Medicare Supplement coverage refers to one of ten plans that pay for various levels of out-of-pocket expenses related to Original Medicare coverage (i.e. Medicare Parts A and B). Medicare Supplement is a type of insurance that works with primary medical coverage and, consequently, it must be used in combination with Original Medicare Part A and Part B. The potential out-of-pocket costs addressed by a Medicare Supplement plan are:
- The deductibles for Part A and Part B
- Copayments (or coinsurance charges) associated with Part B medical care
- Coinsurance charges and hospital costs for up to 365 days beyond Medicare’s standard benefit
- Excess charges legally allowed beyond Medicare’s reimbursement rate for a medical service
Medicare Supplement plans are offered by commercial insurance companies and the plans are named by a single letter, the options being A, B, C, D, F, G, K, L, M, and N. This naming strategy causes some confusion because in it means there is a Part A and a Plan A, a Part B and a Plan B, etc. Medicare Supplement plans are guaranteed issue within the first six months of Medicare Part B enrollment (for someone at least 65 years old) regardless of health condition. However, if a Medicare beneficiary beyond six months from Part B enrollment applies for Medicare Supplement coverage, he or she may face medical underwriting that could deny coverage based on health factors.
A Medicare Supplement plan is also known as a Medigap plan or Medicare Supplemental Insurance. It may be used in conjunction with a stand-alone Part D Prescription Drug Plan but it cannot be used alongside a Medicare Advantage plan. One concern with Medicare Supplement plans is that they raise overall program spending by making enrollees’ less sensitive to health care prices. This in turn raises MA benchmarks.
