5 Key Benefits of Medicare Supplement Insurance

Written by Matthew King, time it takes to read this article is  minute(s).

There are currently 63,964,675 Americans who qualify and use some form of Medicare coverage through the federal government. 27,919,354 use the Medicare Advantage option, while 36,045,321 use Original Medicare.

Americans who reach the age of 65 qualify for Medicare. They must navigate the alphabet soup of Medicare to nail down their coverage. 

To ensure full coverage under Medicare, enrollees must pay deductibles and copayments. However, they may find they are still required to cover some costs. 

For this reason, many Americans choose to add Medigap insurance to help offset the user costs associated with Medicare coverage. One of the popular supplemental insurance policies for Medicare is Medicare Supplement Insurance.

If you're a Medicare insurance enrollee or close to Medicare eligibility, you might be trying to navigate this system to decide which version of the insurance policy will be right for you.

Read on to learn more about Medicare, Medicare Supplement Insurance, and what you should consider when you choose your plan.


What Is Medicare?

You already know that Medicare is a government-funded healthcare program for those who are aged 65 and older. It also covers some Americans with disabilities or who have certain illnesses. 

The Medicare bill was signed into law in 1965 by President Lyndon B. Johnson. Its goal, then and now, is to provide healthcare coverage for eligible individuals who are likely leaving the workforce for retirement. 

If you're tiptoeing up to the eligibility age, you're likely trying to understand as much as possible about Medicare to ensure you have the most comprehensive coverage. 

Medicare is handled under the umbrella of the Department of Health and Human Services (HHS) in the federal government. Under the HHS, the Centers for Medicare & Medicaid Services handles the particulars of Medicare and its many rules and regulations. 

What Is Original Medicare?

There are two groups to consider in Medicare, Medicare Advantage and Original Medicare. Original Medicare is close in form to how it was created from the onset. 

Medicare Insurance comes with several parts, often referred to as the alphabet soup of insurance. Understanding the characteristics of Medicare (more on this shortly) can help ensure that when you choose coverage, you're choosing a plan that you know covers you as comprehensively as possible. 

Medicare has Part A, Part B, Part C, and Part D. When you sign up for Original Medicare; you'll have coverage under Part A, Part B, and likely Part D.

What Is Medicare Advantage?

Medicare Advantage is one of two options eligible individuals can choose from under the Medicare program. It is actually the Part C portion of Medicare. 

While this type of insurance is still Medicare and follows all Medicare rules and regulations, it is serviced through a private insurer. When you purchase a Medicare Advantage plan, you almost always get Part A, Part B, and Part D coverage. 

Many appreciate Medicare Advantage plans because they often come with additional coverage, including dental, vision, and hearing coverage.

How Do Original Medicare and Medicare Advantage Differ?

It's important to understand how Original Medicare and Medicare Advantage differ as you consider your options for coverage. Both mean you're using Medicare. Both will get you Part A and Part B coverage. 

The differences involve who supplies the healthcare coverageOriginal Medical coverage comes from a provider who agrees to take Original Medicare. Your rates will be exactly the same no matter which provider you use, as long as they agree to accept Original Medicare. 

Medicare Advantage gets you medical healthcare through a specific network or insurance company. You need to see their providers to be covered. 

Of course, premiums, deductibles, and out-of-pocket costs vary depending on your choice.

Understanding the Parts of Medicare

Let's take a closer look at the parts of Medicare. It will help you understand Medicare Supplemental Insurance and its needs. 

One of the myths about Medicare is that it's free because it's government-sponsored. In fact, there are premiums, deductibles, and co-pays for several parts of the insurance. 

To understand how each part relates to Medicare Supplemental insurance, we will focus on the cost for each part of Original Medicare. 

Part A

Once you reach the age of 65, you're automatically eligible for Part A coverage under Medicare.

This is your hospitalization coverage. It covers you if you have the following:

  • Hospital stays
  • Need skilled nursing facility care
  • Nursing home care 1
  • Hospice care
  • Home health care

For most people, there is no cost for Part A coverage under Original Medicare.

There are, however, some Part A deductibles. Each time you're admitted to the hospital, there's a $1,600 deductible before Medicare kicks in for coverage.

Inpatient nursing home care also starts with a deductible after 60 days, which is $400 per day. 

Part B

Part B of Medicare is the medical part of the coverage.

This covers your medical care and services. If you need to see a doctor or have treatment, it falls under Part B coverage. It also covers the following:

  • Ambulance services
  • Durable medical equipment (DME)
  • Mental health, including outpatient, inpatient, and some hospitalization
  • Some outpatient prescription drugs

Part B coverage is not free of premiums. Your premiums will vary from year-to-year. The 2023 rates are $164.90 per month. You must pay this premium monthly if you want medical coverage.

It also comes with a $226 deductible in 2023, then a 20% co-pay once you've covered the deductible each year.

Part D

Part D part of Medicare covers prescription drug coverage.

With this part of Medicare, you have a list of options for coverage, and rates will vary depending on which plan you choose.

You don't have to select Part D coverage. However, if you don't choose it and later want to add it, there are some steep late enrollment penalties to be aware of.

Rates will vary yearly; some plans also base their rates on your income level.

Part C

Medicare Part C, remember, is actually Medicare Advantage.

This type of Medicare is purchased through a private insurer that must abide by their coverage for you to the rules and regulations of Medicare.

Rates, deductibles, and co-pays for Part C vary depending on your chosen plan and likely your income level. 

Most Medicare Advantage plans include Part A, Part B, and Part D coverage. Often they also have some additional coverages too.

What Is Medigap or Medicare Supplement Insurance?

People who opt for Original Medicare are the ones who will need and likely want Medigap or supplemental insurance. There is a part of Original Medicare that allows you to purchase a Medigap plan.


Pro Tip: This Medigap health insurance is the same thing as Medicare supplement insurance.

Why is Medigap insurance so important if you have Original Medicare?

If you saw the premiums, deductibles, and co-pays for the different parts of Original Medicare, you'll understand the need for Medigap coverage.

Interestingly, Medigap coverage is standardized under Medicare even though it's purchased from private insurers. There are 12 standardized Medigap options to choose from.

The rates for Medigap coverage from private insurance companies are not standard and can vary from company to company.

Medicare Supplement Insurance Vs. Medicare Advantage

A common confusion for those getting close to Medicare age is the difference between Medicare Supplement Insurance and Medicare Advantage. In fact, some think they're the same. 

Both are purchased separately from Medicare. Both are purchased through private insurers. 

They don't cover the same thing, however. Remember, a Medicare Advantage plan (Part C) covers Part A, Part B, and Part D of Medicare through a private insurer.

You pay the private insurer your premiums. They follow Medicare rules and regulations and provide you coverage through their network or providers.

A Medicare supplement insurance plan or Medigap works with Original Medicare. These standardized plans are purchased from private insurers and help offset Original Medicare's costs.

Medicare Supplemental Insurance, What You Should Know

If you choose Original Medicare and are ready to consider supplemental insurance to help offset the costs of the Original Medicare, there are some important things you should know.

Let's take a closer look at a few important considerations with Medicare supplement insurance. 


Avoid Medicare Networks 

You know that supplement insurance or Medigap is purchased from a private insurance company.

However, you don't have to worry about getting your medical coverage from that company's providers.

Remember, in a Medicare Advantage plan, you would need to see that company's providers.

The Medicare supplement insurance will provide coverage if you see a doctor who takes Medicare.


Comprehensive Coverage Through Medicare Supplemental Insurance

While some of the user costs under Original Medicare can be steep, once you have a supplemental insurance plan, you have good comprehensive coverage.

Plan G is the most popular choice for many people under Medigap plans. You can get a serious medical diagnosis like cancer and have extremely limited out-of-pocket costs.


Buying Your Insurance Through an Agent

This is a little trick for buying a Medicare supplement insurance plan. You'll be better off purchasing from an insurance agent or an insurance company.


An agent can look at multiple insurance companies to consider costs.

They can scour the market for the right price for you. An insurance company will not be sending you to a competitor who has a better rate. 


Plans Standardized

This is important to remember when you start to consider supplemental insurance plans. Medicare standardizes supplement insurance. There are only about 12 options available.

You need to look at which plan best meets your needs for additional coverage. Then you can price shop between insurers who offer that plan.

If you decide Plan G, for example, is suitable for your coverage needs, then you can shop for who offers the best price based on your age and income for that plan.


Medicare Supplement Premiums

While the plans might be standardized, the rates are not. Rate plans can and will go up as you age.

The good news is that as long as you continue to qualify for Medicare, you can switch who provides your Medigap coverage.

Benefits of Medicare Supplemental Insurance

It's important that you understand all the ins and outs of Medicare, specifically Original Medicare.

Then you can better understand why certain things about the coverage provide benefits with supplement insurance.

Let's take a closer look at Medicare supplemental insurance benefits.


Extended Hospital Stays Get Covered

You might remember that in Medicare Part A, a co-pay kicks in, and a steep one, with an extended hospital or nursing home stay.

Now, nobody wants to be in that scenario.

Yet, knowing you're covered if you face an extended stay can be a huge relief instead of worrying about the bill you're wracking up.


Cover Out-of-Pocket Expenses

The purpose of Medigap coverage is to help offset costs from Original Medicare.

One significant benefit is how this insurance helps to cover coinsurance, copayments, and deductibles from Medicare.


Overseas Coverage

If you plan to travel in your retirement, this one is important. Most Medicare coverage isn't available when you travel out of the country. 


Pro Tip: Several Medigap supplement plans pick up coverage for overseas travel, so you know you have the coverage you need. 


Hospice Coverage

While the thought of needing hospice care isn't ideal, you also don't want to saddle your loved ones with an enormous bill as you face the end of your life.

Medicare does cover some hospice costs, and the supplement insurance should help to pick up the rest.


Same Providers Who Accept Medicare

One of the biggest advantages of supplement insurance is that it can be used with the same providers as your Medicare.

You don't have to go to look for a network provider.

If your medical provider takes Medicare, they will also take your Medigap or supplement insurance, too.

Make Sure You're Covered With Medicare Supplemental Insurance

Understanding all the intricacies of Medicare can be overwhelming for users.

Ultimately, the most important thing is ensuring you have the coverage you need. This includes Medicare supplemental insurance if you opt for Original Medicare coverage

Check out how we can help you if you plan to sell Medicare supplement insurance as part of your insurance business. 

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