How Do Medicare Supplements Work?
Let's look at the basics of Medigap plans
The whole concept of Medicare Supplements can be new to most people entering the age of Medicare. The first question we usually get from clients is quite simple, How do Medicare Supplements Work?. As with most things that are complicated, these people instincts are correct in that it's usually best to start with the basics. So let's do that. Medicare Supplement 101. How do they work?
First, before understanding these plans, we need to understand what they are supplementing, original Medicare. The current design of Medicare harkens back to it's original design many decades ago and follows the eventual evolution and additions to that occurred ever since. Medicare breaks up into two main parts in which it divides facility or hospital based care (called Part A under Medicare's love for letters in names) and physician or doctor services (called Part B). Part A came first with Part B to follow. Each has a deductible after which Medicare will pay 80% of the charges which means the Medicare enrollee will pay this 20% indefinitely which is one of the main issues with Medicare coverage since 20% of a big bill is a lot of money. There was no coverage for medication in original Medicare. So that's Medicare in a nutshell. How do supplements work?
The supplements fill in the main holes of Medicare coverage to provide nearly 100% coverage when using Medicare providers for covered benefits. This means there should be very little if any cost out of pocket for the mainstream medical care. You didn't think it would be that easy though, did you? There are different plan options in the Medicare supplement world that function differently. The traditional plans run from A (again with the letters) through N these days although some older people may remember others like the J plans. Each plan has different benefit options that primary piece meal these categories: Part A Deductible, Part B Deductible, Excess (extra paid to doctors that don't accept Medicare), and Skilled Nursing Facility co-insurance. They all cover the 20% co-insurance of Medicare although the N plan will require some cost-sharing. From years of experience we can recommend the F plan as the best blend of cost and benefit with all core benefit categories above covered. Excess is especially important going forward. So those are benefits...who offers the supplements?
Private carriers actually offer and administer the Medicare supplement insurance plans along the standardized benefits outlined by Medicare. You pay your premium to the actual carrier in addition to any payment to Medicare (say for Part B premium). The carriers ultimately look to Medicare to determine eligibility of individual claims. This means that Medicare determines if a given medical service is covered or not. The supplements will not pay for benefits that Medicare doesn't pay it's share for. Essentially, they will not cover above and beyond benefits that Medicare covers. Again, there are very few blind spots now with Medicare since preventative benefits and Part D prescription coverage (must be purchased separated from Medicare or a Medicare supplement insurance) have been added to the market.
Hopefully that gives the novice a good basis for how Medicare supplement insurance plans work but of course, there are always questions that arise since everyone's situation is unique. Feel free to contact us a licensed Medicare supplement agents to go over your situation and address any questions that may arise.