What are supplemental health insurance plans? Supplement insurance falls under two broad coverage categories:
- Medigap insurance (and other retirement insurance that pays after Medicare)
- Insurance that adds to or extends the coverage of your current health insurance policy.
Medigap insurance is supplement insurance that is sold only to people enrolled in Medicare, and it’s purpose, in brief, is to pay after Medicare and cover the coinsurance and deductibles of Part A and part B. We will talk more about this is a moment.
Other supplement insurance, such as that often sold by Afflac, extends or adds coverage to your current policy. This sort of insurance is generally sold to people who may still be in the work force and too young or otherwise ineligible for Medicare. Generally speaking, there are three main kinds of this sort of insurance:
- Disease specific
- Accident Health Insurance or Accidental Death and Dismemberment
- Hospital Indemnity Insurance
The first sort of supplemental health insurance, Disease Specific, pays you a cash benefit in the event you require disease specific treatment. For example, cancer. In such a case the benefit is usually paid by the day or by the procedure. There is generally a daily benefit minimum as well as a policy maximum. The cash you receive is yours to spend as you see fit and has no relationship with how much your regular insurance pays for your costs.
The next category, Accident Health or Accidental Death and Dismemberment basically reimburses you for the costs of accidents. In such a circumstance, the plan pays premiums directly to you for costs of specific accidents outlined in the policy. In the event of death, benefits are paid to your named beneficiaries. This sort of supplemental insurance generally requires no physical exam and premiums are usually low.
Hospital indemnity supplemental plans pay a cash benefit to you in the event of an inpatient stay. Normally, the policy specifies a minimum duration before benefits are paid. The cash benefit is paid in addition to any other sort of insurance you may have. In some cases, you can find plan through your employer requiring no physical exam.
Medicare supplemental insurance is known as medigap insurance. Since Medicare doesn’t cover all medical expenses, people who don’t have other health insurance and choose not to enroll in a Medicare Advantage plan may decide to purchase a Medigap policy. Medigap is private insurance that helps to cover some or all of the gaps in Medicare benefits.
Since 1992, there have been 10 standard Medicare supplemental policies. These medigap policies are designated by the letters A through J. In 2005, two new medigap policies—designated by the letters K and L—were added. Medigap policies K and L have higher out-of-pocket amounts and lower premiums than policies A through J. Although all 12 standard policies may not be available to you where you live, supplemental Plan A is available to Medicare beneficiaries everywhere. It is also important to understand that medigap insurance only works with Original Medicare, which is the Medicare plan managed by the Federal Government. Medigap cannot pay on any of the cost sharing incurred in a Medicare Advantage Plan, which is a euphemism for Medicare managed care plans, such as the HMO and PPO plans.
Related posts:
- Medicare Supplemental Insurance
- Medicare Advantage PPO Plans–Key Tips to Understanding the Medicare PPO
- Health Insurance Plans-Individual & Family Plans-What You Buy When You Buy Health Insurance
- How Health Insurance Works: What You Buy and What it Means
- Medicare Part D 2010
