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Medicare 101: Medicare Supplement Plans Explained

| July 22, 2019

When you enroll in Medicare, you receive healthcare benefits, but what if they aren’t enough?

Well, there are a couple ways you can supplement Medicare coverage, bridging the divide between basic coverage and what you really need.

Medicare Supplement Insurance (“Medigap”)

Medigap helps cover the cost “gap” for things that aren’t covered by Original Medicare.

The best time to buy a Medigap policy is during your six-month Medigap open enrollment period, which automatically starts the month you're 65-years-old and enrolled in Medicare Part B. During that time, you can buy any Medigap policy sold in your state, even if you aren’t in the best health as it is guaranteed issue.

However, after the open enrollment period, you may not be able to buy a Medigap policy as you will now be subject to underwriting including medical questions. And if can buy one, it may cost substantially more.

Comparing Medigap Policies

Every Medigap policy must follow laws designed to protect you.

For instance, policies must clearly identify themselves as “Medicare Supplement Insurance.” And, only “standardized” policies can be sold, which are often identified by letters (e.g., Medigap Plan A).

All Medigap policies offer the same basic benefits. Some just offer more benefits to cover more costs. There is an official summary chart of the “letter plans” available to help you compare.

Deciding what Medigap plan is right for you is a personal decision. Still, an insurance professional can help guide you through what’s available to meet your needs.

Medicare Part D

Private insurance companies got in the Medicare business years ago, offering more comprehensive Medicare supplement plans, including prescription drug coverage, which is known as “Part D.”

Keep in mind, Part D coverage is an optional benefit and must coordinate with any other drug coverage you have, including from Original Medicare and Medigap policies.

Also keep in mind that tiered lists of covered drugs (called “formularies”) can change from policy to policy – make sure your drugs are covered and ask the right agent to run a drug analysis to let you know what your drug costs will be for the year.

Medicare Part D plan costs include:

  • Premiums
  • Deductibles
  • Coinsurance
  • Coverage gap costs
  • Costs for additional medical care
  • Late enrollment fees

Your specific drug plan will vary based on several factors, including:

  • Drugs you use and if they’re on the formulary
  • Which Part D plan you choose
  • If your pharmacy is in the plan’s network
  • How you pay for coverage

Extending Coverage, Protecting Assets

Owning a supplemental policy to help cover costs Medicare doesn’t can be a boon to your retirement. Depending on your situation, it could not only protect your assets from costly medical care, but also provide health coverage that would otherwise be difficult (or impossible) to attain.

As with most insurance, the sooner you know your situation and needs, the better. You have a limited window to take advantage of Medicare supplement insurance, so be ready to act. That’s easier to do with the help of an insurance professional.

So, if you need help navigating the confusing world of Medicare coverage options, make sure to ask for it!

Securities sold through CoreCap Investments, Inc., a registered broker-dealer and member FINRA/SIPC; advisory services offered by CoreCap Advisors, Inc., a registered investment advisor. Cornerstone Financial and CoreCap are separate and unaffiliated entities.