There’s a number of reasons why you should have a Medigap plan (commonly referred to as Medicare supplement plans) to go with your Part A and Part B Medicare coverage (a.k.a. Original Medicare). In short, Part A & B take care of roughly 80% of your health care expenses with you being responsible for the other 20%. Medigap policies are designed to help take care of that other 20% you’re exposed to as well as your deductibles.
For example, if you went to the hospital and had a procedure done, you could expect to receive a bill for your Part A deductible and a number of other expenses, which can easily get into the thousands of dollars – your Part A deductible alone is $1,216 (for 2014). If you had a Medigap Plan F, you would be covered at 100% and you would just be paying your monthly premium.
These plans are guaranteed issue when you’re turning 65 and going on Medicare or when you have a special enrollment period available to you (e.g. coming off of group health insurance). You have a 6-month window from your Medicare Part B’s effective date to purchase a Medigap plan, known as your initial open enrollment period. Outside of this window (and assuming you don’t have a special enrollment period available to you), you can be underwritten – meaning you would have to answer the health questions cited on applications.
One of the biggest advantages of Medigap palns are that they all feature standardized benefits (e.g. a plan F from company ABC is the same as a plan F from company XYZ) and are guaranteed renewable! You can also purchase a new Medigap plan at any time during the year
You can also go to any doctor – no HMO or PPO networks to worry about! The only supplement plans that feature networks are SELECT plans – these plans can offer a lower premium compared to regular Medigap plans, but not every area has them available and they’re limited to certain options.