Is Medicare supplemental insurance worth it? Here's what some experts think.
Medicare supplemental insurance, also known as Medigap, is extra insurance coverage you can purchase from a private insurance company to fill in the gaps that Original Medicare doesn't cover. Original Medicare Parts A and B cover hospital and medical services, respectively, but it doesn't always pay for all your healthcare costs. Generally, you must pay for deductibles, copayments, coinsurance and other expenses.
While the benefits in each lettered Medigap plan are the same, premiums vary by insurance company, plan and where you reside. As such, it's easy to compare apples to apples to see what different insurers charge for the same policy (Medicare.gov offers a pricing tool to get a general idea of prices in your area).
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When Medicare supplemental insurance is worth it
Medigap could be beneficial for many seniors as a way to cover the gaps left by other insurance coverage. Still, deciding whether Medicare supplemental insurance is worth it for you will likely depend on your unique financial situation, health, lifestyle goals and other considerations. According to the experts we spoke with, enrolling in Medicare supplemental insurance may be worth it in the following situations:
When you enroll in Medicare
Amanda Reese, a Medicare department manager at Hafetz and Associates, recommends enrolling in Medicare supplemental insurance when you first get Medicare A & B. "This allows you to get into any plan that is available to you without any underwriting or preexisting conditions."
And if you have the opportunity, consider getting Medigap before age 65. "Another time you should strongly look at a Medicare supplemental plan is if you get Medicare under the age of 65," Reese says. "In some states, this is your only chance to get a supplemental plan before you are 65. If you don't opt in right away, you are locked out from applying until you turn 65."
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When you want to use your own doctor
Medicare supplemental insurance may be worth it if you value doctor choice. As John Hill, president of Gateway Retirement in Rock Hill, South Carolina, points out, "You may also want to consider a supplement when you want your doctor and not the insurance company in charge of your care. A supplement does not require a referral to see any doctor."
When you want to protect your finances against costly healthcare expenses
If your budget has little room for emergencies and "what if" situations, Medicare supplemental insurance coverage could help you overcome unexpected expenses.
"Medicare supplements give peace of mind, knowing if Medicare covers it, your supplements cover it," says Hill. "With Medicare supplements, you won't have medical cost surprises, which could wreck your budget. Medicare supplements can help protect your finances from high costs, which can destroy your nest egg."
When Medicare supplemental insurance is not worth it
Of course, Medigap isn't for everyone. You may decide to forego Medicare supplemental insurance in certain situations, such as:
When you already have coverage
You may not have a pressing need for Medigap coverage if your existing insurance already provides comprehensive coverage for your medical expenses.
"If you're pretty healthy and have other coverage that takes care of most of your medical expenses, you might not need Medicare supplemental insurance," says Terry Turner, a financial wellness facilitator and writer for RetireGuide.com.
"And if the cost of the premiums feels like too much of a stretch for your budget, consider other options. But if you're already covered and feeling good about your healthcare situation, you probably don't need to stress about getting Medigap," adds Turner.
When premiums are too high
Depending on your insurance company, plan and where you live, your premiums could exceed your budget. In that case, you might think twice about getting supplemental Medicare insurance.
"Sometimes, when my clients are in their later years, supplement prices are too high for them," says Hill. "At that point, consult with your medical providers to see what networks they are in. Then, with the knowledge of costs, they can proceed to get an Advantage plan with the lowest maximum out-of-pocket costs."
Find out what a Medicare supplemental insurance plan could cost you now.
The bottom line
Ultimately, deciding whether Medicare supplemental insurance is worth it comes down to its benefits and costs as it relates to your personal situation. "Seniors should view supplements as a guard for their budget and an open door for their medical needs," says Hill. "It should be viewed as a product that brings predictability and peace of mind."
As with any financial product, it's wise to do your due diligence and weigh the pros and cons of Medicare supplemental insurance before making a decision. Consider your overall health, family history, how often you see a doctor and your lifestyle to help determine if you have a need for additional coverage. Of course, run the numbers to see how your premiums, deductibles, copays and other costs would impact your budget.
