Ashford Insurance

Do I Really Need a Medicare Supplement?

Picture of Sonia Ashford

Sonia Ashford

Sonia Ashford is the owner of Ashford Insurance, an independent health insurance agency specializing in Texas Medicare insurance.

Many Americans reach retirement age, begin their Medicare coverage, and are shocked to find out that Medicare is not free. If you did not to save up for your Medicare Part B premiums during your retirement, you may find yourself coming up short.

Many Americans reach retirement age, begin their Medicare coverage, and are shocked to find out that Medicare is not free. If you did not to save up for your Medicare Part B premiums during your retirement, you may find yourself coming up short.

Then again, going with just Original Medicare and no supplemental coverage is not smart.

The financial gaps in Medicare are substantial, leaving you to pay for expensive deductibles and 20% of all your outpatient coverage. If you don’t have a Medicare Supplement plan, commonly known as Medigap coverage, or a Medicare Advantage Plan, you’ll have to come up with the balance yourself.

Fortunately, there are many options to cover the holes in Medicare that will fit whatever your budget size is. Ashford Insurance has Medigap plans which cost a slightly more but do have almost full coverage. We also have Medicare Advantage plans, some of which can cost as low as $0 for the plan itself.

Let’s look at some basic facts so you can judge if you need a Medicare Supplement plan or if a Medicare Advantage plan would be right for you.

Covering the Gaps in Medicare Part A and Part B

Just like with your current insurance, Medicare has deductible, copays and coinsurance for which you are responsible. Medicare Part A covers up to 60 days of hospitalization, but you pay a deductible of $1,408 per Benefit Period in 2020.

If you are in the hospital for more than 60 days, you begin paying an expensive daily copay for your hospital care. If you are in the hospital 150 days, your hospital coverage runs out altogether.

Your cost-sharing under Part B is similar. You are responsible for paying your Part B deductible, which is $198.00 in 2020. Then Part B Medicare only pay 80% of approved services. This means you are responsible for paying 20% of all your doctor visits, your ER visits, blood tests, X-rays, surgeries, durable medical equipment and even high-priced things like chemotherapy.

On top of that:

There is no cap on your 20% like you’ve had on your employer group insurance plans.  You pay that 20% forever. Paying 20% of the cost of a hip replacement will hurt a lot. But it will pale in comparison to paying 20% for the treatment of an illness like cancer.

Even for small items like  a CT scan, your 20% could be a burden.

Medicare supplements plans were designed to fill the gap in your medical coverage left by Medicare. You need a Medicare supplement for providing you peace of mind, knowing that if the unexpected happens, you will not have your credit ruined because of unpaid medical bills.

Medicare supplements will take care of things like deductibles, co-payments, and coinsurances that you are responsible for, and a few plans will even cover you when traveling outside of the United States.

There are 10 standardized Medicare supplements Plans (A, B, C, D, F, G, K, L, M and N) and one high-deductible plan.  Most Medigap plans are guaranteed renewable for life meaning that if you pay your premium, you are covered and cannot be denied coverage because of any health issues or because of your age.

As of January 1, 2020, Medigap plans sold to new people with Medicare aren’t allowed to cover the Part B deductible. Because of this, Plans C and F are not available to people new to Medicare starting on January 1, 2020. Folks enrolled in Plan F previously will be grandfathered into that plan.

Once your Medicare plan has paid its part, your Medigap coverage will pay most of the balance for any Medicare-approved charges. Also, you can see any doctor that participates in Medicare, too, which is one of the nicest features about Medigap plans.

Which Medicare Supplement Has the Most Coverage?

Many people need a Medicare supplement to help cover cost-sharing they otherwise could not afford.

Other than the Medicare Part B deductible the Plan G provides full coverage for all of the gaps in Medicare. It pays for your hospital deductible, copays, and coinsurance. It also covers the 20% that Part B doesn’t cover. 

Here are a few of the benefits that a Medigap plan can help pay for:

  • Medicare Part A coinsurance hospital costs after initial Medicare coverage is exhausted
  • Medicare Part B copayment
  • Blood (first 3 pints are free)
  • Hospice care (coinsurance or co-payment)
  • Skilled nursing facility care (SNF) coinsurance
  • Part A Deductible
  • Foreign travel emergencies
  • Part B excess charges
  • Preventive care coinsurance (Medicare Part B)

Also note that Plan N is also very popular seller This plan offers lower premiums than Plan G, and you do a little bit of cost-sharing on the back end of your policy.

Many people don’t mind paying the Part B deductible out of pocket in return for the lower premiums that Plan G and Plan N can give them.

Medigap Eligibility

As soon as you reach 65 and are eligible to apply for Medicare, you are also eligible to purchase a Medicare Supplement policy. You will be given a ONE-TIME open enrollment period to enroll in any Medigap plan with no health questions. Your open enrollment period is the first six months from the first day you signed up for Medicare Part B.

During this open enrollment, you can sign up for any supplemental plan and you are guaranteed coverage. They cannot turn you down because of pre-existing medical conditions.

After the open enrollment period ends, Medigap companies will require you to answer health questions on future applications, and you could be turned down or rated up (charged more).  This makes the open enrollment the best time to sign up for a Medigap plan.

Open Enrollment vs Annual Election Periods

The Annual Election Period does not apply to Medigap plans.

Don’t confuse your Medicare Supplement Open Enrollment with the Annual Election Period in the fall. The period that runs from October 15th – December 7th every year is for changing your Medicare Part D drug plan or Medicare Advantage plan.

Annual Election Periods are not:

Annual Election Periods are not a time when you can apply for any Medigap plan and get approved without having to answer health questions. No annual period for that exists. Your only period to do that is the one-time 6-month window mentioned above (Open Enrollment).

Medigap Costs

Each Medigap insurance company sets their own rates. You can compare plans based on their premiums. Be sure to also look at the plan’s history of rate increases. You want to enroll with a carrier that has competitive rates now and a history of low rate increases.

We’ve learned that Medigap plans are very comprehensive, so it stands to reason that they cost more than the other types of coverage. So what are some less expensive options?

Fortunately, there’s alternate options. Take a look at Medicare Advantage plans and learn what they do to help you cover the gaps in Medicare.

Medicare Advantage Plans

For those who may find that the premium for a Medigap plan does not fit within their budget, a Medicare Advantage Plan is a good alternative. In fact, these plans were specifically designed to provide Medicare beneficiaries like yourself with an alternative to Original Medicare with a Medicare Supplement.

Medicare Advantage Plans are referred to as the Part C of Medicare. One popular feature of Medicare Advantage plans is that most include coverage for prescription drugs (Part D). These plans pay instead of Medicare (as opposed to after Medicare, as Medigap plans do). When you join a Medicare Advantage plan, Medicare pays that plan to administer your care.

Medicare Advantage Plan Types

Medicare Advantage plans generally have networks of providers that accept their plan. These networks might be just in one or two counties and sometimes we see them include the whole state. You must agree to use those providers according to the plan’s rules.

The most common types today Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). Standard HMO plans require you to see only providers in their network, except in emergencies. This is more restrictive than a PPO plan, so we often find that Medicare HMO plans costs less than Medicare PPO plans, but not always.

You Must Continue to Pay for Part B on Medicare Advantage

Enrolling in Medicare Advantage does not exempt you from paying your Part B premium.

One of the most common misunderstandings about Medicare Advantage plans is that enrolling in a Medicare Advantage plan does not replace what you pay for Part B.

You must continue to be enrolled in both Medicare Parts A and B before you can join a Medicare Advantage plan in your area. Numerous people get this wrong. They enroll in Medicare Advantage and then think they can disenroll from Part B.

If you disenroll from Medicare Part B the Medicare Advantage plan will kick you out. Once again, you must be enrolled in both Parts A and B and live in the plan’s service area to join a Medicare Advantage plan.

What throws people off is that in some areas there are some Medicare Advantage plans with what we call a $0 premium. This means you don’t pay for the plan itself, but it doesn’t mean you get out of paying for Part B.

Benefit of No Health Questions

Medicare Advantage plans have another feature that is attractive. They ask only one health question rarely turning anyone down for coverage. People who suffer from End-Stage Renal Disease are not eligible for Medicare Advantage in 2020.

You can only enroll in Medicare Advantage plans at certain times of the year.

This prevents people from just waiting until they get sick to get coverage. If you don’t enroll in a Medicare Advantage plan during your initial enrollment window, then you will have an annual chance to do so each year in the fall from October 15th – December 7th. This is called the Annual Election Period.

Final Thoughts on Whether You Need a Medicare Supplement

Because we have many options for covering the gaps, there is no need to run around without some type of supplemental coverage.  If you find yourself asking whether you really need a Medicare supplement, ask yourself if you can afford to pay 20% of a $50,000 knee replacement or 20% of eight weeks of cancer chemotherapy.

If you are like most of us, you can’t pay that much out of pocket. So yes, indeed you need a Medicare supplement or Medicare Advantage plan.

A Medigap plan or Medicare Advantage plan is a wise investment to protect you from catastrophic medical spending.

Regardless of your current financial situation, there is a plan that will agree with your budget and your medical needs. Ashford Insurance has licensed and certified agents to guide you through the process of choosing the best plan to fill your needs.

Photo by Khairalseed Sulaiman

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Picture of Sonia Ashford

Sonia Ashford

Sonia Ashford, “The Medicare Insurance Lady”, has been helping Medicare eligibles in Texas with their Medicare Insurance since 2005.