What is Medicare supplement insurance?
Deductibles and copays
Medicare only pays for services it deems appropriate (covered services). Medicare has an allowable charge for each covered service, which is the maximum amount that Medicare will allow insurers to charge for a service. However, Medicare does not pay the total allowable cost for covered services. The first time a particular service is needed, the person in question generally must pay a small fixed amount (known as a deductible) before Medicare pays anything. If the person needs the same service again after a specific time has passed, he must pay another deductible. After the deductible, you also usually have to pay a certain percentage of the costs (copayment) each time a service is used. In 2021, the deductible for outpatient services (such as a doctor’s visit) was $203 per year, and the copay for each use of most outpatient services is 20% of allowable charges. This provision means that people pay the first $203 of their outpatient bills. So the rest of the year, they pay 20% of allowable charges each time they use a service, and Medicare pays 80%. At the end of the year, the process begins again, and another deductible must be paid for the services used in that year. They spend 20% of allowable charges each time they use a benefit for the rest of the year, and Medicare pays 80%. At the end of the year, the process begins again, and another deductible must be paid for the services used in that year. They spend 20% of allowable charges each time they use a benefit for the rest of the year, and Medicare pays 80%. At the end of the year, the process begins again, and another deductible must be paid for the services used in that year.
Medicare supplement insurance
Some people have supplemental insurance (Medigap) to help pay Medicare copays and other medical expenses not covered by Medicare. Companies sometimes provide this insurance where the person has previously worked as part of a retirement benefit. Other people take out supplemental insurance from private insurance companies.
Because Medicare and Medigap don’t cover long-term care, some people purchase separate insurance to pay for long-term care. The decision to buy long-term care insurance depends partly on whether the person in question believes she will need help paying for such services and whether she can afford the premium.
People with low incomes and few assets may be eligible for supplemental coverage through the government-funded Medicaid program.
Medicare Plan (parts A and B)
Original Medicare is available nationwide; It is run by private companies called Medicare administrative contractors and works on a fee-for-service basis. It consists of two parts:
- Part A (often referred to as hospital insurance) covers hospital services and some commonly needed outpatient services for a short period after a hospital stay.
- Part B (often referred to as medical insurance) covers outpatient services, including doctors’ fees.
Original Medicare pays a fixed amount, which it considers a usual, customary, and reasonable amount, for each service it covers. Under Part B, doctors can choose between being paid directly by Medicare (called assignment) and receiving 80% of the allowable charge now from Medicare and a 20% copay from the patient (after deductible). Physicians who accept Medicare must file a claim within one year of rendering the service. However, follow-up must be done to make sure claims are filed on time because Medicare cannot apply payments toward deductibles until a lawsuit is filed.