How to pick a Medicare supplemental insurance plan
Medicare supplemental insurance in an important part of your financial plan in retirement because it helps you cover your out-of-pocket costs not covered by Original Medicare, such as copayments, coinsurance and deductibles. This insurance, also known as Medigap, may also help cover services not covered by Original Medicare, such as emergency medical care when traveling abroad.
If you're a senior whose existing insurance policies don't cover your additional upfront costs for medical services, you may want to consider getting a supplemental Medicare policy. Doing so can help you pay for unexpected and high-cost medical care — and that can help keep your finances intact after you stop working.
Keep in mind, though, that Medicare offers 10 different plans in most states, with varying coverage amounts for each one. So, before choosing a policy, take some time to learn what each Medigap plan covers. And, if you're not sure how to choose the right one, consider these recommendations from medical health insurance experts.
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How to pick a Medicare supplemental insurance plan
According to the experts, there are a few steps you can take to help you pick the right Medicare supplemental insurance plan, which include:
Learn your Medigap options
Gaining a better understanding of your Medicare supplemental insurance options begins by comparing the various health and drug plans at Medicare.gov. Choose the year you need coverage, your ZIP code and your county. You'll be able to select from the Medicare Advantage Plan (Part C) or Medicare drug plan (Part D). To review your Medicare supplemental insurance plan options, select Medigap policy and click "Find Plans."
From there, you'll see links for a chart of Medigap plans A through N that details each plan's coverage, deductible and other valuable information. Taking the time to thoroughly understand what each plan covers can help you determine what options you need most.
Reva Sheehan, senior director of customer insights at mPulse Mobile, recommends making choices based on your current health condition and your expectations for the care you'll need.
"Someone with multiple chronic conditions who likely sees several doctors or specialists might prefer a traditional Plan F — which is the most popular — whereas their healthier counterpart might take a Plan F-High Deductible," says Sheehan. "The monthly premium is lower, and they're less likely to be a high-utilizer, so their plan could be treated more as a safety net."
Find out how Medicare supplemental insurance could benefit you here.
Compare the policies available to you
Choosing the best Medigap policy also involves matching your needs to the policy that best addresses them. Your anticipated needs might include:
- Your current health status: If you have a chronic condition, it can help to consider a Medicare supplemental plan that covers more out-of-pocket expenses.
- Your future health needs: Choosing a comprehensive plan could help you save money if your health declines.
- How much you can afford: Consider how the cost of premiums, deductibles and other out-of-pocket expenses fit within your budget.
- Whether you want to choose your own doctor and hospital: If these choices are important to you, make sure any plan you're considering allows for doctor and hospital choice.
A good place to start might be your medicine cabinet, according to Wilson Coffman, president of Coffman Retirement Group in Huntsville.
"Each Medicare recipient must consider what types of medications they're on. Their medications will dictate what type of plan fits their needs, whether it be Medicare supplement or Medicare Advantage," says Coffman.
Compare the costs
Once you identify a policy that best suits your needs, compare carriers by cost to find the best price.
"Medigap plans are standardized, so a Plan N from carrier 1 is the exact same coverage as carrier 2," points out Scott Maibor, a medical advisor with Senior Benefits Boston. "There are no networks. Price will vary by carrier and is the only criterion to base the selection on, assuming both are reputable carriers."
To help determine if the cost is worth the coverage, Maibor advises estimating your medical expenses for the coming year, such as deductibles and copays, and then subtracting the premium to see if a supplement makes sense.
Also, remember that premiums for Medicare supplemental plans can rise over time.
"Seniors should compare Medigap policies with their cost and rate increases over the past five years," notes Coffman. "All Medigap Medicare supplement policies increase on a yearly basis, and you should likely choose which one has the least number of increases."
The bottom line
It's wise to shield yourself against unexpected expenses, and that's especially true for many seniors. Consequently, different types of insurance coverages are often recommended by financial advisors to help protect your finances against a major event or catastrophe.
Similarly, Medicare can help cover your health needs in your later years, and Medicare supplemental insurance can help you pay for any bills your health insurance and Medicare doesn't cover. Do your due diligence and run the numbers to ensure the added protection could help safeguard your finances.
