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Planning your retirement is one of the most emotional and difficult experiences you’ll have. The thought of thinking about how much you’d have to shell out just for health care and medical bills can already make you really worried. This is especially true in today’s time and age, wherein health care premiums alone can already cost a 65-year-old couple going in retirement about $250,000. For this reason, you should never underestimate the power of Medigap insurance.

Medigap in a nutshell

At its core, Medigap, or Medicare Supplement insurance, helps pay for a portion of the health care costs that an Original Medicare program doesn’t provide coverage for. These typically include copayments, coinsurance, and deductibles. Also, some supplemental policies also cover the insured for medical and health care services the insured incurs while traveling outside of the country.

When you have a Traditional Medicare policy and you purchase Medigap, the first program covers you for its portion of Medicare-approved amount. After this, the supplemental coverage shoulders its share.

Don’t confuse Medigap with Medicare Advantage; the latter provides you with ways to maximize Medicare benefits, while the former serves as a supplement for an Original Medicare policy.

Key highlights and must-know facts about Medigap

These highlights and facts will help you understand and realize the huge benefit of having Medicare Supplemental insurance:

  • To qualify for Medigap, you need to have both Parts A and B of a Traditional Medicare policy.
  • In case you want to obtain Medigap but you currently have a Medicare Advantage Plan, you have to drop the latter first before you can benefit from the former.
  • You have two costs to think about: the monthly premium for the Medicare Part B and the monthly premium you pay your Medigap provider.
  • Each Medigap policy only covers one person. So if you and your spouse want to enjoy its benefits, you have to purchase two separate policies.
  • Only purchase a Medigap plan from an insurance provider licensed in the state to offer these supplemental coverages.
  • As long as you have a standardized Medigap policy, you can have it renewed regardless of health problems. In other words, the insurer can’t cancel the policy, given that you keep paying the premiums.
  • Before, some Medigap plans covered prescription drugs, but those sold after January 1 no longer do. Thus, to receive prescription drug coverage, you have to participate in a Medicare Prescription Drug Plan (Part D).
  • It’s against the law for an insurance company to sell you Medigap if you already have a Medicare Medical Savings Account (MSA) Plan.
  • Medigap, although very helpful in managing health care and medical costs, don’t provide coverage for all expenses.
  • Some of what Medicare supplement plans usually don’t cover include long-term care, private-duty nursing services, eyeglasses, vision or dental care, as well as hearing aids.

Completely dropping a Medigap policy

Just in case you decide you have or need to completely drop a Medigap insurance plan, make sure you time it right. Otherwise, you may have to shell out money for certain penalties or fees.

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