What’s Medicare Supplement Insurance (Medigap)?
Some Medigap policies also offer coverage for services that Original Medicare doesn’t cover, like medical care when you travel outside the U.S. If you have Original Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for covered health care costs. Then your Medigap policy pays its share.
Original Medicare (Part A and B) Eligibility and Enrollment
To be eligible for premium-free Part A, an individual must be entitled to receive Medicare based on their own earnings or those of a spouse, parent, or child. To receive premium-free Part A, the worker must have a specified number of quarters of coverage (QCs) and file an application for Social Security or Railroad Retirement Board (RRB) benefits. The exact number of QCs required is dependent on whether the person is filing for Part A on the basis of age, disability, or End Stage Renal Disease (ESRD). QCs are earned through payment of payroll taxes under the Federal Insurance Contributions Act (FICA) during the person’s working years. Most individuals pay the full FICA tax so the QCs they earn can be used to meet the requirements for both monthly Social Security benefits and premium-free Part A.
Medicare Advantage Plan, Original Medicare Choices
Medicare Advantage (MA) offers an alternative way of receiving your benefits through local or regional private plans, which are most often health maintenance organizations (HMOs) or preferred provider organizations (PPOs). Each plan must include everything covered by traditional Medicare, but may offer more benefits and/or lower copays. Most plans charge a monthly premium (in addition to the Part B premium), and most include Part D drug coverage. Your choice of doctors and other providers may be restricted to those in the plan’s network and geographical area—although PPOs allow you to go out of network for a higher copay. Each plan can, each calendar year, change its premiums, its extra benefits and its copays, or withdraw from Medicare You cannot buy a medigap policy to cover out-of-pocket costs in a Medicare Advantage plan. But each plan has an annual limit on out-of-pocket costs.
How Original Medicare, Medicare Advantage differ
For example, your Medicare Advantage plan might have a $15 copay when you see the doctor. That means you’ll pay $15 every time you see the doctor, no matter how much the visit costs your health insurance company. If you have Original Medicare, you’ll pay 20 percent of the total cost of the visit. If the visit costs $200, you pay $40.
Medicare Guide: Original Medicare only covers 80% of Part B
“One of the tips for shopping for a Medigap plan is that when you’re looking at a certain plan, the cost can vary. But all the insurance and all the coverage is the same, so, in that situation, you can really pick by price when you’re in that sleeve,” she says. “You’re not going to get more from a Plan F if you pay more for a different company’s plan.”