As you approach retirement, it’s essential to understand the out-of-pocket expenses associated with Medicare, the federal health insurance program for people 65 and older. Original Medicare and Medicare Supplemental Insurance (Medigap) are two popular options, but they differ in coverage and costs. In this article, we’ll compare out-of-pocket expenses for Original Medicare and Medicare Supplemental Insurance to help you make an informed decision.
Original Medicare:
Original Medicare is a fee-for-service program that covers a wide range of healthcare services, including doctor visits, hospital stays, and preventive care. However, it has some significant out-of-pocket expenses:
- Deductible: In 2024, the deductible for Part A (hospital) is $1,632, and for Part B (medical), is $240.
- Copays: 20% coinsurance for most Part B services, including doctor visits and outpatient procedures.
- Coinsurance: 20% for Part A hospital stays, including skilled nursing facility care.
- Premiums: Most people pay $174.70 per month. However, premiums can range from $244.60 to $594 per month depending on income.
Medicare Supplemental Insurance (Medigap):
Medigap is supplemental insurance that fills the gaps in Original Medicare coverage, including deductibles, copays, and coinsurance. Medigap policies are standardized and offer different levels of coverage, known as Plans A-N. Here are some vital out-of-pocket expenses associated with Medigap:
- Premiums: Medigap premiums vary depending on your age, health, and insurance provider, but they typically average $137.00 per month.
- Deductible: Some Medigap plans may have a deductible ranging from $0.00 to $2,800.
- Copays: Medigap plans typically cover 100% of Medicare-approved amounts for Part A and Part B services, eliminating copays and coinsurance.
Comparison of Out-of-Pocket Expenses:
| Expense | Original Medicare | Medigap (Plan G) |
|---|---|---|
| Deductible | $1,632 Part A and $240 Part B | $0 (some plans may have a deductible) |
| Copays | 20% coinsurance for Part B services | 0% coinsurance for Part A and Part B services |
| Coinsurance | 20% coinsurance for Part A hospital stays | 0% coinsurance for Part A and Part B services |
| Premiums | Part B premiums: $174.70 with ranges from $244.60 to $594 | Medigap premiums: average $137.00 per month |
Conclusion:
Regarding out-of-pocket expenses, Medigap (Plan G) offers more comprehensive coverage and fewer expenses than Original Medicare. However, Medigap premiums can be higher, and you’ll need to pay a premium for the supplemental insurance. On the other hand, Original Medicare has lower premiums but higher out-of-pocket expenses.
Ultimately, the choice between Original Medicare and Medigap depends on your circumstances, healthcare needs, and budget. The skilled agents at Diamond Insurance Solutions are ready to help you consider your options to determine the best coverage for your situation.