What Is Medicare Carve Out?

Medicare carve out is a type of insurance available to individuals with Medicare who also have private insurance. These plans pay the balance of what is left between what your health insurance would have paid if you weren't on Medicare and what Medicare did pay.

Uses

• Many insurers and employers use carve out plans because they are more cost-effective method of providing insurance to the elderly. Typically, companies save money on providing health insurance when using a carve out plan compared to companies without a similar plan.

Considerations

• The use of Medicare carve out insurance has been attacked by the Equal Employment Opportunity Commission and the AARP as being discriminatory against seniors. However, an exemption in the Age Discrimination Act for health care insurance confirmed by the Supreme Court has provided solid legal ground for these plans in recent years.

Benefits

• Supplemental insurance covers all the expenses Medicare does not cover. Medicare carve out insurance, on the other hand, first has Medicare pay for expenses and then fills in the gap of what is left over up to the maximum of the carve out insurance policy.