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Understanding Medicare Supplement Plans

When people plan for retirement, they may look ahead to their 65th birthday as the marker for when Medicare kicks in and their health care premiums ease up.

But as anyone Medicare eligible knows, Medicare isn’t a no cost ride.

Although Original Medicare, paid for by the federal government, provides hospital insurance at no cost for older adults.

Original Medicare consists of Part A (hospital) and Part B (medical). Although Part A is paid for by the federal government and provides hospital insurance at no cost for Medicare eligible individuals, your Part B will still have costs associated with it. These costs include some out-of-pocket costs, including 20% coinsurance on doctor visits and other Part B services. Your Part B will have a premium, unlike Part A, and it’s not available to all consumers – which we can explain in detail when you speak to one of our licensed insurance agents.

This is where Medicare Supplement Insurance comes in.

Also known as Medigap, this supplemental coverage is available to purchase through a private insurer, and you can use it to help pay your out-of-pocket medical expenses.

Like any other aspect of Medicare, Medicare Supplement Plans require some navigation in order to make informed choices. Here’s a guide to what you need to know.

medicare supplement plans

Medigap vs. Medicare Advantage

You might be wondering: Do I need supplemental insurance if I have Medicare?

According to AARP, only 10% of beneficiaries rely solely on the Medicare program to cover their health care needs; that means the other 90% is using some sort of supplemental coverage to help pay for medical expenses.

People usually do this in one of two ways: Medigap (Medicare Supplement Insurance), or a Medicare Advantage Plan.

You can also pair Medicare with other health insurance, such as your employer’s group plan or Medicaid coverage.

So what is the difference between Medicare Supplement and Medicare Advantage Plans?

Medicare Supplement Plan:

Since Medicare Part B leaves you to pay 20% of the costs for doctor visits and other medical services, a Medicare Supplement Plan — Medigap — is designed to fill in the “gaps” by paying for copayments, coinsurance and deductibles. This type of insurance is available for purchase through private companies.

Medicare Advantage:

This is an alternative to Original Medicare. Since Advantage plans bundle Medicare Part A (hospital insurance), Part B (medical insurance for doctor visits) and often Part D (prescription coverage), Medicare Advantage is also known as Medicare “Part C.” Most Advantage plans provide additional benefits original Medicare doesn’t include, such as vision, hearing and dental.

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