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Do I Need a Medicare Supplement Plan?

Medicare Part A and Part B can go a long way toward paying health care costs like hospital stays and doctor visits as you age, but they don't cover everything. You will need to decide whether you should add to your coverage by purchasing a Medicare supplement policy, which can cover many of your out-of-pocket expenses. You could also elect to go without traditional Medicare and choose an alternate health care plan.

  1. Identification

    • A Medicare supplement policy, sometimes referred to as Medigap, fills some of the coverage gaps that occur with Medicare Parts A and B. Although private insurance companies sell Medigap, the federal government mandates that all coverage must be the same regardless of the insurer. Depending on your state of residence, you can choose from up to 12 plans, identified with the letters A through L. Generally, the deeper into the alphabet you get, the more coverage a plan provides.

    Coverage

    • Medicare Parts A and B both include annual deductibles that you must pay out of your own pocket before coverage begins. As of 2011, the Part A deductible is $1,132 and Part B is $162. You also may have a variety of copayment amounts, depending on the services you need. A Medigap policy will help you meet some of these additional costs, which can ease your financial burden after retirement.

    Considerations

    • Depending on your situation, you may not need a Medigap policy. For example, if you still work or can carry your employer's medical coverage into retirement, you could be paying for duplicate coverage with a Medicare supplement plan. If you are financially well off, you may have the resources to meet the deductibles and copayments out of your own pocket. And if your health is very good, you may not need to use your Medicare supplement plan very often, although this can change as you continue to age.

    Alternative

    • An alternative to a Medigap policy is to purchase a Medicare advantage plan, also known as Medicare Part C. Private insurers sell advantage plans, which you may use in place of Medicare and a supplement. However, unlike Medigap policies, the federal government doe not regulate Medicare advantage plans as strictly, and there are many different plans from which to choose. Although a Medicare advantage plan may offer lower premiums, you need to examine your plan carefully before buying to ensure it offers all the coverage you need.

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