There are two ways to handle your coverage when you are adding Medicare into your world.
First place to go. Look at Page Six of the Medicare & You Handbook, 2020.
Look to the left side of that page. Go towards the bottom and you’ll see the word “Medigap”. This is exactly why we like to refer to this policy as a “Medigap Contract”. Yes, it’s also referred to as a “Medicare Supplement”. But, when we ask a room full of 100 people that are enrolled in Medicare if they have a supplement? They all say “YES”.
But, they have no idea if they have Medigap or Medicare Advantage.
So, we start here. Medigap vs Medicare Advantage. If you can tackle this, you’ve won half the battle with understanding Medicare.
Many of our conversations revolve around these two choices. In all fairness, there is a third choice. Retain only Original Medicare. We don’t advise doing that, but it is another alternative.
Let’s touch on Original Medicare for a minute and then it’s a bit easier to build on the Medigap conversation.
When you are enrolled into Original Medicare, this means that you have enrolled into Medicare Part A and Part B. You have both hospital and medical coverage via the federal health insurance system. You pay a monthly premium for this coverage. This premium is paid to the government.
Now, for that premium, the government will now cover (i.e. pay for) 80% of your medical insurance costs.
Note that we say “80%”. That is not 100%.
So, you can do one of two things to cover that 20% hole.
You can purchase a Medigap contract (a.k.a. a Medicare supplement) from any insurance carriers. Many, many insurance carriers offer Medigap contracts. Some that you’ve heard of, others not so much. These Medigap contracts are available in letter choices. Sort of like vanilla, chocolate and strawberry? You can get Plan F, G or N….
Each contract letter has it’s unique characteristics BUT… the overwhelming benefit in these contracts is that they all follow Medicare —-> which is your primary insurance “carrier” now that you enrolled into Original Medicare.
Being clear here. You enroll into Parts A and B. They will pay 80% of your medical costs. You then purchase a Medigap contract Plan G? It will then pay whatever Medicare does not aside from a $198 deductible (which is the Part B deductible in 2020).
That’s what Plan G does. It pays all that Medicare does not, other than the Part B deductible.
Networks. So, if Medicare is your primary “carrier”, are there networks? YES – a large one. The entire U.S. – any doctor or facility that accepts Medicare coverage. Remember, whatever insurance company that you bought your Medigap plan from? They must follow Medicare. They’re the secondary.
So. You buy a Plan G. You have Medicare A/B. You have a knee replacement. You pay $198; your 2020 annual deductible. That’s it. The contract that you bought from the secondary insurance carrier pays the rest.
When you think of Medigap following Medicare, it can become a bit easier to wrap your head around. If you like the idea of a product that can help you to budget, allows you to go any doctor/facility that accepts Medicare and you don’t like surprise medical bills? A Medigap contract could be a good fit for you and your lifestyle.