Center for a Secure Retirement
Do You Need Supplemental Insurance With Medicare?

Do You Need Supplemental Insurance With Medicare?

Determining your health insurance needs as you approach Medicare age and move into retirement can feel overwhelming. What exactly are your coverage options? What do Parts A and B pay for? Do you need supplemental insurance with Medicare? It's understandable if you're feeling frustrated by all the questions you need answered.

As you look at Medicare plans, you'll want to first consider your own health situation, including current providers, medications, surgical procedures, inpatient care and other associated health needs. It can be helpful to make a list of your upcoming costs so you'll be able to see everything in one place.

For some, Medicare Parts A and B — known as Original Medicare — cover everything they need. For others, it can be a good idea to look into Medicare Supplement insurance, or Medigap, to ensure that all health costs are covered.

Medigap insurance is meant to add an extra layer of coverage, not replace your Original Medicare plan, and you're not obligated to purchase supplemental insurance with Medicare. However, having it can significantly reduce your out-of-pocket health care costs over time.

Let's review the different parts of Medicare and what they cover as well as why you might want to consider a Medicare Supplement insurance policy for additional coverage.

Understanding Medicare Parts A and B

In order to be eligible for Medigap, you first need to be enrolled in Medicare Parts A and B.

Medicare Part A is hospital insurance and covers things like inpatient hospital stays, skilled nursing care, hospice care and limited home health care services. Part A has a yearly deductible ($1,408 in 2020), generally does not have a monthly premium and covers up to 60 days of hospitalization. If you're in the hospital longer than 60 days, the daily copay for your hospital care can become expensive and coverage runs out after 150 days.

Medicare Part B is medical insurance, which covers medically necessary and preventative services such as clinical research, ambulance services and durable medical equipment. Part B has a yearly deductible ($198 in 2020) and premiums are based on your taxable income from the previous two tax years.

With Original Medicare, your costs are covered up to 80% without any additional plans needed.

Do You Need Supplemental Insurance With Medicare?

If certain health conditions or coverage needs have you concerned about how you'll pay for the remaining 20% of costs, then you'll want to consider obtaining a Medigap policy.

Medigap insurance is provided through private insurance companies and pays for some or all of the associated health care costs that aren't included in Original Medicare coverage. Let's say you've left your employer's health insurance plan and are already enrolled in Medicare. Your biggest concern might be your total out-of-pocket costs, especially if you have a chronic illness or recurring health issue. Medigap can help limit or eliminate your copay, coinsurance and deductibles.

If you need preventative care services, certain Medigap policies can help cover the costs for those as well, in addition to at-home recovery or hospice care services. Or perhaps you want to make sure any potential health issues or emergencies are covered while you're traveling outside of the U.S. If so, you can purchase a supplemental insurance plan that will help pay for those costs, should they arise.

Medicare Supplement insurance plans are standardized, meaning that the benefits of each policy must remain the same across all insurance providers. The only difference will be the cost of the plan. Massachusetts, Minnesota and Wisconsin offer different standardized plans, however, so if you are a resident of one of those states, it's a good idea to research the differences to ensure you're choosing the right policy.

It's important to explore all your health insurance options at your own speed so you can make the right decision for your retirement without feeling overwhelmed. If you have further questions, you can speak to an insurance specialist and learn more about which supplemental insurance plan best fits your financial and health care needs.

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