Glossary
Medicare supplement insurance, defined
A private policy that pays some or all of the deductibles, coinsurance and copayments left over after the federal health program for older and disabled people has paid its share. The plans are standardised by letter, so a given letter pays the same benefits from any carrier, and only the premium and the carrier differ.
In practice
It works alongside Original Medicare, not with an Advantage plan, and it pays only for services Medicare has approved; it adds no drug coverage, so a separate Part D plan is usual. The most reliable time to buy is the window that opens when Part B begins, when a carrier must accept the applicant regardless of health; outside that window and outside a guaranteed issue situation, underwriting applies and an application can be declined. Premiums rise with age under attained-age pricing, less so under issue-age or community rating, and the pricing method is worth asking about. Availability and premiums vary by state and carrier. Comparing carriers for the same letter is the whole exercise, since the benefits are identical.
A worked example
Suppose a retiree has an outpatient procedure with a $2,000 approved charge. Original Medicare pays its share and leaves, say, $400 of coinsurance. With a letter plan that covers Part B coinsurance in full, the carrier pays the $400 and she owes nothing beyond her monthly premium of, say, $150. Hypothetical figures.
Applies to: Medicare