Medicare is designed in the United States so that, once you become eligible to receive Medicare benefits, whether by reaching the age of 65 or by being a younger person who is approved due to disability or other reason, you will automatically be enrolled in Medicare Part A. Before we go any further, we should describe and define the various parts of Medicare.
Part A: Hospital insurance covering inpatient care, skilled nursing, and at home care. This has no premium attached to it, so long as you paid Medicare taxes while working.
Part B: medical insurance covering outpatient care, doctors’ visits, home health services, and durable medical equipment. There is a monthly premium attached to Medicare Part B, which can be automatically withdrawn from Social Security benefits.
Part C: Medicare Advantage plans, which bundle the services of Parts A & B into one package. There is a monthly premium, and you may also face out-of-pocket expenses.
Part D: Prescription Drug Coverage. This has a monthly premium.
As we said above, Part A of Medicare is automatic as soon as you’re eligible for it. You will have to elect to also receive Parts B or D, or if you’d like to enroll in an Advantage plan of Part C.
Medicare works as health insurance. As long as the facilities you visit accept Medicare, what will happen is that the doctor’s / hospital’s billing administrators will send the bills to Medicare. Medicare will then approve or disapprove of the services. If they approve, Medicare determines the value of the services provided, and will pay 80% of that value. The remaining 20% could be billed to you.
This is where a Medicare Supplement plan, or a “Medigap” plan, comes into play. If you have a supplement plan, you will not have to pay that 20% yourself. Instead, if you have a Medicare Supplement plan, once Medicare pays the 80%, they will pass on the remaining amount to the secondary insurance, to cover the remaining balance.
Medicare Supplement plans do precisely that—they supplement the Medicare coverage that you already have. While Medicare pays their normal 80%, the Supplement plan will cover the remaining 20%. The goal is that you won’t be responsible for the remaining 20% on your own, which, depending on what medical services are performed, could be very expensive. Instead, you can select a Medicare Supplement plan that will have a monthly fee that you pay, instead of having to pay a potentially large lump sum amount to a medical facility.
There are certain things to remember involving a Medicare Supplement plan. Many people describe Supplement plans as, “They pay what Medicare doesn’t.” In the strictest sense, that is true. The Supplement plan will pay the balance left behind when Medicare approves. But what this statement may falsely lead people to believe is that, if Medicare does not approve a medical procedure or service, that the Supplement plan will pay for it instead. This is not the case. A Medicare Supplement plan follows all Medicare guidelines. This means that a Supplement plan will only pay for services if Medicare first approves the charges involved. Medicare does not cover everything, and will not approve certain care, such as long-term, dental, hearing, and vision. There are separate plans that are available for those types of care, however. The general rule of thumb with a Supplement plan is that, if Medicare covers it, the Supplement plan will also cover it. But it’s best to check with Medicare first if you have any doubts if they’ll cover a particular service or procedure.
Two of the most popular providers of Medicare Supplement plans are from AARP Health, underwritten by United Healthcare, and Humana. Both companies offer plans that have differing levels of coverage and corresponding monthly premium payments. There are also plans that will combine both your Part A and Part B Medicare coverage along with Medicare Part D prescription drug coverage. These are not traditional Medicare supplements, however, and are instead called “Plus” or “Advantage” plans. They have different rules and requirements, and frequently have a “network” associated with them, requiring you to visit specific doctors and hospitals.
There are many options available. If you are in the market for a Supplement plan, you should consider the many different options available to you, and select a plan that fits your financial and medical needs.