Covering Your Greatest Asset: How Can Supplemental Medicare Coverage Help to Protect Your Pocketbook?

Turning 65 has a lot of pros and cons, especially those that come with knowing that you have officially reached the age of Medicare.  It’s great that you have reliable and affordable insurance that you can depend on, but that coverage also comes with caveats and stipulations you may not understand or know about, and these can be stressful.

For instance, did you know that Medicare only covers 80% of charges, and only if those charges are “Medicare approved”?  Or that if you travel outside of the country, you do not have insurance coverage because Medicare alone does not cover foreign travel?

These little details and more are exactly why you should take the time to learn about – and invest in – what is called “supplemental Medicare coverage,” or a second insurance that protects your pocketbook from those charges and incidents that Medicare does not pay.

What is Supplemental Coverage?

Supplemental coverage, also called secondary insurance or Medigap (because it covers the gaps Medicare does not pay), is an outside insurance coverage that limits the amount that you have to pay when you are getting medical care.

These types of coverage plans can give you anywhere from basic protection – keeping you safe from major and catastrophic expenses – to full protection where you will not have to pay a penny out of your pocket to receive medical coverage for just about any potential issue that may arise.  

Supplemental insurances are labeled by the letters A, B, C, D, F, G, K, L, M and N and each type of letter refers to a policy that has differing amounts of coverage for you.  There is more information on what each of these policies covers online at Medicare’s website or supplemental insurance sites like this one.

Protection from the 80/20

By now you have probably heard of the magic 80/20 number, where Medicare pays 80% of the approved claims that are filed on your behalf for your patient care.  You have probably also learned the hard way, if you already have Medicare, that the 20% they do not pay can add up, ranging anywhere from $20 for a basic co-pay at a doctor’s office to hundreds of dollars for an MRI or hospital stays.  This is after your annual beginning of the year deductible of $183 is met

Two very common diagnoses for millions of people in the United States are cancer and heart failure.  These two diagnoses can result in hundreds of thousands of dollars in medical bills, of which only 80% are paid by Medicare.  Your cost can be in the thousands or tens of thousands without protection.

Supplemental coverage can help protect you from the 20% co-pays out of your pocket for costs like these that have no cap on them.  This means that they can continue to pile up on you as long as you continue to need treatment. Supplemental coverage can also pay your deductible for you, saving that much-needed money after the holidays when many people are already counting their pennies.

Hospital Coverage – Is it Fully Paid By Medicare?

Medicare comes in two parts – Part A and part B.  Part A is your hospital coverage and Part B is for all other doctor expenses.  When you have to go to the hospital, you probably assume that since you have Medicare, your visits will be covered except for maybe the 20% that you know you have to pay.  However, this, again, has stipulations attached to it.

To begin with, you have a deductible that you must pay when you go to the hospital during what is called your “benefit period.”  This deductible is $1340 per benefit period.  You can have multiple benefit periods in a year, requiring multiple $1340 deductibles.  For more information on benefit periods, you can click here.

Additionally, you have a hospital coinsurance in the event of a traumatic incident or illness that requires you to stay for a lengthy time as an inpatient.  This coinsurance kicks in on the 61st day of hospitalization and is $335 per day for days 61 – 90.  That can become quite costly at a time when the last thing you should be concerned about is the excessive price that getting well is going to cost you.  Supplemental insurance helps give you peace of mind during this time as well.

Rehabilitation and Skilled Nursing

Accidents happen and they often can’t be avoided.  Whether it is your fault or not, you need to be able to confidently seek treatment and get the care that you need to heal.  Besides accidents, you may need surgery to repair injuries that are chronic or urgent. Age can often bring with it problems with balance, completing basic activities of daily living and other important issues that require extra assistance.

Sometimes that means that you will require rehabilitation or skilled nursing care.  Medicare Part A covers skilled nursing care with limitations.

For instance, Medicare does not cover long-term care.  The intent behind covering skilled nursing and rehabilitation is to help patients who have been hospitalized and then discharged will an illness, injury or operation that requires further follow up and assistance to avoid a repeat hospitalization.

Medicare will cover up to 100 days for skilled nursing and rehabilitation per benefit period, but the coinsurance is $167.50 per day.  If you or your loved one stay the full course of 100 days, you are looking at almost $17,000.  Many seriously ill patients have to stay the full 100 days and then return during their next benefit period, thus incurring yet another $17,000.

Certain Medicare supplemental policies will cover these costs for you, allowing you to focus on getting back to your normal self.

Additional Benefits With Side Costs

Many other benefits that are often overlooked until they are needed are not covered at all by Medicare, or only covered partially.  

Should you or a loved one need hospice treatment, there are many caveats to how Medicare will pay for this medical necessity.  Hospice benefits are available once your doctor and a hospice provider certify that you have a terminal illness and you have less than six months to live.  Once this occurs, you must agree to accept palliative care – in other words, comfort care instead of care intended to cure your illness – and sign a statement agreeing to this.

At this point, Medicare Part A will kick in and cover your hospice care, except for room and board, care unrelated to hospice treatment or performed by a non-hospice provider, and medications that are not for symptom control or pain relief.  Your cost for hospice care can accrue quickly – you are responsible for 5% of the Medicare approved costs of any inpatient respite stays (times that your doctor feels you need to be temporarily in a hospice facility), and up to $5 for each medication.  Supplemental insurance can cover this for you.

In addition to hospice benefits, another often overlooked necessity of health care is that of blood transfusions.  Yes, Medicare Parts A and B both cover blood transfusions, but with each type of coverage you must be prepared to pay out of your pocket for the first three pints of blood each year.  According to recent statistics, the average pint of blood typically costs between $130 and $150. However, most supplemental plans cover most, if not all, of this hit to your purse.

Traveling is wonderful, and is often something many people wait until they retire to be able to do.  Some people have waited for decades to be able to take the time for that trip across the world, and have well-earned it.  However, making the final decision to explore new places should not have to ultimately depend on whether or not you will be covered in the event of a medical emergency while you are away from your normal customs and care.  Medicare by itself does not pay for care received while you are in a foreign country. Depending on which country you are in, this can result in huge medical bills or, even worse, complete denial of care because you do not have insurance and cannot pay the exorbitant cash price at the time of service.  This is where Medicare supplemental insurances really shine, covering you for medical care (up to your plan’s limits) and giving you the peace of mind to be able to relax and enjoy your vacation, knowing that should anything unexpected happen you will be covered for medical care.

Spend Your Money Wisely – Invest in a Supplemental Insurance Policy

Determining whether or not a Medicare supplemental insurance policy is cost effective for you should be decided after you have sat down with an agent who has explained each type of policy, what it covers, and what the cost is.  

You can then review the gaps in your Medicare coverage  and decide if you are willing to take a chance on leaving yourself open to the potentially huge or catastrophic debts that you may incur. If you would feel safer knowing that no matter what happens to your health, you are covered and can concentrate on getting the best care possible, then a supplemental health insurance policy is a wise investment..