Healthcare Educators


Who Should Buy a Medicare Supplement?

by | Mar 5, 2021

Medicare is far from free. According to the Fidelity Retiree Health Care Cost Estimate, a couple who retires in 2020 at age 65 will need approximately $295,000 just for healthcare costs. Saving for retirement is important, but so is picking the right Medicare plan.

Medicare Supplement Insurance, often called Medigap, can help with the out-of-pocket costs associated with Medicare. It’s not a good match for everyone, but for the right person, it can be a lifeline.

Here are four groups of people who should consider buying Medicare Supplement Insurance.

1. People in Original Medicare

Medicare Supplement Insurance plans are designed to work with Original Medicare. They are not designed to work with Medicare Advantage, and they cannot be used to cover the out-of-pocket costs associated with a Medicare Advantage plan. In fact, it is illegal for someone to knowingly sell a Medicare Supplement Insurance policy to someone who is enrolled in Medicare Advantage.

If you’re enrolled in Original Medicare, however, Medicare Supplement Insurance might be a smart move. Medicare enrollees normally have to pay coinsurance, copays, deductibles and excess charges out of pocket. Medicare Supplement Insurance policies can cover these costs, sometimes at 100%. (Because of a new law, plans available to people who become eligible for Medicare during or after 2020 can no longer cover the Medicare Part B deductible. Plans can still cover other costs, however, including the Medicare Part A deductible.)

2. People with Possible Hospital or Skilled Nursing Facility Costs

Medicare Part A provides hospital coverage. Most people don’t have to pay a premium to enroll in Medicare Part A, but they are responsible for the deductibles and coinsurance, and these expenses can add up quickly.

In 2021, the Part A deductible is $1,484. After that, enrollees pay $0 for the first 60 days of each benefit period, but they pay $371 per day for days 61 to 90 of each benefit period, and $742 for each lifetime reserve day. Skilled nursing facility care can also be expensive, at $185.50 for days 21 to 100 and 100% of costs after day 100.

Standard Medicare Insurance Supplement plans pay 100% of Medicare Part A coinsurance, with up to an additional 365 days after Medicare benefits are used. Some Medigap policies also cover 100% of skilled nursing facility care.

3. People Who Want to Travel Abroad

Medicare provides coverage in the United States. If you’re hoping to travel abroad during your golden years, you’re going to need additional coverage.

Medicare Supplement Insurance can provide that coverage. Many (but not all) Medigap plans provide 80% coverage for foreign travel emergencies, up to the plan limits.

4. People Who Want to Plan Their Healthcare Costs

Even if you’re healthy now, you never know when an illness or injury will hurt you. Without the right coverage, it could hurt your savings, too.

On its own, Original Medicare does not have an annual out-of-pocket cap. This means there is no limit to what you could end up paying out of pocket if you experience a major illness or injury.

When you’re living on a fixed income, planning for this kind of uncertainty is difficult. With the right Medicare Supplement Insurance plan, you can make your healthcare costs more predictable and easier to plan for.

Selecting the Right Plan

Medicare enrollees have multiple Medicare Supplement Insurance plans to choose from. In most states, these plans are standardized and labeled with the letters A through D, F, G, and K through N.

The best time to buy Medicare Supplement Insurance is when you first become eligible. After that, enrollees may be subject to medical underwriting, resulting in higher premiums or even rejected applications.

Need guidance? Contact PTT Financial. We have a network of licensed agents who are eager to assist you.