Original Medicare covers a great deal of medical expenses but it does not cover everything. You may want to look into supplemental insurance (Medigap) to fill the gaps in Original Medicare. Medigap Plans come in a variety of types, usually indicated by letters. How this Medicare supplement insurance is offered varies somewhat from state to state. Like all health insurance, you should be sure to compare plans and consider your situation before signing on.
First of all, Medicare has four basic parts: Part A Medicare, Part B Medicare, Part C (Medicare Advantage Plans), and Medicare Part D (prescription drug coverage). Part A is Hospital Insurance. Part A covers inpatient care in a hospital, skilled nursing facility, hospice, and home health care. Usually Part A covers the following:
- Inpatient care in hospitals including critical access to hospitals, inpatient rehab facilities and long-term care hospitals.
- Inpatient care in a skilled nursing facility (to be a skilled nursing facility a facility has to meet certain criteria under the Social Security Act. This does not include custodial or long term care)
- Hospice care
- Home health care
- Inpatient care in a Religious Nonmedical Health Care Institution, this is an institution that meets the needs of those whose religious beliefs do not allow specific medical treatment.
When it comes to Part A coverage, there are reasons to consider supplemental medical insurance. For example, when you stay overnight in a hospital it isn’t automatically considered an “inpatient” visit. You are not an inpatient until you are admitted with a doctor’s order. Inpatient and outpatient designations matter when it comes to what you pay. Some Medigap plans can cover hospital-related gaps in Medicare (Part A). Among the various Medigap plans, all cover up to 365 additional days after Medicare Part A costs are used up. Percentages covered will vary by plan but some cover 100 percent. Medigap plans all cover the first three pints of blood used in the hospital (which can be quite expensive). They also cover Part A hospice care coinsurance and copayments. Note that Medigap plans do not necessarily cover the Part A deductible. Likewise some do and some do not cover Skilled Nursing Facility coinsurance.
Medicare Part B covers doctors’ services, home health services, outpatient care and other services. This includes some preventative services. Services must be considered “medically-necessary.” That means services you need to diagnose or treat a medical condition also must fall under accepted standards of medicine. Part B can also be used to cover certain preventative services such as flu vaccination. Medigap insurance can be useful for covering gaps in your Part B coverage. For instance, all Medigap plans cover Medicare Preventative Care Part B Insurance copayments. However, few Medigap plans cover the Medicare Part B deductible. Only two of the available plans provide such coverage. Excess Part B Charges are also only covered by two plans you can purchase now.
Medicare Advantage plans are also sometimes called Medicare Part C. These plans are not part of Original Medicare. Medicare Advantage Plans are like HMOs and PPOs (there are less common forms of Advantage Plans as well). They include Part A and Part B and most also include prescription drug coverage (Part D). Medicare pays companies that offer such plans a fixed amount and they abide by rules set by Medicare. When you have a Medicare Advantage Plan, you probably do not want a Medigap plan. It will not pay copayments, deductibles or cost sharing for your Advantage Plan. You cannot buy a Medicare Advantage Plan and a new Medigap plan. You are, however, entitled to keep any existing Medigap plan with a Medicare Advantage Plan. There might be situations where you would want to keep a Medigap plan when you have a Medicare Advantage Plan. It would depend on your coverage and needs.
Medicare Part D is Medicare’s prescription drug coverage. You can get this coverage separately if you have Original Medicare or have it included in a Medicare Advantage Plan as mentioned above. Medigap plans that cover prescription drugs are no longer sold.
As noted earlier there are different Medigap plans, designated by letters A through N. Plans E, H, I and J have not been sold since May 31, 2010 but if you bought one before that date you can keep it. Again, assess closely if you actually need the coverage in your old plan. There is no point in paying for duplicate coverage or coverage you simply do not need.
The gaps that all these plans cover vary from plan to plan but each lettered plan, no matter where it is offered, must offer the same predetermined coverage. They can offer additional coverage but must offer the coverage mandated for each plan. Prices, however, may vary from state to state or even region to region.
Many companies offer Medigap insurance, and even though the lettered plans must offer the same coverage, the costs can vary. What the plans offer are what you are paying for and you should carefully consider all the coverage and whether you will use that coverage. Some plans offer coverage when you travel to foreign countries. Such coverage is useless for a homebody while it would be a wise purchase for a world traveler.
Check your other coverage, your needs, and your costs. Do not be shy about asking questions to your provider. After this you can make an informed decision on a Medigap plan and whether you need one or not.