Benefits of Medicare Supplemental Insurance

Supplemental Medicare insurance can be beneficial in helping pay for some of the out-of-pocket health care costs that aren’t covered by Medicare.

Mature woman studying a document related to Medigap plans.

In order to understand what Medicare Supplement Insurance is and how it works, it’ll be helpful to have a basic understanding of what Medicare is and how it works, so let’s start there.

What is Medicare and how does it work?

Medicare is health insurance for people 65 or older, certain people under 65 with disabilities and people of any age with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a kidney transplant). The way it works is that it’s divided into separate “Parts”, each aligned to a specific service (i.e., hospital insurance, medical insurance and prescription drug coverage), that can either be used together or separately. Let’s take a look at each of the parts along with each of the specific services they cover.

Medicare Part A, B, and D:

  • Medicare Part A (hospital insurance) covers hospital stays, skilled nursing care, hospice and some home health care.
  • Medicare Part B (medical insurance) covers some doctors' visits, medical supplies, preventative services and outpatient care, such as rehabilitation.
  • Medicare Part D (prescription drug coverage) covers prescription drugs.

Medicare Part C:

  • Medicare Part C (also called Medicare Advantage) is a little different in that it’s actually an alternative Medicare plan sold by private insurance companies that typically includes Medicare Part A, B and D. Some Medicare Advantage plans may also offer additional benefits like hearing, vision and dental.

What is Medicare Supplement Insurance and how does it work?

While Medicare helps cover many of the costs associated with health care, it doesn’t cover them all. That’s where Medicare Supplement Insurance can help. Medicare Supplement Insurance, also known as Medigap, is offered by private insurance companies as a “supplement” to help cover many of the out-of-pocket expenses, such as copayments, coinsurance and deductibles.

Medicare Supplement Insurance can help cover costs that Medicare doesn't cover including:

  • Medicare Part A coinsurance and deductibles
  • An additional 365 days of hospital costs after the lifetime limit on Medicare Part A coverage is reached
  • Medicare Part B coinsurance (20% of most services you receive) and deductibles
  • The additional costs you may face by receiving care from a doctor who charges more than the amount Medicare agrees to pay for a service or procedure
  • Hospice coinsurance
  • Skilled nursing facility coinsurance
  • Emergency care in a foreign country
  • Blood transfusions

Are medicare supplement plans worth it?

Since everyone’s situation is different, the answer to this question really depends on a number of personal factors including your health, your lifestyle, your medical history, your financial situation, the additional money you’ll spend if you get this type of coverage and any extra expenses you may incur if you require care that’s not covered by Medicare.

As you consider your options for health care in retirement, it’ll be helpful to spend some time learning about the different options and coverages offered. Medicare.gov has a chart that may help with your decisions. Finding the right supplemental insurance options for you can help minimize those health care costs you will face during retirement.

State Farm® offers six standardized Medicare Supplement Insurance plans. Your State Farm agent can help you identify what’s available in your state.

Not connected with or endorsed by the U. S. government or the federal Medicare program.

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. State Farm makes no guarantees of results from use of this information.

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