What Seniors Should Know About Medigap Insurance

Sunrise Senior Living  |  March 10, 2020
Share

Older adults nearing retirement age are sometimes surprised to learn that Medicare doesn’t cover all of their medical expenses. While it does ease the burden of health care costs, the costs that aren’t covered can quickly add up.

That’s where having supplemental insurance can help. Referred to as Medigap insurance, these policies can be purchased to help pay for expenses not covered by Medicare. Medigap policies are sold by private companies.

To help you make an informed decision about what Medigap policy to choose, it’s best to first get a clear understanding of what each part of Medicare covers.

Medicare From A to D

Navigating the different parts of the Medicare benefit can be confusing. Understanding how Medicare works and where a supplemental insurance policy can help is essential for older adults. Here’s a quick overview of what seniors should know about using Medicare to pay for health care expenses.

Medicare Part A

Medicare Part A is the section most people are familiar with. Here are the types of health care expenses it covers:

  • Hospital care
  • Skilled nursing care (at home or in a rehabilitation center)
  • Hospice care
  • Home health services

Medicare Part B

Medicare Part B is designed to cover health care expenses not related to hospitalization or nursing care. It covers preventative care, as well as what Medicare considers to be “medically necessary services and supplies to detect, treat or cure a disease, illness, or medical issue.”

A few examples of care and services covered under Medicare Part B may include some physician appointments, preventative screenings, ambulance services, and medical equipment.

Medicare Part D

While Medicare Part B does cover some prescription drugs, many Medicare recipients choose to opt for additional drug coverage through Medicare Part D. Each provider that offers prescription coverage through Medicare Part D must meet a minimum standard as set forth by Medicare. Insurance providers develop their own list of what prescription drugs they will cover (referred to as a formulary), and decide how to group those drugs into different tiers. These tiers determine how much you pay for each drug.

It’s also worth noting that if you choose a Medicare Advantage plan (under Medicare Part C), your plan will likely include prescription drug coverage. This article can help you learn more about Medicare Advantage plans.

What is a Medigap Policy?

For older adults who have both Medicare A and B coverage, purchasing a supplemental insurance policy is an option. These Medigap policies can cover deductibles, copayments, and coinsurance expenses.

While Medicare doesn’t pay for seniors who develop an illness when traveling outside the country, some Medigap insurance policies will. Unfortunately, similar to Medicare, supplemental insurance often won’t cover monthly fees for a long-term care center, eye care, dental care, hearing aids, and nonmedical home care.

Companies that sell Medigap insurance are required to be licensed in your state and to adhere to federal regulations. One of which is that Medigap policies are guaranteed renewable. If you develop health problems, your supplemental insurance company can't cancel your Medigap policy as long as you continue to pay the premium on time.

How Medicare and a Medigap Policy Work Together

If a situation arises where you are a patient in a local hospital, a Medigap policy can help pay for your hospital costs. As long as you are admitted at an inpatient level of care, your Part A coverage will cover a substantial amount of the bill, but not all of it.

In 2020, you will be responsible for paying the first $1,408 of your hospital expenses. Medicare will pay for the remainder of the expenses up to 60 days. Beginning on day 61, you will be responsible for paying a portion of the daily bill. That amount increases again after 90 days.

The 2020 coinsurance rates, those portions of health care expenses the patient is responsible for paying, are:

  • Days 61 to 90: $352 per day of the same benefit period
  • Days 91 and over: $704 per day for each lifetime reserve day (up to a maximum of 60 days over your lifetime)

If you aren’t familiar with lifetime reserve days, it’s important to learn more about them. After a Medicare recipient uses all of their lifetime reserve days, they are responsible for paying all costs when hospitalized for over 90 days in the same benefit period.

It’s important to know that if you are admitted back into the hospital in the same year, you may be required to pay the first $1,408 again.

What about outpatient procedures and premiums?

Outpatient diagnostic tests and procedures are covered by Medicare Part B. While there is no cost for seniors who qualify for the Medicare part A benefit, there is a monthly premium for part B as well as a deductible. That means if you incur outpatient medical expenses covered by your part B benefit, you will be billed for the first $193 (the 2020 deductible rate) and for 20 percent of the costs after that.

It’s easy to see how these costs can add up quickly.

A Medigap policy can help cover the deductibles, co-pays, and other expenses outlined in these scenarios. For an older adult with a chronic health condition or one who experiences an injury or serious illness, the uncovered expenses can take a big bite out of retirement savings.

Read More About Medicare

We know the ins and outs of Medicare can be confusing. These articles help answer some of the more commonly asked questions:

If you have any questions about senior living for yourself or a loved one, please call (888) 434-4648. One of the experienced Sunrise Senior Living team members will be happy to help!