Do Low-Cost Medicare Supplement Plans Save Money?

Medicare supplement insuranceMedicare Supplements are additional insurance policies that Medicare beneficiaries can purchase to cover the gaps in their Original Medicare (Medicare Part A and Medicare Part B) health insurance coverage. premiumsA premium is an amount that an insurance policyholder must pay for coverage. Premiums are typically paid on a monthly basis. In the federal Medicare program, there are four different types of premiums.  continue to increase. The increases have a lot to do with changes brought about by the Affordable Care Act (aka, Obama) and how these changes affect reimbursements to healthcare providers. As a result, a lot of seniors are asking about low-cost Medicare supplement plans (Medigap). But, do these plans actually help you save money?

The answer might surprise you.

In this blog post, we’ll go over what supplemental plans cover, copays, and coinsuranceCoinsurance is a percentage of the total you are required to pay for a medical service. , and how to determine the amount of coverage that’s right for you. We’ll also answer these frequently asked questions about Medigap plans:

What Do Medicare Supplements Cover?

Medigap policies, as the name implies, cover the gaps in your Original MedicareOriginal Medicare is private fee-for-service health insurance for people on Medicare. It has two parts. Part A is hospital coverage. Part B is medical coverage. health insurance. As a general rule, once you have paid your annual Part BMedicare Part B is medical coverage for people with Original Medicare benefits. It covers doctor visits, preventative care, tests, durable medical equipment, and supplies. Medicare Part B pays 80 percent of most medically necessary healthcare services. deductibleA deductible is an amount a beneficiary must pay for their health care expenses before the health insurance policy begins to pay its share., Medicare covers about 80% of the rest of the “reasonable charges”. However, that still means that you’re on the hook for 20% of copaymentsA copayment, also known as a copay, is a set dollar amount you are required to pay for a medical service. and coinsurances. This is where most seniors can save some money.

The first thing you’ll want to do is to look at the Medicare Supplement Plans Comparison Chart so you can better understand what each plan covers. It’s the easiest way to compare supplemental Medicare coverage.

Medicare Co-payments and Coinsurance Explained

Copayments are fixed fees that you pay for various medical services. For instance, when you see your primary care physician you may have to pay a $20 co-payment, and seeing a specialist may cost $25. These fixed-price fees are predetermined by Medicare based on the type of service.

Although it may sound like the same thing, coinsurance is another out-of-pocket medical expense, but it is a percentage of the service cost instead of a fixed amount.

Copayments and coinsurances can really add up fast, especially if you see your doctor frequently or have a condition that requires hospitalization. If this sounds like you, then having a Medigap Plan GIf you're turning age 65 this year, Medicare Supplement Plan G is the most comprehensive Medicare supplement you can buy. It's also the most popular. You might be thinking that Medicare Supplement Plan F is... or Medigap Plan NMedicare Supplemental Plan N is one of the ten standardized Medigap plans. Although it is one of the newest plans available, Medicare Plan N is quickly becoming a favorite with Baby Boomers aging into their... might be the best strategy. However, if you are very healthy and rarely see the doctor, you can save a lot of money by taking a little more risk. It all comes down to weighing your out-of-pocket expenses versus your supplemental insurance costs.

The following Medicare Supplement Plan Benefits Chart offers a quick look at the benefits provided by the ten standardized Medigap lettered plans (A through N).

Evaluating Cost Differences

Let’s assume that the Medicare-approved amountA Medicare-approved amount is what Medicare will pay for a covered service. Healthcare providers that agree to Medicare assignment accept the approved amount without excess charges. What Does Medicare-Approved Amount Mean? A Medicare-approved amount is... for a doctor’s office visit is $75. In this case, Medicare pays $60 and your portion of the bill, the coinsurance, is $15. In other words, there’s a $15 gap that has to be paid.

Medicare supplement insurance, or Medigap if you prefer, lowers your health care costs by covering the copayment and coinsurance gaps in your Original Medicare (Part AMedicare Part A is hospital coverage for Medicare beneficiaries. It covers inpatient care in hospitals and skilled nursing facilities. It also covers limited home healthcare services and hospice care. Hospital Insurance and Part B Medical Insurance) coverage. Using our example, if you have a policy that covers all of your Part B coinsurance, you will save $15 each time you need to see the doctor.

As you can see, having a policy that offers you full Part B gap coverage won’t save you money if you don’t use outpatient services regularly. However, if you see your doctor and specialists often, those fees add up fast and your full-coverage Medigap policy is saving you money.

Do the math. If you’re paying $200 per month ($2,400 a year) for your Medigap policy but you’re only saving $500 a year on copayments, you might want to consider a plan with a little less Part B coverage and a lower monthly premium.

Choose Your Plan Carefully

Saving money on copayments and coinsurance is smart, but you don’t want to be penny wise and pound foolish. It’s important to fully understand the costs and benefits of your supplemental Medicare policy. The right plan for you depends on your medical needs, expenses, and budget. You don’t want to buy more insurance than you can afford. At the same time, you don’t want to put your savings or property at risk by not having enough coverage in the event you should become hospitalized or critically ill. That’s why it’s so important to do your homework and choose wisely.