If you’re over the age of 65 and eligible, Medicare can provide relatively low-cost coverage that makes sense. There are still gaps, and some people choose to purchase supplemental insurance to cover what Medicare doesn’t. These supplemental policies are often referred to as “Medigap”.
To be eligible for these supplemental policies, you must already be enrolled in Medicare Parts A and B. Part A covers hospitalizations, while Part B covers most routine doctor visits. Part C is an alternate package that combines what Medicare offers into an HMO policy. Medicare Part D, which is not necessary to be eligible for Medigap policies, helps cover the cost of prescription medications.
Parts A and B of Medicare function similarly to most other health insurance plans, and may be sufficient for many people 65 and older. As with other non-HMO insurance policies, you pay a premium for your coverage and then are eligible to have Medicare pay for certain medical bills once you’ve met your yearly deductible.
How Medicare Supplement Insurance Can Help
Under Medicare Part B, you choose your own providers and seek the healthcare you want. Medicare then assigns a value of what they consider a “reasonable price” for the service you received – for example, an X-ray or a wellness visit to the doctor – and pays 80% of that value, while you are then responsible for paying the remaining 20%. For example, if a doctor charges $800 for a series of tests, but Medicare only considers $500 a reasonable price, they will pay $400 (80% of $500). In most cases, you should only be required to pay the remaining $100 (20% of $500).
The idea of a Medigap policy is that it is provided through private insurance companies and covers the portions that Medicare does not pay. In exchange for a monthly premium, the policy helps to cover your deductibles and the 20% for which you are responsible. Depending on whether you have Part D, you could also be eligible for a supplemental insurance policy to help cover the cost of your prescription medications.
Is it worth the additional cost?
Medicare supplemental insurance operates from the same basic principle as every other insurance policy: you pay for something you hope you never need, and it pays off when you do. Medigap policies are more likely to be worth their premiums if you anticipate regular doctor visits and frequent medical care, although what lies ahead in life can be difficult to predict. If you know you have a preexisting condition that will necessitate ongoing medical care and intervention, then purchasing a supplemental policy is advised.
Although Medicare supplemental insurance policies are provided through private insurance companies, they are regulated by the government. Standard packages are available, labeled Plans A through N, though premiums and other specifics vary between companies. The first step in considering a Medigap plan is to determine which package makes the most sense for you. A qualified insurance representative can discuss your unique situation with you and help you to reach an informed decision. At The Harrin Group in San Antonio, Texas, we are happy to help and guide you, and to provide you with peace of mind.
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