What is Medicare Supplemental Insurance?

July 28, 2020

In our article “What Does Medicare Actually Cover?”, we talked about Parts A and B of Medicare. Parts A and B make up Original Medicare. (Confusing, right?) It’s a common misconception to think that Medicare covers everything; it doesn’t. This is why private insurance companies fill the gaps by selling Medicare Supplement Plans.

What are the Medicare Supplement Plans?

Medicare Supplement Plans are commonly referred to as Gap Insurance or Medigap. These are insurance plans offered by private insurance companies (like Parts C and D are). You must be enrolled in Parts A and B in order to purchase a Medigap policy. 

“Medigap refers to a group of supplemental insurance plans that work in conjunction with your regular Medicare benefits. They cover many expenses not covered under Original Medicare such as additional hospital days or international travel.” Medicoverage.com

It’s important to note that Medicare Supplemental Insurance is not Medicare Advantage. Medigap does not include prescription coverage since the passing of the Affordable Care Act; that coverage is only available through a Part D (Medicare Advantage) plan. 

How Do I Choose Medicare Supplemental Insurance?

Choosing a Medigap policy can be a challenge, we know. This is why we offer our no-cost Medicare Guide (see below). But also, insurance brokers are a great resource. They will present you with options that make sense to you. If, for example, you’re an avid overseas traveler, you may want to purchase Medigap insurance. 

Medicare.gov also has a plan finder to help you see what options are available. It doesn’t hurt to do some research. Create a list of pros and cons and go from there.

Why Do I Need Supplemental Insurance with Medicare?

The short answer to why you need Medigap insurance is because Medicare is essentially catastrophic coverage. There is a huge, overwhelming list of things that Medicare doesn’t cover and limits on costs as well. But that doesn’t mean that Medigap covers them either. It’s important to not confuse Medigap with Medicare Advantage. 

“Medigap policies generally don't cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing.” Medicare.gov

Like any health insurance plan, Medicare has deductible limits. It’s likely that you will hit the limits of your Medicare coverage. This is when you are exposed or see the gap in coverage. Inevitable gaps in coverage is why you need supplemental insurance with Medicare. Medigap policies extend your Medicare Benefits so you’re not surprised with large bills later. 

“You’ll enter the coverage gap when you deductible, total drug costs, the insurers’ costs, and your co-pays reach $4,020. During the gap period, you must pay a certain percentage of the total cost of both brand-name and generic drugs.” MedicareFAQ.com

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