How much does Medicare supplemental insurance cost ?

Do I really need Medicare supplemental insurance ?

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Before we get started, it’s important to ask ourselves, is a Medicare supplemental plan really necessary, and if so, why?

As you know, although the original Medicare covers a large portion of major medical expenses, it does not cover all of them. It is therefore the task of the beneficiary to cover the remaining expenses. In this way, Medicare contributes 80% while the beneficiary gets the remaining 20%. This last percentage includes deductibles, co-payments, and coinsurance for health services, and can be paid in several different ways. Among them, we have:

  1. Medicaid (if you qualify)
  2. Medicare savings programs (QMB, SLMB, QI)
  3. Employer Group Medical Coverage
  4. Benefits of VA
  5. TRICARE for life (for military retirees)

If you need to qualify for any of these benefits, you will have to find money on your own by working overtime, borrowing money or spending your savings to pay for medical expenses even if you have Medicare. The other option would be to buy a Medigap loaf.

Although self-financing may seem like a great idea for meeting medical expenses, it is important to keep in mind that it is too risky. Even balancing the cost of doctor visits, an advanced diagnosis (an MRI, for example) or hospitalization for a significant illness or injury could lead most people to total bankruptcy.

Let’s put it this way: Can I afford to pay 20% of the cost of cancer treatment or a hip replacement? A cost-effectiveness study conducted during 2013 resulted in a total cost of $40,102 for first-line mesothelioma treatment. This amount does not take into account your inpatient care.  In the United States, the average cost of a hip replacement can reach $32,000.

It’s impossible for most of us to pay that 20% out of pocket, since it involves such large expenses. That’s why the need arises to purchase Medicare supplemental insurance. Just like with car insurance, we really don’t have a choice.

How much coverage can I get with a Medigap plan?

Having understood the need for supplemental insurance, we can explain how Medigap coverage works. Medigap, as its name implies, fills the gaps in Original Medicare. This means that it covers deductibles, co-payments, coinsurance, blood, and foreign travel. Medigap covers these gaps through 10 different standardized plans. They are categorized by codes ranging from A to N. This makes Medigap really easy. Just choose the plan with the coverage you want and go shopping.

The plan with the most coverage is Medicare Plan F. This plan offers complete coverage in all Medicare gaps. So, if you have a Plan F policy and the medical services you use are all approved by Medicare, you don’t pay anything out-of-pocket. However, this plan is only available to people who turned 65 before January 1, 2020. This is a detail to consider.

After Plan F, Medicare Plan G offers the most coverage, and is available to everyone who turns 65 with guaranteed issue. This plan is identical to Plan F, with one exception, it does not cover the annual Medicare Part B (health insurance) deductible. However, many people are able to save enough on their annual premium payments to pay the deductible themselves and save something.

The Medicare N Plan is another Medigap plan that is growing in popularity because it offers good savings. This Medigap policy is perfect for healthy people who are getting older on Medicare because, in addition to offering full coverage of the higher costs, it allows you to pay some of the lower costs.

Let’s give an example. With the Medigap Plan N policy, you pay up to $20 to see your doctor (co-pay) and up to $50 to use the emergency room. You will also pay any extra charges. These are costs that exceed the standard Medicare reimbursement rates that your doctor can charge (up to 15%) if you don’t accept Medicare Assignment. Other than that, Plan N covers the same as Plan G, which allows you to save.

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