You probably know that when you reach age 65, you can apply for Medicare. What you might not know is that Medicare won't pay for all of your future health costs—not even close. There are many expenses Medicare won’t cover. Your only options are to (a) pay out of pocket, or (b) protect yourself with Medicare supplement plans.
A Medicare supplement plan is insurance you purchase to help offset the cost of the expenses not covered by Medicare. It is not sold by the government, although the government regulates who can sell these policies and what they must offer. Medicare supplement insurance companies offer plans that are approved by your state. Let’s go through the basics of Medicare supplemental insurance.
What Does a Medicare Supplement Insurance Plan Cover?
That depends on which plan you select. The federal government has authorized 10 standard plans, all available in most states. The exceptions are Wisconsin, Minnesota, and Massachusetts, which have their own state-authorized plans. Medicare supplement plans are lettered: Plan A, B, C, D, F, G, K, L, M, and N. Each plan covers different amounts for different expenses, including your deductible and co-insurance. You can select the plan that covers the expenses you think you’ll incur.
What Doesn’t a Medicare Supplement Insurance Plan Cover?
Supplemental insurance plans won't cover the following expenses:
- Prescription drug costs. For this, you need Medicare Part D.
- Long-term care costs
When Should I Buy a Medicare Supplement Plan?
The best time to buy is during your open enrollment period for Medicare. During this window, you can’t be turned down, no matter your health. If you don’t buy a policy during open enrollment, you can still buy one later…but you’re taking the risk that the insurance company might turn you down. If you wait until after your open enrollment window, insurers can use your current state of health as a reason to charge you more per month or even deny your application.
Are There Special Requirements to Enroll?
You must be enrolled in “Original Medicare,” which consists of Part A and Part B, to buy a supplemental policy. You cannot buy a policy if you select “Medicare Advantage” instead of “Original Medicare.”
Does It Matter Who I Buy My Plan From?
Yes and no. Because the government regulates these plans, they are identical. A Medicare Supplement Plan D, for example, will offer the same benefits whether it’s sold by Vendor X or Vendor Y. Vendors X and Y, however, may charge you different prices for that plan. Your job in choosing an insurer is to make a selection balanced between price and the stability and quality of the vendor. You may want to compare things like financial ratings to select the best Medicare supplement insurance companies.