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Even though Medicare covers the bulk of your medical expenses after you turn 65, you’ll still find gaps in its coverage. A Medicare supplement policy, also called Medigap, can cover many of these expenses:
- Deductibles. Expect to pay a certain amount out of pocket every year before Medicare Part A and Part B coverage kicks in: $1,632 for Part A if a patient is admitted to the hospital and $240 for Part B in 2024.
But deductibles aren’t all of it. You’ll still have to pay a portion of the costs for doctors’ services, long stays in a hospital or a skilled nursing facility, medical equipment, outpatient care and other services.
- Copayments. The set fee you pay for your health services, such as $25 for a doctor visit.
- Coinsurance. The percentage of a bill you must pay for a service or medical equipment, such as 20 percent for an outpatient procedure.
Medicare pays its share of the Medicare-approved amount for your health care expenses first. Then Medigap kicks in to help cover your portion of the costs.
Medigap policies are sold by private insurance companies but regulated by federal and state governments. You’ll pay premiums to the Medigap company you choose, in addition to premiums you pay Medicare for Part A or Part B.
A big plus for Medigap is you can use any doctor or hospital that accepts Medicare, unlike private Medicare Advantage plans, which usually have provider networks and charge more or don’t cover out-of-network providers.
What do Medigap policies offer?
Pays the coinsurance. All Medigap plans cover the 20 percent Part B coinsurance you otherwise would pay yourself for physician visits and other outpatient services. They also cover the Part A coinsurance costs for inpatient hospital stays.
For example, Medicare covers the first 60 days as an inpatient in a hospital, but you’re responsible for paying the coinsurance for days 61 to 90 ($408 in 2024) and an $816 daily coinsurance after that for up to 60 lifetime reserve days in 2024.
Covers some deductibles. Most Medigap plans cover the Medicare Part A hospital deductible, which is $1,632 per benefit period in 2024.
Adds health benefits. Although Medicare won’t cover your hospital stay after you’ve used up your lifetime reserve, all Medigap policies cover the daily coinsurance costs and up to 365 additional lifetime days in the hospital after your Medicare benefits are depleted. All Medigap plans cover the first three pints of blood you may need each year, either in full or in part.
May cover other costs. Some plans pay coinsurance costs for skilled nursing facilities and hospice care; excess charges from doctors who don’t accept assignment, which means they can charge up to 15 percent more than the Medicare-approved amount; and foreign travel health care emergencies.
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