Supplemental Coverage Options

While Medicare provides essential health coverage for seniors and certain disabled individuals, it was never designed to cover all healthcare expenses. Understanding supplemental coverage options can help protect against potentially high out-of-pocket costs and provide additional benefits beyond Original Medicare.

Medigap (Medicare Supplement Insurance) policies help fill the "gaps" in Original Medicare coverage. Sold by private insurance companies, these standardized policies help pay some healthcare costs that Medicare doesn't cover, such as copayments, coinsurance, and deductibles. Some plans also cover emergency care when traveling abroad, which Original Medicare doesn't.

Medigap plans are standardized into plans labeled A through N, each offering a different combination of benefits. The most comprehensive plan, Plan G, covers almost all out-of-pocket costs except the Part B deductible. Premiums vary based on the plan letter, insurance company, location, and pricing method (community-rated, issue-age-rated, or attained-age-rated).

To purchase a Medigap policy, you must have Medicare Parts A and B. The best time to buy is during your six-month Medigap Open Enrollment Period, which begins the month you're 65 or older and enrolled in Part B. During this period, you can buy any Medigap policy sold in your state, even if you have health problems, without medical underwriting.

Medicare Advantage (Part C) represents an alternative approach to supplemental coverage by replacing—rather than supplementing—Original Medicare. These plans bundle Parts A and B benefits and usually include prescription drug coverage and extra benefits like vision, dental, hearing, and fitness programs.

While Medicare Advantage plans often have lower premiums than combining Original Medicare with separate Medigap and Part D plans, they typically restrict you to network providers and require referrals for specialists. Most plans include an annual out-of-pocket maximum that limits your financial exposure.

Medicaid, for those with limited income and resources, can work alongside Medicare as another form of supplemental coverage. Dual-eligible individuals may qualify for Medicare Savings Programs that help cover Medicare premiums, deductibles, and coinsurance.

Program of All-inclusive Care for the Elderly (PACE) combines medical, social, and long-term care services for frail individuals who would otherwise need nursing home care.

When choosing supplemental coverage, consider factors like your health status, prescription needs, preferred doctors, travel plans, and budget. The right combination of coverage can provide peace of mind by protecting against potentially catastrophic healthcare costs.