As you approach age 65, you have some financial planning to do, whether you’re still working or already retired. Health care is probably at or near the top of your list of expenses as you work out a budget for living on a fixed income. Medicare insurance alone which includes Part A, Part B, and perhaps a Part D drug plan will not cover all your medical expenses.
Many people have continuing employee health benefits as retirees, but for those who don’t, there is a gap that can be unpredictable and expensive. A Medicare Supplement insurance policy can help fill that gap, save you money and even out your cash flow.
What The Plans Cover
Medigap is the short name for the private supplemental plans known as Plan A through Plan N. They do not cover all of your potential health care expenses, but they do pay for your share of covered Medicare expenses to the extent that you choose. The types of payments you are responsible for include:
- Deductibles: the amount you pay before Medicare Part A and Part B begin paying.
- Copayments: the fixed amounts you pay, such as for office visits.
- Coinsurance: your share of charges which is a percentage.
- Part B Excess charges: the amount a doctor can charge beyond the Medicare assignment.
- Blood transfusions: the first three units.
- Emergencies while out of the country: limited foreign benefits.
Some expenses are not covered by Medicare or Medigap. These include things like long-term care, private nursing, dental and vision services, eyeglasses and hearing aids. There are several companies available that offer these policies separately for seniors.
Choosing a Plan That is Right For You
All plans now sold cover Part A and Part B coinsurance, including hospice care, plus another 365 days of hospital care after your Part A benefits are exceeded. Medigap Plans K and L only cover a percentage of those costs, though. Deciding on the best plan really comes down to how much premium you wish to pay each month combined with how many out-of-pockets costs you wish to be subject to.
Although there are ten plans available, three are most widely chosen: Plans F, G and N. These all cover the Medicare Part A deductible, which can be charged multiple times during the year, and the coinsurance for skilled nursing facilities up to 100 days.
Though several different plans are available, because these are the most popular they tend to offer the most coverage for the lowest premiums. You might find a different plan letter that seems to fit your needs better, however often it cost more than Plan F or G with less coverage.
Medigap Plan F – The Most Comprehensive Coverage
Plan F also covers 100 percent of your share of other Medicare-covered expenses. This is a popular plan because you will have no surprises, regardless of how many times you need health care during the year. There are no co-pays, you don’t pay any deductibles, and the coinsurance is paid by the plan in full. It’s obvious why most people on Medigap insurance choose to go with Plan F.
Medigap Plan G – Lower Premiums Than Plan F
Plan G has nearly the same coverage, but the Part B deductible remains your responsibility to pay out-of-pocket. Some people prefer to pay the lower premium for this policy in exchange for the risk of paying this one-time low deductible, since the savings in premium is often more than the cost of the deductible. For people nearing or over the age of 70 Medicare Supplement Plan G is an outstanding choice as the difference in annual premiums compared to Plan F is far greater than the Part B deductible.
Medigap Plan N – A Great Lower Cost Alternative
Plan N does not cover the Part B deductible or the excess physician charges. This plan appeals to people who only go to doctors who accept the Medicare assignment and don’t want to pay for additional coverage.
Choosing a Company
Medicare Supplement insurance is offered by private insurance carriers, so you will have a separate a monthly premium in addition to the one you pay to Medicare for Part B. Since they are individual plans, you and your spouse can each choose a Medigap plan that suits your own health care needs, however you will each have your own policy. Each state has a list of approved insurance companies, many of which you will recognize, such as Blue Cross Blue Shield, Mutual of Omaha, Aflac, and many more.
Each company sets its own premiums. There are several ways that insurance companies determine rates, or set prices for plans, which means you will find different premiums for the same plan, and even varying premiums for individuals within the same plan from the same company. This means you and your spouse could have the same plan from the same company and pay different premiums. All premiums typically go up every year based on how much each company paid out for each plan in the previous year. This is one reason prices can vary for the same plan, so be sure to compare Plan A to Plan A when comparing companies.
The Best Time to Get Coverage
Insurance carriers must accept you into a plan automatically within six months of your eligibility for Part B. After that time period, switching between plans and companies can be done however you will have to partake in medical underwriting of the policy. This simply means filling out the medical questions on a company’s application, as well as things like listing your doctor and releasing your medical records to them depending on the company. Selecting the least expensive plan now does not guarantee that you will always have the lowest price, and we offer an annual review process for our clients to be sure they’re always paying the least amount possible each year for their Medigap coverage.
Medicare Supplement plans are only available to people with Medicare Part A and Part B. Choosing the right plan and working with the right agent can save you money and help stretch your retirement income a little farther by eliminating or smoothing out the bumps from sudden expenses. To compare plans and get quotes enter your zip code below.