What is Medicare Supplement Insurance?
Medicare does not pay for everything. Medicare beneficiaries also pay a portion of their medical expenses, which includes deductibles, copayments, services not covered by Medicare, and excess charges when doctors do not accept assignment.
Medicare Supplement Insurance (Medigap)
Medicare Supplement Insurance is also called Medigap insurance because it covered the "gaps" in Medicare benefits, such as deductibles and copayments. Medicare Supplement insurance is a private health insurance policy purchased by a beneficiary. Federal and state law regulates Medicare Supplement policies.
Only a Medicare Supplement policy, or a Medigap policy, will help fill gaps in Medicare benefits. Other kinds of insurance may help you pay out-of-pocket health care costs, but they do not qualify as true Medicare Supplement insurance. For example, an employer retirement health plan may pay for prescriptions, vision and dental services, but it may not pay for Medicare deductibles and copayments. Therefore, it is not a true Medicare Supplement policy because it does not coordinate benefits with Medicare.
Do I Need a Medicare Supplement Policy?
The answer to this question depends on one factor. Do you know you will always have adequate income and assets to cover all medical costs NOT covered by Medicare, such as deductibles, copayments, or non-covered services? If you are not sure the answer is yes, or if you do not want to risk it, you should explore your options for supplementing Medicare.
Standard Medicare Supplement Coverage
Although the benefits are the same for each standard plan, the premiums may vary greatly. Before purchasing a supplement policy, determine how the company calculates its premiums. An insurance company can calculate premiums one of three ways.
- Issue Age: If you were 65 when you bought the policy, you will pay the same premium the company charges people who are 65 regardless of your age.
- Attained Age: The premium is based on your current age and will increase as you grow older.
- No Age Rating: Everyone pays the same premium regardless of age.
Medicare SELECT Insurance Policies
Medicare SELECT policies are a type of Medicare Supplement insurance sold by a few private insurance companies. A Medicare SELECT policy is one of the standardized supplement policies. It differs from Medicare Supplement insurance because you are expected to use a network of hospitals associated with the insurance company. In return you will usually pay lower premiums. Also, in order to enroll in a Medicare SELECT plan, you must live within the service area of a network facility.