Why Do I Need a Medigap Plan When I Already Have Medicare?

Why do you need a Medigap plan if you already have Medicare? This is a great – and common – question that many people going on Medicare ask themselves and, in increasing numbers, ask me. You certainly do not have to get a Medigap plan. It is completely optional and you can go with only Medicare or with the “self-insurance” route. However, doing so comes with a certain set of “risks” or disadvantages. So it is important to understand just why the majority of people do get something besides only Medicare coverage and why you should make that same choice.

First and foremost, Medicare does have some “gaps”. Gaps, by themselves, especially if you have financial means, are not that big of a deal. However, the Medicare gaps are not capped. In other words, Medicare doesn’t cover 20% at the doctor and hospital after the deductibles are met. This is an unlimited 20%. Even if you have some financial means, paying the deductible may not be difficult, but paying 20% of cancer treatments, organ transplants or heart surgeries would be enough to put a “dent” in anyone’s pocketbook.

So, what Medigap plans do, in a sense, is eliminate this worst case scenario and give you a predictable, known monthly expense in lieu of the risk of a catastrophic expense, which is relatively likely as we get older.

Medigap plans also pay some, or in many cases, all of the deductibles associated with Medicare. Most plans pay¬† the Part A deductible, while many plans also pay the Part B deductible. The hospital deductible (Part A) is actually a “per benefit period” not an annual deductible, so it can amount to a $4000+ amount per year if you had to go in the hospital multiple times.

The most beneficial thing that Medigap plans do is mesh with your existing budget to give you a fixed cost for health care. The top level plans – for example, Plan F – pay everything that Medicare Parts A & B do not cover so that you don’t have any out of pocket costs. This allows you to have a fixed monthly amount in your budget for health care costs, which is very beneficial for anyone who is on a fixed income (i.e. Social Security).

If you have any questions about the Medigap plans or how they work, please contact me on our website or by phone at 877.506.3378.

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