Medicare is far from free. The high cost of health care in retirement can be anxiety inducing for seniors, especially those with limited income and chronic health conditions. A 65 year old who retired in 2024 can expect to spend $165,000 on healthcare during their remaining lifetime. That’s why it’s so important to pick the right Medicare plan. Saving for retirement is important, but so is picking the right Medicare plan.
Medicare Supplement Insurance, often called Medigap, can help with the out-of-pocket costs associated with Medicare. It’s not a good match for everyone, but for the right person, it can provide a financial safety net during retirement years.
Here are four groups of people who should consider buying Medicare Supplement Insurance.
1. People in Original Medicare
Medicare Supplement plans are designed to work with Original Medicare (Parts A and B). They are not designed to work with Medicare Advantage, and they cannot be used to cover the out-of-pocket costs associated with a Medicare Advantage plan. In fact, it is illegal for someone to knowingly sell a Medicare Supplement Insurance policy to someone who is enrolled in Medicare Advantage.
There are a number of reasons why Medicare beneficiaries choose Original Medicare over a Medicare Advantage plan. Unlike Medicare Advantage plans, you do not have to worry about using doctors and hospitals in an approved network. You have the freedom to see any doctor that accepts Medicare. Original Medicare does not require preauthorization for most procedures, whereas Medicare Advantage plans require preauthorization for many health services, medications and medical equipment which could result in denials or delays in care.
Supplement plans are sold by private insurance companies. Pricing can vary based on the insurer, but the benefits are standardized, meaning the policies with the same letter name offer the same benefits, no matter who the insurer is. There are 10 different plans A-D, F, G, K-N, each offering different benefits. Not all plans are offered in all areas. Some plans are no longer available if you turned 65 on or after January 1, 2020.
If you have chosen to enroll in Original Medicare, a Medicare Supplement plan can help cover the deductible, copays and coinsurances not covered by Original Medicare.
2. People with Possible Hospital or Skilled Nursing Facility Costs
Medicare Part A provides inpatient hospital coverage. Most people don’t have to pay a premium to enroll in Medicare Part A, but they are responsible for the deductibles and coinsurance, and these expenses can add up quickly.
In 2025, the Part A deductible for each inpatient hospital admission is $1,676. This covers your share of costs for the first 60 days of an inpatient hospital stay, known as a benefit period. There is no limit to the number of benefit periods you can have, which means you could pay this deductible more than once during the year. Days 61-90 are $419 per day, and days 90-150 (known as lifetime reserve days) are $838 per day. Medicare will only pay for lifetime reserve days once in your lifetime. The skilled nursing facility daily coinsurance for days 21-100 is $209.50 per day.
All Medicare Supplement plans pay 100% of Medicare Part A coinsurance, and offer up to an additional 365 days of coverage after Medicare benefits are used. Some Medigap policies also cover 100% of the skilled nursing facility care coinsurance.
3. People Who Want to Travel Abroad
Original Medicare provides coverage in the United States. Outside the U.S. you only have coverage in very limited circumstances. If you’re hoping to travel abroad during your retirement years, you’re going to need additional coverage.
Medicare Supplement Insurance can provide that coverage. Many (but not all) Medigap plans provide 80% coverage for foreign travel emergencies after you meet the $250 deductible. There is a $50,000 lifetime limit and emergency care must begin during the first 60 days of your trip. Before you travel outside the U.S. you may want to consider purchasing travel insurance for additional peace of mind.
4. People Who Want to Plan Their Healthcare Costs
Even if you’re healthy now, you never know when an illness or injury will hurt you. Without the right coverage, it could hurt your savings, too.
On its own, Original Medicare does not have an annual out-of-pocket cap. This means there is no limit to what you could end up paying out of pocket if you experience a major illness or injury.
When you’re living on a fixed income, planning for this kind of uncertainty is difficult. With the right Medicare Supplement Insurance plan, you can make your healthcare costs more predictable and easier to plan for.
What Medicare Supplement Plans Do Not Cover
Supplement plans generally do not cover long term care, private duty nursing, vision care and eyeglasses, dental care, and hearing aids. They also do not cover prescription drugs. You must enroll in a Part D drug plan if you want prescription coverage.
Selecting the Right Plan
The best time to buy Medicare Supplement Insurance is when you first become eligible. After that, enrollees may be subject to medical underwriting, resulting in higher premiums or even rejected applications.
Is a Medicare Supplement plan right for you? How do you choose the best plan for your healthcare needs, lifestyle, and budget? The knowledgeable team at PTT Financial can educate you on your options and help you make an informed decision. Contact us today.
