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Updated onApr. 25, 2022

Are Medicare Supplement Plans Worth It For You?

Medicare has gaps in what it covers. So, what should you do when deciding what coverage to choose? For many people, the answer is to get Medicare Supplement insurance. Is it really worth it, though?

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Medicare Supplement insurance
, also known as Medigap, can come with a hefty premium. Should you pay it? Read on to get some of the tips that can help you when you are attempting to answer these questions and are deciding on your Medicare coverage.

What Are The Basics Of Medicare Supplement Insurance?

Medicare Supplement insurance is provided by private insurance companies. It is specifically designed to work with Original Medicare. Medicare Supplement pays for some or all of the gaps in Original Medicare. These gaps are costs that you are expected to pay out of pocket, among which include:

  • Medicare Part A deductible — $1,408 for 2020
  • Part A coinsurance for hospital stays, skilled nursing care, and hospice
  • Medicare Part B deductible — $198 for 2020
  • Part B coinsurance — 20% of Part B costs
  • Part B excess charges — up to 15% of Part B costs from some providers
  • Emergency coverage outside the United States

It is important to note that there is no out-of-pocket limit on Medicare expenses. This means that with a major illness like cancer or long-term hospitalization, you could be left responsible for paying tens of thousands of dollars out of pocket. Medicare Supplement plans will pay some or all of these expenses for you.

How Much Does Medicare Supplement Insurance Cost?

When you are asking yourself if Medicare Supplement insurance is worth it, you have to know how the premiums are set to in order to answer that question. The price of Medicare Supplement coverage is based on how many gaps your policy covers. There are ten standardized Medicare Supplement plans: A, B, C, D, F, G, K, L, M, and N. There are also high deductible versions of Plans F and G.

Each of these standardized Medicare Supplement plans covers a different portion, or mix, of the gaps in Original Medicare. Premiums for coverage are customized to each plan. Listed below are summaries of the coverage provided by Medicare Supplement plans A, F, and G.

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Medicare Supplement Plan A

Plan A is the most basic Medicare Supplement plan. It covers:

  • 365 extra hospital stay days beyond Original Medicare
  • 100% of Part A coinsurance for hospital costs
  • 100% of Part B coinsurance
  • First 3 pints of blood
  • 100% of Part A hospice coinsurance

The price of Medicare Supplement coverage is based on how many gaps your policy covers.

Plan A does not cover:

  • Part A skilled nursing care coinsurance
  • Part A deductible
  • Part B deductible
  • Part B excess charges
  • Emergency coverage outside the U.S.
Medicare Supplement Plan F

Plan F is the most comprehensive plan available. Plan F covers 100% of every gap in Original Medicare, including emergency coverage outside the U.S.

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Are Medicare Supplement Plans Worth the Cost?

The answer to this question is different for everyone. To help answer it for yourself, it would be wise to compare Medicare Supplement plans to the other two options available to you:

  • Doing nothing, and sticking with Original Medicare, and
  • Medicare Advantage plans

If you can afford the monthly premiums, Medicare Supplement plans may very well be worth the price. This is because it can limit, or eliminate, your out-of-pocket medical costs. You will then have complete peace of mind knowing that your Medicare coverage is under control, with no chance of unexpected out-of-pocket expenses popping up later.

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If you travel outside the United States, Medicare Supplement coverage could also save you money on health insurance. This is because if you have Medigap Plans C, D, F, G, M, or N, you will be covered internationally, meaning that you do not have to buy supplemental travel insurance.

For those with the means to pay Medicare Supplement premiums, the peace of mind and simplicity of Medigap coverage are considered by most to be well worth it.

The Benefits of Medigap Over Medicare Advantage

Medicare Advantage, also known as Medicare Part C, is another tool used by Americans to close the gaps in Original Medicare. It is more affordable than Medicare Supplement options. Medigap may still be a better option for you, though, for a number of reasons.

The first reason is that Medicare Advantage plans vary by state, and even by county. As such, Medicare Advantage plans in your area may not be as attractive as those in other states or cities. Also, Medicare Advantage plans have the following restrictions:

  • Mostly Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO)-based – This means that you will work with a network of providers, and you will probably need referrals to see specialists.
  • Copays and Coinsurance — You will pay these fees for almost every service or procedure you receive.
  • Medicare Advantage coverage is not portable — This means that you cannot see a doctor outside of your service area, except for Urgent Care or in the case of emergencies.

Medicare Supplement insurance, on the other hand, provides maximum flexibility. In fact, it allows you to see any doctor in the country that accepts Medicare. Depending on the specific Medigap plan you choose, you may pay little or nothing for services, rather than paying small copays every time you use your coverage.

Depending on the specific Medigap plan you choose, you may pay little or nothing for services, rather than paying small copays every time you use your coverage.

Are Medicare Supplement Plans Worth the Cost for You?

So, what is the final answer? Are Medicare Supplement plans worth the cost? They are not for everyone. Certainly, if you are on a tight budget, Medicare Advantage plans might be a better option.

However, if you like the idea of international coverage, little or no money spent out of pocket, and the flexibility to see any doctor in the country, Medicare Supplement plans might be a good fit for you.

Reach out to a licensed professional to compare plans in your area. Working together, you can compare quotes and find a plan that matches your health and budget needs.