What you need to know about supplemental health insurance

by the Editor, SeniorInsider | Jun 02, 2011

With all of the advertising on television and the mailings that start arriving at your home shortly before you are about to turn age 65, it is no wonder that you might have questions about supplemental health insurance and your coverage for Medicare. As anyone who has already begun their Medicare odyssey can tell you, it is important to understand your options for supplemental health insurance.

What is Supplemental Health Insurance?

In its simplest form it is exactly as named; supplemental health insurance is secondary insurance that supplements coverage above and beyond what you get with your primary health insurance. It doesn’t matter if your primary insurance is private health insurance or Medicare. However, if your primary health insurance is going to be Medicare, it is especially important that you understand what supplemental coverage for Medicare is and how it works.

An Overview of Supplemental Coverage for Medicare

With basic Medicare health insurance you get Medicare Part A, which provides your hospital stay coverage, along with such items as stays at skilled nursing facilities, home health care and hospice care. With the Part B section of Medicare, you get coverage for your everyday medical expenses like visits to the doctor, laboratory tests, x-rays, durable medical equipment such as oxygen or CPAP machines, as well as some preventative care like flu shots.

What Do You Pay Under Your Coverage for Medicare?

With Parts A and B you have a deductible that must be met before Medicare pays anything. In addition, the coverage for Medicare is not at 100% of your costs. As a result, you can expect to have out-of-pocket costs before Medicare pays a dime towards your healthcare.

If you want to have a higher level of financial payment as part of your health insurance for seniors, then you need to select one of the plans that provides supplemental coverage for Medicare. Recognizing that Medicare Parts A and B do not adequately cover all seniors, the government has created several supplemental plans to extend coverage for Medicare.

How the Supplemental Plans Work

The first thing you need to know about supplemental health insurance coverage for Medicare is that there are a finite number of plans. Medicare has predefined these plans and specified what the coverage levels are for each. These plans are technically part of Medicare, and thus are called Part F, Part G, and so on… all the way to the newest option, Plan N.

The next thing you need to know about supplemental health insurance coverage for Medicare is that even though Medicare has defined and created these plans, they do not actually provide the insurance. Instead, they have approved specific private insurance companies to be the providers of supplemental health insurance. This is why you receive so many mailings from various insurance providers as well as AARP and other senior focused organizations that provide or endorse various plans to supplement coverage for Medicare.

Selecting Supplemental Coverage for Medicare

If you choose to have a supplemental health coverage plan, you will have to make a decision first on which of the plans offers the type of coverage that you think will most suit your needs. Then you will have to determine which of the private companies has the best offer for you.

To understand which of the supplemental plans is best for you, it is important to understand the various levels of coverage offered. This should be compared to what you believe your healthcare needs will be for the year. You can learn about the various plans at the Medicare website as well as by reviewing the ‘Medicare and You’ booklet that Medicare produces.

Differences Between Private Companies that Offer Supplemental Coverage for Medicare

Once you understand the plan basics and have an idea which one most suits your needs, you can then begin looking into the private insurance companies that provide that coverage. Keep in mind that if two different companies are offering you Plan N coverage, they must provide all of the services as defined in Medicare’s guide for Plan N. Where the companies can differentiate themselves is in pricing for the monthly premium, service levels, and possibly any extras that they might choose to include.

Another important factor to keep in mind is that if you elect supplemental coverage for Medicare under one of the extended plans, the insurance company that you select as your provider will become your primary health insurance provider. In essence, they will take over your Part A and Part B coverage from Medicare as well. This is why they are so anxious to win your business, and it is also why it is so important that you understand your options prior to making a decision.



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