Deciding if You Need a Medicare Supplemental Insurance Plan
Switching from a private health plan as a business owner or employee to Medicare at age 65 can relieve financial anxiety related to visiting the doctor. More than 39 percent of working adults in the US with private health insurance had a high-deductible health plan (costing at least $1,300 annually for individual coverage) as of 2016. In contrast, traditional Medicare (termed Original Medicare) normally involves payment of a much smaller annual deductible for each of its two main parts.
However, Medicare only covers 80 percent of the hospital or outpatient treatment costs. Your decision whether to purchase a supplemental Medigap plan needs to be based on various considerations as described below.
Personal Finances, Healthcare Costs, and Medicare Options
Monthly income and savings can be a key factor in choosing whether to purchase Medicare’s options. While there is typically no monthly premium for Medicare’s Part A, a monthly premium usually needs to be paid for Part B (which covers medical services, including physician visits). In 2016, 91 percent of all people covered by Medicare were enrolled in Part B. If you do not have sizeable savings – and require periodic medical care – you can still end up financially-depleted by high annual medical expenditures, even as a Medicare beneficiary.
While an impoverished senior may qualify for Medicaid to cover the remaining 20 percent of costs not paid by Original Medicare, most seniors will be responsible for paying those uncovered costs. The Centers for Medicare and Medicaid Services (CMS) describes Medigap as a type of private insurance designed to cover Original Medicare’s “gap” in coverage. In this way, a person who has regularly-scheduled visits with physicians can curb “out-of-pocket” medical expenses.
Your Risk for Chronic Disorders – Diabetes and Heart Disease
More than 25 percent of people aged 65 and older in the US have diabetes. Besides regular visits with an endocrinologist (specialist physician) and oral antihyperglycemic drugs, newly-diagnosed diabetics who are seniors often are referred for nutrition counseling and social worker consultations.
If you are obese and/or smoke, your risk for diabetes (Type 2) is increased. A diabetes diagnosis involves following the endocrinologist’s management plan (including daily medications) to avoid developing common diabetes complications. Similar to most specialists, the cost for an endocrinologist visit is usually higher than one with a primary care (generalist) physician.
According to the Agency for Healthcare Research and Quality (AHRQ), 37.2 percent of all people aged 65 and older in the US have heart disease. Chronically-high cholesterol levels have been linked to heart disease in middle-aged people. Physicians usually prescribe daily statin medication for people who have high LDL cholesterol levels and/or high triglycerides. If persistent high cholesterol is not treated, plaques in the arteries – that can lead to a blood clot traveling to the heart – are more likely to develop. For this reason, anyone diagnosed with heart disease needs to follow their physician’s directions in order to minimize the likelihood of a premature heart attack.
Which Medigap Plan Provides the Best Coverage?
Differences between Medigap plans exist in terms of deductibles, monthly cost, and full spectrum of coverage (since some plans may offer more than the CMS-required standardized coverage). Therefore, careful review of the plans available in your geographic area is important in order to choose a plan that meets your individual needs.
If you had already assumed that your monthly income was not high enough to consider purchasing a Medigap policy, an AHIP report in 2018 noted that 36 percent of Medigap enrollees in 2015 had an annual combined beneficiary and spouse income below $30,000.
Although you cannot purchase a Medigap plan if you are covered by Medicare Advantage, your particular Medicare Advantage plan may even cover 100 percent of your hospital costs (if received in an “in-network” hospital) – in contrast to Original Medicare’s standard 80 percent coverage limit.
For these reasons, it makes sense to carefully consider your options before you first enroll in Medicare. At Life First Financial & Insurance, we can help you to compare available Medigap plans, and determine if these plans can meet your unique needs and circumstances. Contact us at info@lifefirstfinancial or 954-256-5356.