Save money by understanding how Medicare and supplemental insurance work together.
Medicare subsidizes medical coverage for seniors and the disabled by providing payment to contracted providers for services. These are broken into parts, the most popular are; A, B, and D. Part A is easiest to remember by thinking of it as facility coverage. It includes hospitals, rehabilitation centers, and skilled nursing. Part B covers office visits, hospice, and home care. Part D is prescription coverage, and can be the most confusing and expensive part of Medicare. Even with Medicare subsidizing coverage, you are still left with out of pocket expenses for care. These include; deductible, copayments, prescriptions, and coinsurance that are all paid at the time you receive care. Prescription benefits are provided up to a certain dollar amount, at which point you enter an area of zero coverage called the “donut hole.” This means that, Medicare will not pay for prescriptions until your out of pocket prescription costs reach a certain amount. Then you are on the other side of the donut hole and go back to normal benefits.
Insurance companies offer a variety of plans to work with basic Medicare coverage to help you save money. Medicare and supplemental insurance are different in what they offer, Medicare coverage is the same for everyone and supplemental offers you many options. It is helpful to review your medical costs when comparing supplemental insurance so that you can select the plan that will save you the most money. Medicare and supplemental insurance both have monthly premiums, yet supplemental insurance will vary in cost. Supplemental insurances may also offer coverage for things like vision and dental care which basic Medicare does not.
Medicare and supplemental insurance are both called “payers.” The order in which they pay for medical services is called the coordination of benefits. For a service to be eligible for payment, it has to meet Medicare requirements first. This is because Medicare pays first, it is the primary payer. What is left over, such as the coinsurance (your portion of the bill) is then covered by your supplemental insurance according to your policy. This is where the savings comes in, since something such as a Doctor visit may cost $200. Medicare would pay a percentage leaving you with the remainder. The supplemental insurance would then receive the bill for your portion and pay it. If you are in the Part D donut hole and your supplemental insurance offers coverage for prescriptions, they would pay once Medicare denied. This ensures you are never paying for prescriptions 100% out of pocket and can save you considerable amounts of money.