Here’s what you need to know before you buy a Medicare supplement
Choosing the right Medicare Plan can make all the difference between having control of your budget potentially wasting some money. The following video will give you a good foundation on what a Medicare supplement is, how it works and when you should make a purchase.
What to know before you buy
1. Medicare supplemental policies are also known as Medigap because they help fill some of the gaps by paying part of your Medicare-covered expenses. Which of the 10 standardized plans you choose will determine how much and which types of cost-sharing amounts are paid.
With a Medicare supplement you can choose your own providers and are not generally subject to a provider network. The exception is if you buy a Medicare Select policy which is a supplement that requires network usage.
Supplemental policies do not include Part D coverage and you should buy a stand-alone Part D plan to avoid any late enrollment penalty.
2. Medicare supplements are different from Medicare Advantage Plans. An Advantage Plan is another way to receive your Medicare benefits and since benefits are paid by that plan, it is not considered supplemental.
You are also not subject to Medicare Advantage Plan enrollment periods when purchasing a supplement.
3. Knowing when to buy a supplement is very important. The best time to buy is during your Medigap Open Enrollment Period, which begins 3 months prior to medicare eligibility.
During this time an insurance company:
- Must sell you any policy that it sells
- Not make you wait for coverage
- Not charge you more due to health problems
Another time to buy is when you are entitled to Guaranteed Issue Rights. These are times when you can buy a supplement guaranteed, regardless of your health and are generally triggered by a change in your circumstances.
One time you may have these rights is when you are enrolled in Medicare and your employer or union group health policy and it is ending, including COBRA.
You can buy at other times but will usually be subject to medical underwriting.
4. Because plans are standardized, conducting a comparison of Medicare supplement policies is pretty straight-forward. When you look at the Medicare supplement benefits chart you can compare plans side-by-side.
Plans are designated by the letters A through N and plans with the same letter will have the same core benefits not matter which company sells it. For instance, when shopping for Medicare supplement Plan N, the only difference will be the monthly premium.
5. Be aware that premiums from different companies can vary by as much as $100 per month or more. And this is for the same plan!
You should get quotes from several companies or easier yet, get quotes from an insurance broker that represents multiple companies.
Medicare supplement pros and cons
- standardization makes comparing easy
- Network usage not required
- Easy to budget for
- No annual enrollment periods
- Higher premiums than Medicare Advantage
- Part D not included
- Extra benefits very limited or not included
The key to finding the best Medicare supplement is making sure it fits your budget after you factor in the cost of Part D and gives you a level of benefits you can be comfortable with.