For thousands of Americans, retirement means having to live on a limited income. While Original Medicare is your guarantee for affordable health care after the age of 65, the coinsurance, copayments, and deductibles that Original Medicare Parts A and B carry may be overwhelming for some people living on a budget.
This is where Medicare Supplement, or Medigap, insurance comes in; to fill those financial gaps that Original Medicare benefits do not include in their coverage. Medigap policies help Original Medicare recipients by paying some health care costs like copayments, coinsurance, deductibles and some other expenses you normally pay for out-of-pocket.
You are eligible to purchase Medigap policy from a private insurance provider if you have both Parts A and B of Original Medicare, but not if you have a Medicare Advantage policy. You pay a monthly premium for your supplement plan in addition to your monthly Medicare Part B premium. Only one person is covered by a plan of this type and it does not include prescription drug coverage.
If you are living on a budget and are concerned about the out-of-pocket expenses you may have with your Original Medicare benefits alone, a supplement plan that has an annual out-of-pocket maximum limit could be valuable to you. Here are some important details to help you decide whether this type of policy is what you need.
Medicare Supplement Plans Out-of-Pocket Maximum Limits
The purpose of Medicare Supplement plans is to assist Medicare recipients with out-of-pocket expenses from their Original Medicare health care coverage. There are several types of Medigap plans available. Two of these plans (K and L) offer annual out-of-pocket maximum limits, while the other options do not.
When you reach your annual maximum amount, your health care plan pays 100 percent of all the remaining health care costs for the current year. These expenses include your deductibles, copayments, and coinsurance. Your monthly premiums are not included.
Plan K has set its annual maximum limit at $5,880.00 for 2020 which is an increase from 2019 when the limit was $5,560.00. Plan L has raised its limit to $2,940.00 for 2020, up from $2,780.00 in 2019.
How much you pay for your Medicare Supplement plan will depend on when you enroll in coverage, and where you live. Not all plans are available everywhere in the United States. Each insurance company chooses the plans they wish to offer, and they are not required to offer all plans. For Medicare recipients who visit a health care provider on a frequent basis, or who need specific routine health care services, out-of-pocket expenses like copayments and coinsurance can soon become overwhelming to those living on a limited income. Having a Medigap policy like the Plan K or L which offer an annual maximum spending limit may make all the difference to them financially.