Welcome back, readers. We are so excited to jump right into the second part of our Medicare series, focused on Medicare Supplement Plans. Again, we would like to take some time to acknowledge our colleague, Shirley Van Nostrand at Advantage Insurance Benefits for it is through her expertise that we were able to bring you this series. To recap, in our previous post we introduced Medicare Parts A (hospital expenses) and B (medical insurance) and discussed how some people choose to enroll in an Advantage Plan to cover the gaps in their coverage.
We also touched on the presentation versus the reality of Medicare Advantage plans and how they can end up costing retirees way more money than they planned. Healthcare is a precious commodity, especially in retirement so it is important that you make the right choice for you.
Today we are going to talk about Medicare Supplement Plans: what they are, how they operate, and if they could be a good fit for your needs.
What are Medicare Supplement Plans?
Medicare Supplement Plans, or Medigap plans, were designed to cover many costs not covered by your Medicare plan. In order to enroll in a Medigap plan, you must first be enrolled in Original Medicare. There are 10 options, plans A-N each offering different levels of coverage. Please see this chart for more in-depth information about each plan.
When you are enrolled in a Medigap plan, you can go to any doctor that accepts Medicare. This offers more flexibility and choices on where you want to receive care and differs from Advantage plans. Each Advantage Plan is locally-based, meaning a plan in Edmonds, WA wouldn’t be the same as a plan in Tampa, FL. But a Supplement Plan allows you to receive care from any hospital/care provider that accepts Medicare. It is important to note that only Supplement Plans F, G, and N have foreign travel coverage. Each varies in the deductible, percentage covered, and maximum, so if you want foreign travel coverage, be sure to mention that when you are working with your team of professionals to help you select the best plan for you.
Unlike Medicare Advantage Plans, where each plan can vary on the type of care provided, each Medigap plan offers the same care no matter where it is purchased. Part G at Company 7, for example, would offer the exact same services as Part G at Company 2. This leaves consumers with the advantage to shop around for a cost-effective policy.
Which plan offers the most coverage?
Each Medigap plan can be useful depending on the person, but the two most popular are Plans F and G. Plan F is by far the most heavily enrolled because it covers 100% of your expenses after Medicare qualified expenses.
As you may have heard in the news, starting in 2020 no one will be able to enroll in Medicare Part F. However if you are enrolled in Medicare before 2020 you are able to be grandfathered into Plan F should you choose. But the monthly premiums for Plan F are predicted to rise, leaving many people with the next best thing, Plan G.
Plan G also covers 100% of your expenses after Medicare with one exception—it does not cover the deductible for Medicare Part B. In 2019, the standard deductible is $185. This article will go into further detail about what Part G does and doesn’t cover.
It is important to explain what it means for these plans to cover 100% of expenses after Medicare. Both Medicare Part F and G cover all qualified (Medicare-approved) excess expenses from Part B and are the only supplement plans to do so. These excess charges are the differences between what a health care provider charges and the Medicare-approved amount. Normally, you would be responsible for that difference, but these plans will cover the costs so long as the procedure is covered by Medicare in the first place.
It is essential to note that no Medicare Supplement plan covers prescriptions, so you will need to enroll in that coverage separately.
Is there a big difference between Supplement and Advantage Plans?
Medicare Supplement plans are an excellent resource for many retirees. But going this route, you will need to make sure you enroll in your care separately:
- Original Medicare (A and B)
- Medicare Supplement
- Prescription Drug Plan
A question you might be asking yourself is: why should I enroll in a Medicare Supplement Plan when I could get everything I need in an Advantage Plan?
This is an excellent question and one that doesn’t have just one answer. One primary distinction to make it that Medicare Supplement plans can be great tools for maintaining a consistent healthcare budget in retirement.
Differing from Medicare Advantage Plans, Supplement Plans do have monthly premiums but lower out-of-pocket maximums. Where you could be paying upwards of $7,000 on an Advantage plan, a Supplement plan could only be $2,000 to $3,000. This limited out-of-pocket maximum saves you the heartache of an astronomical medical bill should something unexpected happen.
If you can afford to pay the monthly premiums, it is an excellent strategy to consider because while you may be paying more month to month, you won’t have to pay a huge lump sum should you need a medical visit and you can clearly budget your medical expenses month to month.
Can you switch to a Supplement plan from an Advantage Plan?
If you are unhappy with your Advantage plan and want to switch to a Supplement plan, you do have that option.
Washington State residents do have the option to dis-enroll from their Medicare Advantage plans to transition to a Medicare Supplement plan without completing a health questionnaire two times a year, during the Medicare Annual Election period from Oct 15th – Dec 7th and/or during the Medicare Open Enrollment from Jan 1st – Mar 31st.
Medicare Supplement plans offer retirees more flexibility and consistency in their healthcare plans. While coverage varies, the most important thing is finding a plan that will take care of you when you need it to. Unfortunately, that is much easier said than done.
Here at TFS, we want to make sure that your health is protected especially in retirement. We would love to talk to you about including healthcare into your retirement plan.
The last part of our series will be coming up soon. We can’t wait to share it with you!