Do I Really Need Supplemental Insurance with Medicare?
When it comes to Medicare, supplemental insurance usually refers to Medicare Supplement plans. Also called Medigap plans, these plans help cover the costs that Original Medicare doesn’t pay. Original Medicare covers 80% of costs once you’ve met your Part B deductible. This leaves you responsible for the remaining 20% (your coinsurance).
While not required, a Medicare Supplement plan definitely has its upsides. Your out-of-pocket costs can add up, and a Medigap plan can save you money. Plus, some Medicare Supplement plans have additional benefits that could come in handy.
Key takeaways:
You don’t need a Medicare Supplement insurance plan.
We often recommend enrolling in a Medicare Supplement plan to save money, and it’s generally best to enroll when you first enroll in Medicare.
Benefits of having a Medicare Supplement plan
There are 10 different types of Medicare Supplement plans—each with its own level of coverage. While specific coverage details may vary with the plan you choose, having a Medicare Supplement plan will always lower your deductible and out-of-pocket costs.
Lower coinsurance, copayments, and Part A deductible
The main benefit of Medicare Supplement insurance is to fill in the gaps left from Original Medicare. If you only have Part A and Part B, you’ll still need to pay for copays and 20% coinsurance. Most Medicare Supplement plans help cover copays and coinsurance for Part A and Part B. They also help pay for your Part A deductible for hospital stays.
No prior authorization requirements or provider networks
Original Medicare and Medigap plans don’t restrict you to provider networks or slow your access to care with prior authorization requirements. This means you have more freedom to see the providers you want and get care when you need it.
Plan standardization
All plans of the same letter type (e.g., all Medigap Plan Ns) are identical in coverage. Pricing may be different based on personal factors and the policy’s pricing structure, but the coverage remains the same.
Together, lower out-of-pocket costs, reliable and quick access to care, and standardized plans, make healthcare costs more predictable when you have a Medicare Supplement plan.
Cost scenarios with and without Medicare Supplement insurance
Insurance lingo can be complicated, so we’ve provided examples of how Medicare Supplement insurance works to save you money. See what your costs would be for common procedures with and without a Medicare Supplement Plan G, the most commonly recommended Medicare Supplement plan.
Cataract surgery
Estimated cost: $3,500
Your coinsurance:
With Medicare Supplement Plan G: $0
Without supplemental insurance: $700
Hip replacement surgery
Estimated cost: $30,000
Your coinsurance:
With Medicare Supplement Plan G: $0
Without supplemental insurance: $6,000
With a Plan G, once you reach your Part B deductible, you typically won’t have to pay anything for Medicare-approved services or medical equipment. While you have to pay a monthly premium, the plan minimizes your out-of-pocket costs and gives you more financial predictability.
Other coverage options
Part of what makes Medicare confusing is that there are different insurance types. Within each type of coverage, there are also several plan types—and there’s no best Medicare plan for everyone. The four types of coverage are:
Original Medicare (Part A and Part B)
Medicare Advantage (Part C)
Medicare Supplement
If you have Original Medicare, you can add a prescription drug plan and/or a Medicare Supplement plan. If you enroll in Medicare Advantage, you cannot enroll in Original Medicare or a Medicare Supplement plan. Most Medicare Advantage plans include prescription coverage, but you can choose to enroll in a separate prescription drug plan if you have Medicare Advantage.
Prescription drug plans
Neither Original Medicare nor Medicare Supplement cover prescriptions. To make sure all of your healthcare needs are covered, you should look at Part D (prescription drug) plans. Prescription drug plans can vary, so make sure you find one that covers all of your prescriptions and limits your costs. We can help with that!
Medicare Advantage
Some people also choose to move from Original Medicare to Medicare Advantage. Medicare Advantage plans are a private, bundled alternative to Original Medicare. They provide additional benefits such as routine hearing, vision, and dental care. Because they’re run by private companies, Medicare Advantage plans have varying out-of-pocket costs depending on the plan and insurance provider. Compared to Medicare Advantage, Medicare Supplement plans have standardized coverage and costs so you know what to expect.
How to enroll in Medicare Supplement insurance
The best time to enroll in a Medicare Supplement plan is during your Medigap Open Enrollment Period. There’s a lot to consider when finding the right types of supplemental insurance for you. Get in touch with a licensed Medicare Advisor to enroll in the best Medicare coverage for your health and financial needs. Call us at 855-900-2427 or book an appointment to get started.