Once you qualify for Medicare, a new question arises for many participants: do I really need supplemental insurance with Medicare? The answer to that question varies based on your income, finances, existing medical conditions and more.
But hearing that it depends can be frustrating. Instead, learn when you might need a Medigap plan and who often benefits from supplemental health insurance.
When Do You Need a Medigap Plan?
A Medigap plan can help make your medicare coverage more affordable by providing coverage for services or providers you don’t currently have access to. Here’s a look at several scenarios when Medigap can benefit you.
When You Are Eligible for Medicare Parts A and B
Most people are not eligible for supplemental insurance plans until they qualify for what is known as Original Medicare. Original Medicare encompasses both Part A and B. You cannot purchase Medigap coverage if you are on a Medicare Advantage Plan.
The added policy can help pay the portion of your bill that Medicare does not cover, including co-pays, deductibles and coinsurance.
Once you purchase this coverage, it renews annually unless you stop paying premiums, regardless of whether you receive a new diagnosis or encounter a new medical condition.
When You Want to Fill the Gaps in Coverage
Medicare coverage is excellent in most cases. But you’ll still incur expenses, even when seeing medical professionals who accept Medicare. Here are some gaps that you can have in your Medicare Part A and B plans that might leave you with expenses you want to cover.
Deductibles
Medigap can help cover your Medicare deductibles. For example, the Medicare Part A deductible for hospitalizations is $1,632 for 2024.
You’ll incur similar expenses for traditional doctor appointments and outpatient care. The deductible for these services in 2024 is $240.
Coinsurance and Copays
In addition to a deductible, you’ll also incur copays and coinsurance for visits and medical care. In the case of a hospitalization, your deductible applies to room and board. But you might be billed 20% for other expenses during your stay, such as anesthesia.
Out-of-Pocket Limits
A Medigap policy can help cover expenses until you hit your out-of-pocket limits. For example, your Medicare plan covers 100% of your expenses for the first 60 days in the hospital. After that, you’ll pay $408 per day in 2024. Similar copays apply to nursing and hospice facilities.
Medicare Part A and B have no out-of-pocket limit. That means you could rack up quite a bill with copays and coinsurance from medical care. Your supplemental coverage can make this more affordable.
When You Want to Have More Choices and Flexibility
Not all providers accept Medicare, which means you could be left with providers that are not convenient for you or it could mean changing all your providers once you switch to Medicare from private insurance.
Medigap covers a larger network of healthcare providers and can reduce the likelihood that you’ll need a referral to see a specialist and still receive coverage.
When You Want Predictable Healthcare Costs
Medigap insurance means you’ll have consistent monthly premiums and then the coverage will pay for some or all your outstanding healthcare bills after Medicare coverage. In most scenarios, you do not have to take additional steps in the billing process when you use both Medicare and Medigap coverage for your expenses.
Many people enrolled in Medicare are on a fixed income, and enrolling in Medigap coverage can help them plan for unexpected expenses and ensure coverage for these scenarios to avoid surprises.
When You Travel Frequently or Live in Multiple States
If you plan to travel, Medigap coverage can help ensure you have healthcare coverage no matter where you go. Depending on your Medicare plan, you might only have coverage with providers in your area, which means when you travel to another state, you’ll need to pay for care out-of-pocket. Additionally, Medicare does not cover services outside the U.S.
Medigap plans can expand your coverage beyond your home state and even offer insurance when you head abroad. That way, you can enjoy your retirement on your terms with the peace of mind of knowing you won’t encounter big surprises from medical expenses.
Is Medigap Worth the Cost?
Whether Medigap insurance is worth the cost or not depends on your situation. Coverage varies by state and by the insurance provider you select. Another factor in whether the coverage is worth it depends on your health and lifestyle.
When you enroll in coverage will also be a factor. If you enroll when you are first eligible, you’ll be younger and perhaps in better health, which is a factor in your premiums. Each year, your premiums can adjust based on new diagnoses and risk factors, but the sooner you get in with a plan the better.
Supplemental health plans cost anywhere from $50 to more than $300 per month, but if you incur large medical expenses, that could be well worth the expense.
Some years, you might find the supplemental coverage more than pays for itself. In others when you have fewer expenses, you might find that you spent more on premiums than you would’ve for out-of-pocket costs on your Medicare coverage.
One hospitalization could make a supplemental plan pay off, though in most cases, such expenses are unpredictable. so you can’t just purchase Medigap in the years you know you’ll be hospitalized. Instead, look at the cost over several years to determine whether the coverage has been worth it for your finances.
Get the Best Medicare Supplement Insurance from Benzinga’s Top Providers
Find the best Medicare supplement insurance from trusted carriers who can help you keep your medical expenses predictable and affordable.
Protecting Your Finances with Medigap Insurance
Medigap insurance can help protect your finances when you’re enrolled in Medicare Part A and B. For most participants, the coverage pays off, though you’ll need to weigh your personal health factors and expenses to determine the best move for you. Talk to a health insurance agent to get a personalized quote to discover the best course of action.
Frequently Asked Questions
Can I purchase a Medigap policy at any time?
You can purchase a Medigap policy if you are enrolled in Medicare Part A and B. You’ll have six months from the date of qualifying for Part B to enroll in a Medigap plan.
Is Medigap renewable every year?
As long as you pay your premiums, Medigap coverage is guaranteed to be renewable every year. It renews on an automatic basis unless you choose to cancel the policy or switch to a different provider.
Will I need to go through underwriting to get Medicare supplement insurance?
You will not need to go through underwriting for Medicare supplement insurance as long as you enroll within the first six months of Medicare Part B eligibility, which is known as the Medigap Open Enrollment Period.
About Rebekah Brately
Rebekah Brately is an investment writer passionate about helping people learn more about how to grow their wealth. She has more than 12 years of writing experience, focused on technology, travel, family and finance. Her work has been published in Benzinga, Hearst Bay Area, FreightWaves and Dallas Observer publications.