Financial Benefits Of Purchasing A Medicare Supplement Plan
Medicare is a vital component of retirement budgeting because it enables people to afford healthcare and live the healthiest life possible during their golden years.
While Medicare can be a powerful asset to help offset medical expenses, it’s essential to know that it does not pay for all costs, and it has some potent exclusions.
Since there can be noticeable gaps in Medicare coverage, insurance companies created Medicare Supplement Insurance (also known as Medigap) to help pay for expenses not covered by Medicare, including deductibles, co-payments, coinsurance, and more.
Today, we are going to discuss how Medicare Supplement plans can fit into your retirement budget and ultimately help save money on healthcare expenses throughout your golden years.
Medicare At A Glance
It’s essential to understand the primary components of Medicare to see how Medicare Supplement plans can help you save money on medical costs in the long run:
Medicare is a federal health insurance program that is available to people who are 65 or older, and it can extend to certain younger people who have disabilities or end-stage renal diseases.
Many people are automatically enrolled in Medicare, while others need to enroll manually.
There are three main parts of Medicare:
Medicare Part A (Hospital Insurance)
Part A pays for most inpatient hospital stays, care provided by skilled nursing facilities, hospice care, and even some home health expenses.
Most people do not pay a premium for Part A, but if you do not qualify for premium-free Part A, you may be required to pay a monthly fee for it.
Medicare Part B (Medical Insurance)
Part B covers some doctor’s care, outpatient services, medical supplies, and some preventative services.
Most people will pay a monthly premium for Part B and people with higher adjusted gross incomes may end up paying extra, but most fall under the primary premium.
Medicare Part D ( Prescription drug coverage)
Medicare Part D covers some of the costs associated with prescription drugs, including most recommended shots and vaccines.
Using Medicare Supplement Insurance (Medigap) To Cover the Difference
Now that we have a frame of reference for the different components of Medicare, we can see that Medicare covers many expenses, but not all.
People who frequently go to the doctor or have more out-of-pocket medical costs will quickly find that Medicare coverage by itself is not sufficient for all of their medical bills.
This is where Medicare Supplement insurance comes in to bridge the gap and alleviate some of the financial burden incurred by medical expenses.
Medicare supplement plans are available in 47 States with up to 10 standardized plans ranging from Plan A to Plan N (Note that plans E, H, I, and J are no longer available).
*Do not confuse Medicare Supplement Plan A with Medicare Part A; although they look similar, they are not the same
Benefits Of Medicare Supplement Insurance
Many providers offer Medicare supplement insurance plans, but most of them offer a core Suite of benefits, including:
- Medicare part A coinsurance expenses up to another 365 days after Medicare benefits are used up
- Skilled Nursing Facility coinsurance
- Coverage for the first three pints of blood issued during a medical procedure (Which would otherwise be charged to the patient if the provider had to purchase the blood)
- Emergency care for foreign travel, up to 80% of Medicare-approved costs
- Medicare Part B deductible
- Excess charges incurred by Medicare Part B
- Preventive care coinsurance
Hopefully, you can see that for some consumers; Medicare supplement plans can almost eliminate out-of-pocket expenses for certain individuals.
Eligibility And Enrollment
Medicare supplement plans can be powerful financial tools to help offset the cost of medical expenses during retirement, but who is eligible for these benefits?
Who Is Eligible For Medicare Supplement Insurance?
Consumers aged 65 years or older who are currently enrolled in Medicare Part A and Part B have a six-month window to enroll in Medicare supplement insurance plans.
During this six-month window, you have a guaranteed issue right to participate in any Medicare supplement insurance plans available in your area.
Pre Existing Conditions
If you enroll during the six-month guaranteed issue period, you may not be denied for pre-existing distance for Medicare supplement basic benefits. However, there may be waiting periods depending on how your carrier structures its supplement plans.
How Does One Enroll In Medicare Supplement Insurance?
Enrolling in Medicare supplement insurance is pretty straightforward if you can enroll during your initial 60 day period. Since Medicare supplement plans are standardized, shop around with different carriers and brokerages to find coverage that fits you and your needs the best.
Since each Medicare Supplement Plan offers unique benefits, make sure you take time to identify potential costs and then budget accordingly for the most relevant Medicare supplement plans.
Once you decide which plans are the most relevant to you and your needs, reach out to local insurance companies to compare their prices and compare a variety of quotes.
If you enroll Past your initial 60-day enrollment window, You may face additional penalties or costs.
How Much Does Medicare Supplement Insurance Cost?
Many Medicare supplement plans offer the same or very similar benefits, but different providers can charge a range of prices depending on your situation.
Issue-Age Rated
Issue age premiums base the premium on a person’s age when the supplement plan was purchased. Premiums are usually cheaper for younger people, so it’s vital to purchase a Medicare supplement plan as early as possible to lock in a favorable rate. Although premiums may rise due to external factors like inflation, they will not increase due to your age.
Community Rated
Community-rated premiums are calculated based on macroeconomic factors, and they impact entire communities instead of individuals. Community-rated premiums do not factor in individuals’ age or sex because all of the premiums will rise or fall together.
Attained-Age Rated
Attained age-rated premiums are the most dynamic because they increase with the insured’s age. These premiums are usually cheapest when they are purchased and gradually increase relative to how old the policyholder is.
While premiums may be calculated differently, it’s crucial to take advantage of any discounts or considerations depending on health and lifestyle. Some insurance companies provide discounts for customers who do not smoke or for those who prepay their premiums annually.
Medicare Supplement Insurance Can Provide Peace Of Mind And Save Money
As you can see, Medicare supplement plans are a powerful way to reduce the fear of the unknown often associated with future health care costs.
Although Medicare offers many benefits, there are out-of-pocket expenses such as co-pays and deductibles that Medicare supplement plans can alleviate.
