Medicare and Supplemental Insurance Plans

Who are eligible for Medicare

Medicare is a federal program that provides insurance for people 65 and older and for people under 65 who who have permanent kidney failure or who have certain disabilities. The Health care Finance Administration (HCFA) administers the program with the U.S. Department of Health and Human Services (HHS).

There are two parts of Medicare, Part A (Hospital Insurance) and Part B (Medical Insurance). Part A covers hospital, home health care, hospice, and skilled nursing facilities. This portion of Medicare is usually provided at no cost to the member, since most people either worked themselves or had spouses that worked and paid taxes. Part B is provided as an option to eligible members, who pay an additional cost. Part B covers physician and outpatient hospital care, as well as, some other services, such as lab and radiology tests. There is also available Part D for Prescription Drugs. For more information on Part D, please click here. The cost for Part B is approximately $96.40 a month, which may be deducted automatically from your Social Security check.

Aside from the premium costs, the Medicare program does forward some additional out of pocket expenses to the member. For Part A, there is a deductible (approximately $1,024.00 per benefit period) and co-insurance of about $256.00 per day during an inpatient stay. The cost per day increases after the 90th day. In addition, Medicare pays just 80% for certain durable medical equipment, home health care visits and other items. Medicare does not cover all items, and it is imperative to review the Medicare guidelines for what is and what is not covered.

The additional costs for Part B, aside from the monthly premium, include a deductible of $135.00 and co-insurance of 20%, since Medicare continues to pay just 80% for covered services. The payment amount is determined by using an RBRVS payment methodology (Resource Based Relative Value Studies) that assigns a value for each medical procedure.

Medicare is a federal program that provides insurance for people 65 and older, people under 65 who have permanent kidney failure or those who have certain disabilities. The Health Care Financing Administration (HCFA) administers the program with the U.S. Department of Health and Human Services (HHS). There are two parts to Medicare, Part A (Hospital Insurance) and Part B (Medical Insurance).

The problem with Medicare is that it won’t cover all medical services and pays providers 80% of the scheduled allowance making beneficiaries responsible for the remaining expenses. This “gap” in coverage could be resolved by purchasing Medigap policies offered by private insurance companies.

Both state and federal agencies regulate Medigap policies. The federal government instituted a standardized set of Medigap policies (Plans A through J) that offer similar types of coverage regardless of where you live. All private insurance companies that sell Medigap policies must provide at least Plan A, which offers the very basic supplement to Medicare insurance coverage. Plan J is more comprehensive, but is also more expensive. The standardized method of identifying plans makes it easy to compare various types of coverage and pricing among private insurance companies. Plan D for instance will be the same no matter which private insurance company you are looking to purchase supplemental insurance coverage from and regardless of where you reside. These plans will cover the co-insurance and deductible amounts remaining from the Medicare plan, as well as, offer coverage for prescriptions and preventive care. Medigap policies do not provide coverage for long term care.


If you have a Medicare HMO plan, you may not need Medigap insurance, because most services should be covered, including prescriptions, by your policy. You should verify with your health plan or review your policy booklet for the benefits provided to you before searching for a Medigap plan.

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