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June 2, 2016

The “A” Medicare Supplement Insurance Plan

The “A” Medicare Supplement Insurance Plan

It’s important to break down each Medicare supplement insurance plan to make sure you really understand what they cover before your final choice. Luckily, the different plans all operate within the same categories of benefits with the difference (outside of cost) being whether a certain Medicare benefit is covered by the Medigap plan or not. This standardization does make things quite a bit easier so let’s jump into the first Medicare supplement insurance plan….the A plan.

The A plan is the most basic plan available although not always the cheapest due to the high deductible F plan that came on the scene later. That being said, the A was originally the bare bones Medicare supplement plan even though traditional Medicare plus any supplement is pretty robust coverage when compared with the pre-65 individual/family insurance market. Also, don’t get confused between “Plan A” and “Part A”. Part A refers to the benefits in traditional Medicare that deal with Hospital benefits while Plan A is a Medicare supplement. We know…there are too many letters flying around in any discussion of Medicare but we’ll try to simplify things a bit. So let’s jump in and look category by category at what the A plan covers. First, let’s deal with the 4 big items in traditional Medicare where there is some exposure.

First, let’s deal with Part A (the hospital or facility based coverage mentioned above). If you only have traditional Medicare, there will be a deductible, which is indexed to inflation and generally adjusts every year, after which you will pay 20% of the remaining charges (Medicare providers) for covered benefits indefinitely. So there are two pieces…a deductible and the 20%. The A Medicare supplement plan covers the 20% co-insurance but not the deductible.

The same is true for the Part B (phyician, lab, etc) deductible and 20% coinsurance. The A plan will cover the 20% but not the deductible. This is less of an issue since the physician deductible is usually a few hundred (between 1 and 2) per year. So that’s how the A plan treats the big four concerns: covers 20% coinsurance but not the deductibles. Next, we’ll look at the remaining core benefits in descending order of importance (in our opinion, of course).

The A plan does not cover Excess. This is the amount a provider is allowed to charge above what Medicare allows (up to 15%) and still participate with Medicare. More and more doctors will likely charge this excess as they are continually squeezed and the Excess charge has no cap. This is potentially an issue with the A plan.

Hospice coverage is a benefit under the A plan as is true for all the Medicare supplement insurance plans. Preventative benefits (as designated by Medicare) are also covered by the A plan (as with all plans). The first 3 pints of blood are also covered.

Foreign Travel and Skilled Nursing are not covered benefits by the A plan. The Skilled Nursing is probably more of a concern than the travel emergency coverage as any facility based care such as skilled nursing can be very expensive (and only going higher). So what’s our net take-away regarding the A plan.

The lack of Excess and Skilled Nursing coverage really stands out as issues with the A plan. Combine these potential holes with the deductibles (both hospital and physician) and the better value is probably to go up the chain since you’re more likely to hit these deductibles as you get older (based on average statistical data). The F plan would be the ideal approach and if cost is the absolute concern, you would probably be better off on the high deductible F plan or even an Advantage plan. Either way, we’re happy to go through your individual situation to find the best fit for you.

An article by Dennis Jarvis
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