enough, and Medicare Parts A and B are probably going to cost you more than you thought they would. There are gaps in Medicare coverage that can take you by surprise if you’re not prepared for them, but luckily, there is a cost-effective way to get more coverage for yourself: a Medicare Supplement Plan.
The Gaps in Part A and B
Just as with the private insurance you get through your employer or through the ACA Marketplace, Medicare has premiums, copays, coinsurance, and deductibles.
- Part A: Medicare Part A covers hospital care, and it’s often thought of as the “free” part of Medicare. This is because most people do not pay a monthly premium for Part A, as long as they worked and paid taxes in the U.S. However, there are actually out-of-pocket expenses associated with Part A. While there is generally no monthly premium, there is a deductible of $1,048 for 2020.
In addition, if you require more than a 60 day stay in the hospital, you will begin paying an expensive daily copay for your treatment. Once you reach 150 days, your coverage runs out completely and you will be left to pay your bills out-of-pocket.
- Part B: Part B covers medically necessary services and supplies, and it more closely resembles what you might think of as traditional health insurance. While some things are “free,” like preventive services (including flu shots, mammograms, cancer screenings, glaucoma tests, diabetes screenings, and yearly “wellness” visits), there are a lot of out-of-pocket costs associated with Part B. First of all, there is a monthly premium, which for 2020 is $144.60, but could be higher if you make above a certain amount. In addition to your premium, there is an annual deductible of $198 for 2020, and a cost-sharing requirement for most non-preventive services.
The cost-sharing requirement for Medicare can quickly add up. After you’ve met your deductible, Part B will cover 80% of many medically necessary services and supplies, leaving you to pay the remaining 20%. This may not sound too terrible when it comes to simple doctor’s visits, but consider what the cost would be for expensive long-term treatments like chemotherapy. And it gets worse. There is one significant way that Part B differs from private health insurance: there is no cap on how much you have to pay, so you pay that 20% forever. Having a chronic illness could mean ending up with huge medical bills, even though you have Medicare coverage.
Medicare Supplement Plans to the Rescue
If you’re worried about the costs of Original Medicare, then the best thing you can do is get a Medicare Supplement Plan. These plans, also known as Medigap, will help fill the gaps in Parts A and B, and will give you peace of mind knowing that you won’t spend your retirement saddled with medical debt.
There are 10 Medicare Supplement Plans, each named with a different letter, and each offering different coverage at different price points. They help with things like deductibles, copays, and coinsurance, and some will even cover you when you travel overseas. With these plans, you can see any doctor that accepts Medicare patients, and they are guaranteed renewable for life, so you will never lose coverage due to changes in your health. Having a Medicare Supplement Plan is really a no-lose situation.
A few of the things that a Medicare Supplement Plan can help with include:
- Medicare Part A coinsurance hospital costs after initial Medicare coverage is exhausted
- Medicare Part B copayment
- Blood (first 3 pints are free)
- Hospice care (coinsurance or co-payment)
- Skilled nursing facility care (SNF) coinsurance
- Part A and Part B Deductibles
- Foreign travel emergencies
- Part B excess charges
- Preventive care coinsurance (Medicare Part B)
How to Get a Medicare Supplement Plan
Having a Medicare Supplement Plan is pretty much a no-brainer, but it does require a little bit of research and planning on your part. There’s a simple solution to the research part: talk to one of BiG’s knowledgeable agents. There’s a lot to learn, so come to us with your questions, and to find out more about each plan and how to purchase them.
As for planning, you simply need to know when is the best time to enroll in a plan. You can technically purchase a plan at any time after you turn 65 and enroll in Medicare, but you should buy it during your 6-month Medigap Open Enrollment Period, which starts the month that you turn 65 and are enrolled in Medicare. This is your only chance to get a plan without having to undergo the medical underwriting process. If you purchase during this time, you cannot be denied coverage due to pre-existing conditions. If you purchase after this time, you could be turned down for a plan, or you could end up paying a lot more.
So, do you need a Medicare Supplement Plan? Well, you’re not required to have one, but given the gaps in Parts A and B and the benefits of these plans, it seems unwise not to. We know it can seem like a lot to sort through (10 plans?!), but try to look at the amount of options as just another advantage of Medicare Supplement Plans – you’re bound to find one that fits your budget and your needs. And you certainly don’t have to go it alone. BiG can break down all of your options and give you quotes on the best plans for you, so you can go back to enjoying your retirement, worry-free.