a patient enrolls in Medicare they have the option to choose either:
Medicare plan - which is an 80/20 plan. Medicare pays 80% of the Medicare
allowed amount and the patient is responsible for paying 20% of the Medicare
Managed Care plan - which could include a wide range of variations in plan
designs. Most Medicare plans are HMO, PPO or FFS plans where reimbursement
could range from being paid in full, after a copay, (like an HMO plan) to 80%
or less (like a PPO plan).
Some Medicare patients
(called beneficiaries) may choose not to enroll in a managed care plan in spite
of the possible higher level of reimbursement and the lower out of pocket
costs, for a lot of reasons:
- Maybe the provider that they
love and trust is not part of the managed care network.
- Maybe the costs for a managed
care plan are too high.
- Maybe they refuse to surrender
their right to choose the providers they want to see.
reason, quite a few Medicare beneficiaries still choose Medicare traditional
also called Medicare Supplemental Plans, were designed for this group of
Medicare beneficiaries as a way to prevent them from incurring financial
hardship due to the 20% portion deemed to be patient responsibility. Medigap
policies are a second health plan that can be purchased to help bridge that gap
The Medigap plan
will pick up 20% of what Medicare allows, leaving the patient, in most cases,
with a little more than the plan deductible to pay out of pocket. Some Medigap
plans will even pick up the plan deductible.
a nutshell, Medigap is…
- Private insurance coverage that is
offered to Medicare beneficiaries who have Part A (hospital) and Part B
- Coverage which can be purchased from
any insurance carrier that is licensed in the state.
- Coverage with a separate premium to
the insurance carrier that must be paid in addition to the Part B premium.
- A policy that cannot be canceled as
long as the premium is paid; even if the beneficiary has serious health
- A plan that will kick in after
Medicare pays and may provide reimbursement for the deductible and 20%
coinsurance that is not paid for by Medicare.
- A big plus for beneficiaries that
choose the traditional Medicare plans, as it will severely limit the money that
seniors will have to pay out of their pocket for healthcare.
- A plan that may not be necessary for
beneficiaries that choose one of the managed care plans because managed care
plans are designed to limit a patient’s out of pocket expense as long as in-network
providers are used.
- Available in 10 different plan types
and are designed to provide a wide range of coverages including: basic medical,
preventative, hospital or skilled nursing, to name a few. The beneficiary can
pick the Medigap plan that best fits their needs.
- Not mandatory. A Medicare
beneficiary may choose to enroll in a traditional Medicare plan, forgo the
Medigap plan and just pay the 20% out of pocket. It is totally up to the
Medicare beneficiary to decide.