Know These Medicare Supplemental Insurance Terms to Keep You in the Loop

Leandro Mueller
Jul 25, 2017 · 4 min read

Securing a Medicare Supplemental Insurance Plan (also known as a Medigap policy) is an excellent way to prepare for one’s retirement years. But learning about this retirement policy can be challenging, considering the often-confusing insurance terminology attached to it.

As such, we’d like to share some common insurance terms encountered when dealing with Medigap plans. And the terms we’ll be discussing today will allow you and other readers a great approach in everything you need to know about Medicare Supplements.

Also, by discussing these terms, we hope that more people will be able to see how advantageous it is to purchase supplements. We do hope that more do purchase coverage, considering the many health and financial benefits offered by Medicare Supplemental Insurance policies.

Common Insurance Terms Associated with Medicare Supplement Plans

Medicare Supplements help policyholders pay for the gaps (out-of-pocket health care costs such as coinsurance charges, copayments, and deductibles) in Original Medicare Plans (made up of Medicare Part A and Part B). Here are some of the most common terms that individuals need to know when dealing with Medigap plans:

Coinsurance

These are the charges that one will pay after deductibles have been settled. The Coinsurance fee is the percentage of the Medicare-approved amount you have to pay after considering the Part A and/or Part B deductible.

Copayment

This is the amount one pays for a medical service such as a prescription or a doctor’s visit. Copayments are usually offered in a set amount and are used for some outpatient services.

Deductible

This is the amount one needs to pay for health care or prescriptions before insurance benefits are applied. Deductibles may change every calendar year.

Guaranteed Insurance Rights

These are the rights an individual has when insurance companies are required by law to sell or offer a Medigap plan to an applicant. Guaranteed insurance rights mean applicants cannot be denied a Medigap plan, cannot be charged higher premium rates because of a health problem, and cannot have their coverage start date be delayed.

Long Term Care

Custodial care or assistance that deals with everyday functions such as bathing, eating, and dressing, with services provided by a caregiver or a nursing home. Medicare does not cover Long Term Care.

Medicaid

A joint federal and state program that assists in dealing with medical costs for individuals with limited income and resources.

Medicare Part A

As hospital insurance, Medicare Part A mainly covers inpatient services (hospital stays, hospice care, elder care facility services, and nursing home care) and some home health care. Additionally, most beneficiaries do not need to pay for a premium since Medicare Part A taxes were already paid during working.

Medicare Part B

An optional part, Medicare Part B covers medical services such as ambulance services, preventive services, and some medical supplies and items. Regarding coverage, Medicare Part B will pay 80% of approved charges for services (20% to be paid by the beneficiary). Medicare Part B has a monthly premium and a deductible to be considered before benefits are paid.

Medicare Part D

Original Medicare or Medicare Advantage beneficiaries in need of drug coverage can apply for Medicare Part D (prescription drug coverage). Medicare Part D allows beneficiaries access to lower costs for prescription drugs. Do take note that Medicare Part D plans come with formularies that vary from other plans — it is suggested that beneficiaries check beforehand to see if the prescription drug they need is part of the list.

Medicare Advantage

Medicare Advantage (also known as Medicare Part C) is optional coverage that provides better and more benefits as compared to what is available for Original Medicare beneficiaries. A combination of Part A and Part B, Medicare Advantage is optimized to cost less and to cover more services (except for hospice services, which is only available in Part A). Also, Part D (coverage for prescription drugs) may also be included for Medicare Advantage plan enrollees.

Medicare-Approved Amount

The amount a doctor or a supplier that accepts an Original Medicare assignment is paid. The Medicare-approved amount may be less than what a doctor or supplier usually charges.

Open Enrollment Period (OEP)

A six-month period that begins when one turns 65 and is enrolled in Medicare Part B. During the OEP, guaranteed insurance rights are applied, allowing applicants an easier time to purchase a Medigap plan.

Premium

The periodic amount that you need to pay for Medicare coverage.

Preventive Services

These are the type of care services that help in keeping you healthy.

Primary Care Doctor

This is the physician responsible for coordinating a policyholder’s managed care plan. Also called as the gatekeeper.

Skilled Nursing Facility Care

A facility that provides the required level of care for daily involvement of skilled nursing or rehabilitation staff.

The mentioned insurance terms will help you in comprehending the many facets of Medigap basics. Do you have other terms that you need defined? Please let us know below.

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