Why Do I Need a Supplement With Medicare?
Understand why Medicare alone isn't enough. Learn how supplemental plans protect you from unexpected healthcare costs and provide peace of mind.
Medicare serves as the federal health insurance program for individuals aged 65 or older, along with certain younger people with disabilities. While Medicare provides fundamental health coverage, it does not cover all healthcare costs. This creates “gaps” in coverage, potentially leading to substantial out-of-pocket expenses for beneficiaries. Understanding these potential costs and how to address them is important for financial protection.
Understanding Medicare’s Coverage Gaps
Original Medicare, which includes Part A (Hospital Insurance) and Part B (Medical Insurance), is not designed to cover 100% of medical expenses. Instead, it features various out-of-pocket costs such as deductibles, coinsurance, and co-payments. These financial responsibilities can accumulate quickly, making healthcare costs unpredictable for beneficiaries.
For instance, in 2025, the Medicare Part A deductible for inpatient hospital care is $1,676 per benefit period. This deductible is not an annual amount; a new benefit period can begin if a beneficiary is discharged and then readmitted after 60 days, potentially leading to multiple deductibles within a single year. Beyond the initial 60 days of hospitalization, daily coinsurance charges apply, reaching $419 per day for days 61-90 and $838 per day for lifetime reserve days.
Similarly, Medicare Part B, which covers doctor visits, outpatient services, and durable medical equipment, has its own costs. The annual Part B deductible for 2025 is $257. After this deductible is met, beneficiaries are typically responsible for 20% of the Medicare-approved amount for most Part B services, with no annual limit on how high these coinsurance bills can become. This 20% coinsurance can represent a significant financial burden for extensive medical care.
Beyond these deductibles and coinsurance amounts, Original Medicare does not cover certain routine services. These include routine dental care, vision exams, eyeglasses, hearing aids, and routine foot care. While prescription drug coverage is available through Medicare Part D, it is a separate program with its own premiums, deductibles, and co-payments, not covered under Original Medicare Parts A and B.
How Medicare Supplements Fill the Gaps
Medicare Supplement Insurance, often known as Medigap, policies are designed to work in conjunction with Original Medicare to help cover its cost-sharing gaps. When you have a Medigap policy, Original Medicare pays its share of the approved amount for covered healthcare costs, and then your Medigap policy pays its share.
Medigap plans typically cover costs such as the Part A deductible, Part A coinsurance for hospital stays, and the Part B coinsurance. For example, a Medigap policy can cover the $1,676 Part A deductible and the 20% Part B coinsurance, providing a more predictable financial outlook for healthcare expenses. This coverage can significantly reduce the financial burden associated with extensive medical treatments or frequent doctor visits.
A key feature of Medigap policies is their standardization. Plans are identified by letters (A through N), and each plan letter offers the same basic benefits regardless of the insurance company selling it. This means a Plan G from one insurer provides the exact same benefits as a Plan G from another insurer, simplifying the comparison process for consumers.
Medigap policies also offer additional benefits not always found in Original Medicare. Many plans, for instance, cover emergency healthcare services when traveling outside the United States. This can be a valuable feature for individuals who travel internationally, as Original Medicare generally does not provide coverage abroad.
Key Considerations for Choosing a Supplement
Selecting a Medicare Supplement policy involves understanding the available options and timing your purchase effectively. While Plan F and Plan C were once popular, they are generally not available to individuals who became eligible for Medicare on or after January 1, 2020. Plan G and Plan N are common choices for new beneficiaries, offering comprehensive coverage with different cost-sharing structures.
When choosing a plan, it is important to consider the monthly premiums charged by different insurers for the same standardized plan. While benefits for a given plan letter are identical across companies, premiums can vary significantly. Comparing premiums from several providers for the same plan letter is a practical step to ensure you find a policy that aligns with your budget and healthcare needs.
The most opportune time to purchase a Medigap policy is during your Medigap Open Enrollment Period. This is a six-month window that begins the month you turn 65 and are enrolled in Medicare Part B. During this period, insurance companies are required by law to sell you any Medigap policy they offer, regardless of your health status, and cannot charge you more due to pre-existing conditions. This is known as guaranteed issue rights.
If you enroll in a Medigap policy outside of this initial open enrollment period, insurance companies in most states may use medical underwriting. This means they can ask questions about your health, potentially deny you coverage, or charge higher premiums based on your health history. Therefore, enrolling during your Medigap Open Enrollment Period is highly advisable to ensure access to the policy of your choice without health-related restrictions.