What do Medicare supplement plans pay for? Also known as Medigap, supplement plans do exactly what the name says—supplement what Original Medicare (Parts A and B) won't pay for. If you're not sure whether you need this insurance supplement, take a look at the three primary costs Medigap pays for and how you can benefit from it.
Insurance Deductibles
Most insurance plans have deductibles. A deductible is a fixed amount of money the insured person needs to pay before the policy takes over. This means you'll need to pay up to the set deductible cost out-of-pocket before your insurance begins to pay for medical or hospital care. The deductible resets every benefit year. If you've only paid part of the deductible in one benefit year, it will go back up to the full price the next year.
In general, the specific dollar amount of a deductible varies by insurance type and policy. Unlike employer-sponsored or private insurance, Medicare is a federal program. This makes deductibles across Parts A and B uniform. According to the U.S. Centers for Medicare and Medicaid Services, in 2021 the Part A hospital inpatient deductible is $1,484 per benefit period and the $203 for Part B medical coverage. These amounts are subject to change in future years.
A supplement plan will cover some or all the deductible costs. Review the specific Medigap coverage to learn more about how much your potential future policy will pay for.
Insurance Copayments
You've met your full benefit period deductible. Does this mean your policy pays for the rest of your hospital and medical payments? While your insurance will start to cover healthcare-related costs, it won't pay 100 percent of your bills.
A copayment (also known as a copay) is a fixed cost you're responsible to pay for certain services. You may have different copays for different types of healthcare costs. These could include copays for doctor's office visits, specialist visits, or emergency room care.
Supplement insurance plans may pay for more than the deductible. This type of policy can also cover the costs of copays. Again, like with deductibles, you'll need to learn more about how much of each type of copay a specific supplement covers.
Coinsurance Payments
Coinsurance may sound like copayments. But these two costs are not the same. After you pay your full deductible, you may still need to pay for a dollar amount or a percentage of the medical services. In 2021 Part A coinsurance is $0 for benefit period days zero through 60, $371 for days 61 to 90, and $742 for days 91-plus. Part B coinsurance is typically 20 percent. A supplement plan can offset these costs and pay for some or all of your coinsurance.
Contact a local Medicare insurance professional to learn more about this topic.
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