Do I Need a Medigap Plan?

You might be asking yourself: Do I really need a Medigap plan? What are the potential risks of relying solely on Original Medicare?

It's a common question, especially when people earn that Medicare isn't free of charge. Without planning for healthcare expenses in retirement, you may find yourself in a tight financial spot.

Having just Original Medicare without any supplemental insurance can be a risky move. Medicare's coverage has notable gaps, especially when it comes to costly deductibles and the 20% coinsurance for outpatient services. Without a Medigap policy or a Medicare Advantage plan, you'll be responsible for these additional costs.

So, is it worthwhile to invest in a Medigap plan? The answer is a resounding yes! Let's explore the benefits these plans offer and how they can provide financial security and peace of mind.

Options to Bridge the Medicare Gap

One great thing about Medicare is that there are various options available to beneficiaries who want to extend their coverage under Original Medicare. You can find a plan that fits any healthcare need or budget. For those who are able to allocate more funds toward health insurance, Medigap plans are a great option for comprehensive coverage. On the other hand, Medicare Advantage plans present an affordable alternative, with some plans available at no monthly cost.

To help you decide whether a Medicare Supplement plan or a Medicare Advantage plan is more suitable for your needs, let's delve into some key facts and considerations.

Gaps in Medicare Parts A and B

First, let's talk about why it’s not usually recommended to stick with Parts A and B only. Similar to typical insurance policies, Original Medicare has deductibles, copayments, and coinsurance costs that fall on your shoulders. For example, in 2024, Medicare Part A covers hospital stays up to 60 days, yet there's still a deductible of $1,632 you need to pay. Should your hospital stay exceed 60 days, you'll have costly daily copayments. After 90 days in the hospital, your coverage under Part A drops completely.

Part B has a similar structure for cost-sharing. In 2024, you're required to pay a deductible of $240 for Part B. Following that, Medicare covers only 80% of approved services under Part B. This leaves you with the responsibility to cover 20% of all your medical expenses, including doctor appointments, emergency room visits, blood tests, X-rays, surgeries, durable medical equipment, and even significant expenses like chemotherapy treatments.

It gets worse.

Unlike other insurance plans where there is a cap on your 20% share, a Medicare cap does not exist. This means ongoing payments of 20% for major procedures like knee replacements and even more extensive treatments such as radiation and chemotherapy. Even seemingly minor services like CT scans can become financially burdensome due to this 20% cost-share.

How a Medigap Plan Can Help

Medigap plans, also known as Medicare Supplement plans, are specifically designed to bridge the coverage gaps left by Medicare. These plans are essential for your peace of mind, ensuring that unexpected medical events do not lead to financial strain or damage to your credit due to unpaid medical expenses.

Medigap policies address the various out-of-pocket expenses such as copayments, deductibles, and coinsurance that we mentioned earlier. Some plans also offer the added benefit of covering medical expenses when traveling abroad.

There are ten standardized Medigap plans (A, B, C, D, F, G, K, L, M, and N) along with a high-deductible option for Plans F and G. A significant advantage of most Medigap plans is their guarantee of lifetime renewability. As long as you continue to pay your premiums, you will retain your coverage without the risk of being denied due to health conditions or age.

After Original Medicare plan covers its portion, your Medigap plan steps in to cover most of the remaining Medicare-approved charges. An added perk of Medigap plans is the flexibility they offer in choosing healthcare providers, as you can visit any doctor who accepts Medicare, which is a highly valued aspect of these plans.

The Medigap Plan with the Most Coverage

Plan F stands out as the most comprehensive option, covering 100% of all out-of-pocket expenses. If your priority is a plan that leaves virtually nothing uncovered, Plan F is the ideal choice.

Here's a look at some of the expenses covered by a Medigap plan like Plan F:

• Coinsurance for hospital stays under Medicare Part A after the initial Medicare coverage ends

• Medicare Part B copayments

• The first three pints of blood in an approved procedure

• Coinsurance and copayments for hospice care

• Coinsurance for care in skilled nursing facilities (SNF)

• Deductibles for Parts A and B

• Emergency medical expenses during foreign travel

• Excess charges under Part B

• Coinsurance for preventive services under Part B

It's worth mentioning that Plan G and Plan N are also highly sought after at our agency. These plans offer more affordable premiums compared to Plan F, with some cost-sharing aspects. Many clients are comfortable handling the Part B deductible themselves in exchange for the lower premiums offered by Plan G and N.

A crucial point about Plan F is its phase-out at the end of 2019. However, if you were eligible for Medicare before 2020, you're still able to enroll in Plan F.

Another strategy to consider is opting for Plan G. It offers a balance of cost savings on premiums and the assurance of ongoing availability, unlike Plan F, which is no longer available to new Medicare enrollees.

Medigap Eligibility

The moment you turn 65 and become eligible for Medicare, you also gain eligibility to purchase a Medigap policy. This opportunity comes in the form of a unique, one-time open enrollment period, allowing you to enroll in any Medigap plan without the need to answer health-related questions. This open enrollment window spans the first six months following your Medicare Part B effective date.

Once this open enrollment phase ends, Medigap providers will start to require health screenings for future applications. This could lead to potential rejection based on health grounds. Therefore, capitalizing on the open enrollment period is crucial for securing your ideal Medigap plan without any complications.

Medigap Premiums

Medigap insurance premiums are independently determined by each insurance company. It's important to compare the premium rates of different plans. However, don't overlook the historical pattern of rate increases for each plan. It's advantageous to choose an insurer that not only offers competitive current rates but also demonstrates a history of minimal rate increases.

Given the extensive coverage offered by Medigap plans, it's understandable that they typically come with a higher cost compared to other types of coverage. This might lead you to wonder about affordability. If a Medicare Supplement plan stretches your budget too thin, don't worry. Medicare Advantage plans are an alternative worth exploring. These plans also play a significant role in bridging Medicare's coverage gaps. Let's dive into what Medicare Advantage plans offer.

Exploring Medicare Advantage Plans

For those who find the cost of a Medigap plan to be outside their budget, Medicare Advantage plans present a viable alternative. These plans were created to offer Medicare beneficiaries an option that differs from the combination of Original Medicare and Medigap.

Often known as Part C plans, Medicare Advantage plans have a notable feature: the majority include prescription drug coverage (Part D). Unlike Medigap plans that supplement Medicare payments, Medicare Advantage plans take over the payment role from Medicare. When you enroll in a Medicare Advantage plan, Medicare compensates the plan provider to manage and deliver your healthcare needs.

One appealing aspect of Medicare Advantage plans is their minimal health screening process. These plans typically pose only a single health-related question, making it rare for applicants to be denied coverage. 

Types of Medicare Advantage Plans

Medicare Advantage plans typically operate within specific networks of healthcare providers. The extent of these networks can vary, ranging from a few counties to, in some cases, encompassing an entire state. When you choose a Medicare Advantage plan, you agree to follow the plan's guidelines for treatment with their network providers.

The most prevalent types of Medicare Advantage plans are Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). HMO plans typically require you to seek care exclusively within their network, except for emergency situations. This is a more restrictive approach compared to PPO plans, which usually results in HMO plans being more cost-effective than PPOs, though this isn't always the case.

There are several other types of Medicare Advantage plans in Arizona, too. It’s important to take the time to understand your Medicare Advantage plan options before enrolling.

Get Help with Medigap Plans

So, what do you think? Do you need a Medigap plan?

With various options available to fill Medicare's coverage gaps, there's no need to risk being without some kind of supplemental coverage. 

No matter your financial situation, there's likely a plan that aligns with your budget and healthcare needs. Our team of certified agents is here to assist you in navigating the selection process to find the plan that's the best match for you.