Medicare is an extremely valuable healthcare resource for seniors. Medicare alone, however, does not cover all of the healthcare costs you’re likely to face later in life. Since unexpected medical expenses can lead to a lot of stress and financial strain, many seniors prefer to be prepared for what might happen.
Descriptions of Medicare Supplement policies often contain terminology that can be confusing. Here’s a quick lesson on what exactly a plan is offering you:
Eligibility:
Medicare Supplement Insurance can only be purchased by a person who is covered by Original Medicare: Parts A and B. Seniors covered by Part C, or Medicare Advantage, can not purchase Medicare Supplement Insurance.
Private Insurance:
Medicare is a federal program, however, Medicare Supplement policies are provided to consumers by private insurance companies, not the government. Both the federal and state governments do however regulate the plans offered. Each insurance company can decide which plans it wants to offer.
Standardized Plans:
All of the plans are standardized and offer the same basic benefits, but some companies may add extra benefits as well. Currently, available plans include A, B, C, D, F, G, K, L, M, and N. While factors like the cost of a plan may vary, Plan A from one company must cover the exact same things as Plan A from another. Only Massachusetts, Wisconsin, and Minnesota have standardized plans different from the rest of the country.
Medigap:
Medigap is another popular term for Medicare Supplement Insurance. Some websites also call it MSI.
Types of Plans:
- High Deductible: High deductible plans offer lower monthly premiums and a higher annual out-of-pocket spending cap.
- Select Plans: Patients with a Select supplement plan will be required to choose from a smaller network of pre-approved doctors and facilities. The premiums are lower.
- Innovative Plans: These have higher premiums but they include additional benefits like dental coverage.
Prescription Medications:
Medicare Supplement plans don’t cover prescription medication. Customers who do want this coverage can add on Medicare Part D, offered by many companies.
Pricing Structures:
You’ll probably encounter three different pricing structures that affect your policy price. The pricing structure will be determined by the company issuing the policy as well as state laws. These structures are:
- Attained Age: Attained age pricing will be at its cheapest when you first enroll at age 65. The premiums for these policies do increase every year.
- Community Rated: Community-rated pricing means that the premiums will be the same for all people living in an area, regardless of their age.
- Issue Age: The rates are determined by your age when you first purchase the policy, but they don’t increase every year.