Are Medicare supplement plans worth it?
Medicare is the health insurance program provided by the U.S. government that helps protect people who are age 65 plus, or younger people who have certain disabilities. While Medicare helps pay for a number of medical expenses, it does not cover all the health care costs a retiree will face. Medicare Supplement Insurance is offered by private insurance companies, and it is designed to work alongside the Medicare program by helping cover the extra expenses. Here's a breakdown of Medicare coverage and the out of pocket costs a supplemental plan can pick up.
Medicare Coverage and Costs
Original Medicare is split into two parts, A and B.
- Part A covers hospital stays, skilled nursing care, hospice, and some home health care.
- Part B covers some doctors' visits, medical supplies, preventative services, and outpatient care, such as rehabilitation.
The other parts of Medicare are Part C (also called Medicare Advantage) which is an alternative way to receive Medicare Part A and Part B coverage. Private insurance companies offer these plans, which will provide all of the coverage of Original Medicare, and may also include Part D prescription drug coverage. These plans have various out-of-pocket expenses that include copayments, coinsurance, and deductibles which can change every year. Also, Medicare Advantage plans typically have a network of doctors and hospitals, and going to a health care provider out of the network usually results in higher out-of-pocket expenses for you.
No matter how you receive your Medicare coverage, there will be deductibles, copayments, or coinsurance. If you choose Original Medicare, you have supplemental insurance options that can help reduce the out-of-pocket expenses you will face during retirement.
How Does Medicare Supplemental Insurance Work
Medicare Supplement Insurance, such as the supplemental plans offered by State Farm®, can help pay some of the costs that Original Medicare doesn't cover. These costs can include:
- Part A coinsurance and deductibles
- An additional 365 days of hospital costs after the lifetime limit on Part A coverage is reached
- 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