Even though Medicare covers the bulk of your medical expenses after you turn 65, you’ll still find some gaps in its coverage. A Medicare supplement policy, also called Medigap, can cover many of these expenses:
- Deductibles. Expect to pay a certain amount out of pocket every year before Medicare Part A and Part B coverage kicks in: $1,600 for Part A if a patient is admitted to the hospital and $226 for Part B in 2023.
But deductibles aren’t all of it. You’ll still have to ante up a portion of the costs for doctors’ services, long stays in either a hospital or a skilled nursing facility, medical equipment, outpatient care and other services.
- Copayments. The set fee you pay for any health service you use, such as $25 for a doctor visit.
- Coinsurance. The percentage of a total bill that you will owe for a service or medical equipment, such as 20 percent for an outpatient procedure.
Medicare will pay its share of the Medicare-approved amount for your health care expenses first. Then your Medigap kicks in to help cover your portion of the costs. You’ll pay a monthly premium for your Medigap plan in addition to premiums you pay Medicare for Part A or Part B.
Private insurance companies sell Medigap policies, and you’ll pay your premium to the one you choose, but federal and state governments regulate Medigap plans. A big plus for Medigap, in contrast to private Medicare Advantage plans, is that you can use any doctor or hospital that accepts Medicare.
What do Medigap policies offer?
They pay the coinsurance. All Medigap plans cover the 20 percent Part B coinsurance you otherwise would pay yourself for physician visits and other outpatient services. They also cover the Part A coinsurance costs for inpatient hospital stays.
Medicare covers the first 60 days as an inpatient in a hospital, but you’re responsible for paying the coinsurance for days 61 to 90 ($400 in 2023) and an $800 daily coinsurance after that for up to 60 lifetime reserve days in 2023. You can use a lifetime reserve day only once, but you may apply the days to different benefit periods. A benefit period begins the day you’re admitted as an inpatient to a hospital or skilled nursing facility and ends when you haven’t received any inpatient hospital or skilled nursing facility care for 60 days in a row.
They cover some deductibles. Most Medigap plans cover the Medicare Part A hospital deductible, which is $1,600 per benefit period in 2023.
They add health benefits. Although Medicare won’t cover your hospital stay after you’ve used up your lifetime reserve, all Medigap policies cover the daily coinsurance costs and up to 365 additional lifetime days in the hospital after your Medicare benefits are depleted. All Medigap plans also cover the first three pints of blood you may need each year, either in full or in part.
They may cover other costs. Some plans pay coinsurance costs for skilled nursing facilities and hospice care; excess charges from doctors who don’t accept assignment, which means they can charge up to 15 percent more than the Medicare-approved amount; and foreign travel health care emergencies.