What is a Medicare Supplement Plan

2014 Medicare and Medigap Updates

What is a Medicare Supplement Plan

Though it may not be the ideal situation, people’s bodies tend to shut down as they age. This means that these individuals are unable to carry out their normal daily activities as they used to. Moreover, they have to be more careful than ever before, as their bodies tend to become more fragile with age. Thus, it is essential that we all have sufficient medical health coverage to insure against a financial loss in the case of a long illness. At this point many people start asking - what is a medicare supplement plan?.

In the United States, the Medicare program is the free-for-all health insurance plan that helps cater to the medical needs of older individuals. To be eligible, applicants have to be 65 and above. While Medicare covers most pertinent medical costs and services, it should be noted that it does not cover all the medical costs. There are some services which are not included in the Medicare plans such as dental and dentures costs, as well as long-term care. While these costs are not included in the Medicare plans, their need is nevertheless important to the affected patients. Thus, there exists a great gap in terms of essential medical services that needs to be catered for should the need for such a service ever arise. This gap is filled with by Medicare supplemental insurance companies that offer plans by the same name i.e. Medicare supplement plans.

While most people may know of Medicare plans, it is quite common to hear a person asking questions such as “What is a Medicare supplement plan?”, as well as “what does it entail?” To better answer these questions, one needs to understand the principles behind premium-based policies, as well as the factors which affect the determination of these premiums. There are generally 10 Medicare supplement plans offered across the United States. The plans are generally given a letter of the alphabet to act as an identifier. Each has its own individual combination of advantages and drawbacks. However, in general, the plan with the least expenses, as well as the least benefits is plan A while that with the most benefits as well as the highest expenses is plan N.

There are three main types of policies and each have different premiums and plans. These are the issue-age policy, the community policy, as well as the attained-age policy. Holders of the issue-age policy have their premiums set against the age at which they attained the policy; the lower the age, the lower the premium. Moreover, this premium does not change as one ages. With the community policy, the premiums are set regardless of one’s age i.e. the premiums are constant. Once again, these premiums do not change with one’s age. With the attained-age policy the premiums are lower when you first purchase them but the rates go up as you age. In most cases the issue age policy turn out to be the cheapest.

When answering the question, “What is a Medicare supplement plan”, one has to understand that though the supplement plan is offered by private insurance companies at varying costs, the plan is still standardized by Medicare. Thus, every year, the plan is reviewed and changes relating to factors such as inflation and insurance underwriting are made. Therefore, it becomes rather important that one fully understands the underlying issues behind the question - What is a Medicare supplement plan - before they buy.