Medicare By Itself is Risky: How a
Medicare Supplement Helps
Newsletter Issue #3
Hi, it’s Wiley Long - president of MediGap Advisors. I’m here to take you to the next step on your guided path to Medicare. Last month I explained the different parts of Medicare and how they work. Now I would like to introduce you to Medicare supplement plans, and explain how they cover the out-of-pocket costs left behind by Medicare and provide additional benefits not covered by Medicare.
How You Can Owe Over $40,000 for Medical Expenses, After Medicare Pays Their Share
After reviewing the various parts of Medicare (Part A, B, and D), it’s easy to see that Medicare leaves behind many uncovered expenses. From the Part B deductible of $185; Part A deductible of $1,364; and 20 percent coinsurance, out-of-pocket expenses can accumulate rapidly. In addition, Medicare sets no annual out-of-pocket maximum - meaning there is no limit as to how high your costs can go in any given year.
Throughout my years in the insurance industry, I’ve heard many frightening stories of couples losing their entire retirement and savings due to medical costs - something that could have been avoided by simply having a Medicare supplement plan.
Should an individual require extensive medical care in their older years, draining their financial resources, they’re typically left relying on the state Medicaid program to help cover medical costs.
This can mean either selling or having assets “seized” to reimburse the state - and this can include such large assets as your home - and other valuable assets you had intended to pass along to your loved ones. (You can learn more about protecting your estate from Medicaid by reading my blog.)
Here’s one story I would like to share:
"Jerry, a semi-retired carpenter in Denver, Colorado suffered a massive stroke while driving. Upon admission to the hospital for the stroke and auto accident injuries, he was immediately hit with the $1,364 Part A deductible.
Days 1-60 were covered under the Part A deductible. Jerry was then responsible for $341 per day for hospital days 61-90, totalling $10,230. Days 91-114 cost him $682 per day, totalling $15,686. Keep in mind - this was AFTER Medicare paid their portion!
Jerry was then transferred to a skilled nursing facility for continued rehabilitation. The first 20 days were paid in full by Medicare; however, the next 80 days cost him $170.50 per day for a total of $13,640.
Unfortunately Medicare doesn’t provide any benefits for skilled nursing after 100 days. So at this point, he was basically forced to continue therapy at home because he could no longer afford the treatment."
Not including ambulance charges, physician fees, and other outpatient care, out-of-pocket medical costs for this single incident ran beyond $42,700. Unfortunately, this individual was admitted to the hospital later that year incurring another $1,364 Part A deductible and additional skilled nursing.
This was a very tragic financial situation that could have been avoided. By signing up for a high-deductible Plan F Medicare supplement plan for less than $100 a month, Jerry’s out-of-pocket cost for that particular year would have been capped at a manageable $2,300.
What is a Medicare Supplement Plan?
Medicare supplement plans are exactly as they sound - plans that supplement your Medicare coverage. This plans pick up where Medicare leaves off, and assist with your medical bills, greatly reducing your risk of losing your savings due to large medical bills.
(Another alternative way to buffer your risk is with a Medicare Advantage plan - I’ll cover that option in a future issue).
There are 10 standardized plans offered by various insurance carriers. You can see a detailed outline of these plans and what they cover on our Medicare Supplement Benefit Grid.
The most popular plans are Plan F (including the high-deductible plan F which offers premium savings!), Plan N, Plan G, and Plan A.
Here is a quick review of what various Medicare supplement plans may cover:
- Medicare’s Part A and B deductible (regardless of how many times you are charged your Part A deductible in a given year)
- Medicare’s 20 percent coinsurance
- Foreign travel - emergency care during the first 60 days of your trip
- Costs associated with seeing non-participating Medicare providers
- Sometimes additional benefits such as no-cost gym memberships, the most popular one being the SilverSneakersprogram.
All of the benefits above are not included in every Medicare supplement plans. Benefits vary by plan, and we’ll take a more in-depth look at the various plans in next month’s newsletter.
The Crucial Medicare Initial Enrollment Period
Here are some important dates you’ll want to remember:
- Three months before you turn 65, you should automatically receive your Medicare card.
- Your Medicare initial enrollment period begins three months before your 65th birthday and lasts until three months after your 65th birthday.
- Your Medicare supplement plan initial enrollment period begins once your turn 65 and sign up for Medicare Part B, and lasts for six months.
During your Medicare supplement plan initial enrollment period, you can sign up for a guarantee-issue Medicare supplement plan. This means you can’t be denied coverage due to any pre-existing conditions.
This may be the only time you’ll have this valuable option - so take advantage of it while you can!
Changing Your Medicare Supplement Plan
You can change Medicare supplement plans any time you choose. There is no specific open enrollment period as there is with Medicare Advantage plans. There is one catch - you would be subject to underwriting, so if you have a pre-existing condition, you can be denied coverage.
You can’t sign up for most Medicare supplement plans until six months before you turn 65. When you’re ready to review your options, contact your MediGap Advisors’ Personal Benefits Manager.
So that’s the skinny on Medicare supplement plans. Next month, I’ll introduce you to the various Medicare supplement plans available and take a more in-depth look at what each plan covers. This will help you get a better idea as to which plan will best meet your individual needs.
If you just can’t wait, you can go ahead and read next month’s issue now. I look forward to guiding you to the next step on your path to 65.