Health insurance is confusing, and it doesn’t really get easier just because you become eligible for Medicare. Like all health insurance plans, Medicare only covers some situations, and may not be adequate for all coverage needs. “Do I need medigap insurance?” is a common question from people just starting Medicare.
Medicare has four basic parts. Part A is provided to everyone who paid into Medicare during their working lives and are over 65, for free. It covers hospital and hospice care services. Part B is basic health care and some preventative care, and can be purchased by those eligible for part A. Part C plans include both A and B benefits, plus some others.
Medicare part D covers prescription drugs, and can be added to parts A and B, and occasionally part C plans. Part C plans are run by private companies, but provide Medicare-approved coverage. Often, these benefits include prescription drug coverage, and if you are covered under your part C plan, you are not eligible to purchase part D.
Plan C is referred to as a Medicare Advantage plan. If you have a Medicare Advantage plan, you usually don’t need Medigap insurance, because the services it would provide are included in your plan. Most people with plan C are ineligible to purchase a Medigap plan, anyway. If you have Original Medicare, which refers to plans A and B, with or without D, you may want to consider Medigap. Medigap insurance pays for some of the things that Medicare doesn’t cover, and can be beneficial if you need expensive treatment.
Medigap plans are standardized by the government, but provided by private insurance companies, and they must be clearly labeled as Medicare Supplemental Insurance. The plans are referred to as plans A through N, and each plan is standardized by the government. Insurance companies are allowed to choose which plans they will provide, but everyone with a Medigap plan M, for example, receives the same coverage, regardless of their insurer.
There are a few exceptions to these generalizations. In Massachusetts, Minnesota and Wisconsin, the standardizations for Medigap are different, but are still required to meet certain guidelines, no matter which insurance company provides them. Medicare SELECT plans provide the same coverage as Medigap plans A through N, but they cost less because you are required to use certain preferred providers for non-emergency care. If you choose to use a non-preferred provider, the coverage does not apply.
Even though they all are required to provide the same level of coverage, insurance companies charge different prices for their plans. This is partially because they choose to use different calculations for deciding what people enrolled in them pay. The three most common calculations are community based, where everyone pays the same regardless of age; issue-age-related, where your age at enrollment determines the rate; and attained-age rated, where your cost rises as your age.
To answer the question “Do I need medigap insurance?”, you really need to consider your own, individual needs. Medigap plans help to cover costs not paid for by Original Medicare, but not everyone is going to want to buy one. Consider your state of general health, how much savings you have and how you are comfortable spending it, and the cost and coverage provided by the various plans before you purchase one.
Wondering whether or not you require Medicare Supplemental Insurance? Get the low down now in our complete overview of Medicare Supplement coverage .
Tags: Insurance, Medicare Supplement, Medigap, retirement