Which is Better: Medicare Supplement vs. Original Medicare?

Posted on August 26th, 2024

Thinking about your present and future health needs is crucial when evaluating your Medicare options. Original Medicare provides a solid foundation by covering hospital and medical services; however, it is essential to be mindful of the associated out-of-pocket expenses. For instance, while Part A generally covers hospitalization-related costs if you or your spouse paid Medicare taxes, you will encounter deductibles and coinsurance. 

Understanding Original Medicare

Original Medicare, the traditional fee-for-service program offered directly through the federal government, primarily consists of Medicare Part A and Medicare Part B. Part A is often referred to as hospital insurance. It covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. On the other hand, Medicare Part B is known as medical insurance, covering certain doctors' services, outpatient care, medical supplies, and preventive services. When enrolling in Medicare, Part A sometimes comes with no premium if you or your spouse paid Medicare taxes while working. However, Part B comes with a standard monthly premium that may vary based on your income.

If you are considering Original Medicare alone, understanding the out-of-pocket costs is crucial. While Part A is often premium-free for many, it has deductibles and coinsurance for hospital stays. For instance, after meeting the Part A deductible, you may still be responsible for copayments if your hospital stay exceeds a certain number of days. Part B also has a deductible, and after it is met, typically covers 80% of the approved cost for covered services, leaving you to pay the remaining 20%. Without additional private health insurance, these costs can add up quickly, especially if you require frequent medical attention or have a chronic condition.

Introduction to Medicare Supplement Insurance

Medicare Supplement Insurance, also known as Medigap, steps in to fill the gaps left by Original Medicare. A Medigap policy is designed by private health insurance companies and works hand in hand with Original Medicare. Essentially, it helps cover additional out-of-pocket costs that aren't covered by Medicare Part A and Part B. For example, Medigap can assist with copayments, coinsurance, and deductibles. This can be a significant relief if you have substantial healthcare needs since these out-of-pocket costs can quickly add up. By partnering with Original Medicare, Medigap policies ensure that you pay less out-of-pocket when you receive care from Medicare-participating providers. This reduces financial strain, providing a layer of predictability and stability in your healthcare expenses.

Another noteworthy point is that Medigap policies also offer standardized benefits across most states. This standardization means that no matter which insurance company you choose, the benefits for each Medigap policy are the same; only the cost may vary. For instance, a Plan G from one company will offer the same benefits as a Plan G from another. This transparency makes it easier for you to compare your options and select a policy that aligns with your healthcare needs and budget. 

Cost and Coverage Comparisons

In terms of cost comparison, without a Medigap plan, the expenses can quickly accumulate due to out-of-pocket costs. Original Medicare alone leaves you to shoulder deductibles, copayments, and a 20% coinsurance after meeting the Part B deductible. Many beneficiaries find these expenses challenging, particularly if they need regular or extensive medical services. This is where Medigap plans present potential financial advantages. Medigap policies help cover these additional costs, thereby reducing your financial burden. For instance, there's often little to no need for you to pay copayments or coinsurance when you go to your doctor's office or receive outpatient treatment. Moreover, some Medigap plans cover additional 365 days of hospital care after you've exhausted Medicare's hospital coverage, offering significant extra coverage.

The cost comparison between Original Medicare with Medigap and Medicare Advantage plans also merits consideration. Medicare Advantage often combines Medicare Part A, Part B, and sometimes Part D, creating an all-in-one alternative that may offer lower initial premiums than Medigap policies. However, these plans typically require you to use a network of doctors and hospitals, which can limit your choices. In some cases, Medicare Advantage may have higher out-of-pocket costs than Medigap. If you prefer the predictable costs and broader provider flexibility, Medigap might suit you better, despite slightly higher premiums. Conversely, Medicare Advantage plans could be more cost-effective if you are comfortable with network restrictions and potentially higher service-specific copayments.

Considering Prescription Drug Coverage

Let's talk about the all-important prescription drug coverage when weighing Original Medicare against Medicare Supplement Insurance. With Original Medicare, prescription drug coverage is not included in Parts A and B, necessitating a standalone Medicare drug plan, also known as Medicare Part D, if you want this crucial protection. Medicare Part D plans are offered by private insurers and can cover a wide range of prescription medications. These plans come with their own premiums, deductibles, and copayments. It’s essential to compare different Part D plans to find one that covers your specific prescriptions at the best rates. Without this coverage, paying for medications out-of-pocket could become financially overwhelming, especially if you have chronic conditions requiring regular prescriptions.

Similarly, Medigap policies sold today generally don’t include prescription drug coverage either. If you opt for a Medigap plan, you will still need to enroll in Medicare Part D to cover your medications. However, the combination of Medigap and Medicare Part D can offer robust coverage, minimizing your out-of-pocket costs for both medical services and prescriptions. Some Medigap policies can also offer benefits like covering the Part B deductible or providing access to emergency care abroad, enhancing your overall healthcare strategy. Therefore, while Medigap policies enhance Original Medicare, you will need to account separately for your prescription drug needs through a Medicare drug plan.

Related:  Exploring the Options for Medicare Supplement Coverage

Conclusion

When deciding between Medicare Supplement and Original Medicare, it is important to carefully consider your individual healthcare needs and budget. While Original Medicare may provide basic coverage, it often leaves significant gaps that can result in high out-of-pocket costs. Medicare Supplement plans, on the other hand, can provide additional coverage to fill these gaps and potentially save you money in the long run. Ultimately, the best option for you will depend on your specific circumstances and priorities. 

At James R. Bartlett, we are committed to providing you with the assurance and support you need through our Medicare Supplement Insurance plans. Our plans are meticulously tailored to address the specific gaps in Medicare Part A and Part B, offering you extensive benefits that traditional Medicare might not cover. For personalized assistance, feel free to call us at (815) 991-5660 or email us at [email protected]. Our dedicated team is ready to answer your questions, guide you through the enrollment process, and help you secure the best coverage for your needs. Experience the peace of mind that comes with knowing you are well-protected.