What is a Medicare Supplement Plan?

Sometimes referred to as Medigap, a Medicare supplement plan is medical insurance that augments the protection provided by the original Medicare plan. The main components of Medicare, known as Medicare Part A, Medicare Part B, and Medicare Part D, cover the bulk of medical expenses, but feature deductibles and gaps in protection that could leave the recipient with a huge amount of medical bills in the event of a serious illness. A good Medicare supplement plan helps to cover those deductibles and gaps, effectively providing the insured party with a complete medical plan.

Medicare itself is a health coverage offering that is owned and operated by the United States government. Generally, this type of coverage is extended to people who are unable to work due to physical and mental disabilities, as well as people who have reached retirement age. While Medicare benefits cover a great deal of general medical costs, there are deductibles for hospital stays and limits on the amount of cost the plan will pay for various treatments and health support services. A good Medicare supplement plan allows people covered under Medicare to offset those uncovered amounts, often making it possible to avoid financial ruin in the event of an extended illness.

There are several different examples of Medicare supplement coverage that are currently available. Government programs such as the Qualified Medicare Beneficiary Program (QMB), the Specified Low-Income Medicare Beneficiary Program (SLMB), and Medicaid are available to US citizens who meet qualifications in regard to general health and financial status. Many of the major private health insurance providers in the country provide some form of supplemental coverage that will pay off any amount of health costs not covered by Medicare. Eligibility with these private plans varies, depending on the qualifications set by the insurance underwriter.

Employers may also offer the opportunity to participate in group insurance coverage plans when the employee retires. This effectively allows the former employee to secure supplemental coverage that will cover any expenses not covered by Medicare. Usually, these plans are provided by the same health insurance provider who underwrites the group insurance plan for active employees, so the former employee is simply transferred from one type of coverage to the other without a need to make a new application.

In general, a Medicare supplement plan functions by covering any costs that Medicare coverage does not cover. For example, the supplement plan will pay the deductible for a hospital stay that is not covered under Part A of the Medicare program. The supplement will also take care of any type of coinsurance payments required, as well as any costs associated with follow-up outpatient therapies not covered by Medicare. This includes home health expenses if the services are required on more than a part time basis. In like manner, a Medicare supplement plan may also make up the difference between what Medicare Part D pays for prescription medication and the total cost of the medication.