Do I Need Supplemental Insurance for Medicare?

Medicare Supplemental Insurance doesn't cover prescription drugs.
Medicare Supplemental Insurance doesn't cover prescription drugs. (Image: michaelquirk/iStock/Getty Images)

Supplemental Medicare insurance, also known as Medigap, is an option for people already enrolled in Medicare Part A hospital and Part B medical insurance. Although you might benefit from one of the 10 available supplemental plans that cover copayments, coinsurance and sometimes deductibles, a decision ought to come only after analyzing relevant information including your personal situation and cost information.

What Medigap Covers

The greater your current and anticipated future healthcare needs, the higher your out-of-pocket expenses are and the more sense it may make to purchase supplemental insurance. According to the most current information, all Medigap policies cover Part A and Part B coinsurance, copayment, hospital costs and up to three pints of blood; many cover the $1,260 Part A per-benefit period deductible, and some cover the $147 annual deductible for Part B. This can be especially helpful if you visit the doctor often, as Part B is 80/20 insurance, meaning that after you pay the annual deductible, you’re still responsible for paying 20 percent of the bill.

Medigap Premiums vs. Out-of-Pocket Expenses

Federal and state laws regulate what each of the 10 available Medicare Supplemental insurance plans covers, but the private insurance companies that sell them set their own prices. According to, at publication the nationwide average is $183 per month or $2,196 annually. However, costs vary widely between different insurance companies, your geographic location and the plan you select. If your average out-of pocket costs don’t exceed annual insurance costs, a Medigap plan may be unnecessary.

Consider Specific Needs

Your specific healthcare needs may determine whether supplemental insurance is necessary. Although private insurers often advertise Medicare Supplemental Insurance as “covering what Medicare doesn’t,” this isn’t exactly true. A supplemental policy doesn’t cover any medical services that Medicare Part A and Part B don’t also cover. This includes prescription drugs, vision or dental care, hearing aids and private-duty or nursing home care.

Alternative Options

You may not need Medigap if your employer offers a retiree insurance plan. In this situation, coordination of benefits between your employer’s health plan and Medicare may make supplemental insurance an unnecessary expense. In addition, retiree health plans often cover vision and dental care, which neither Medicare nor Medigap plans cover. recommends that you compare out-of-pocket costs with Medicare and a retiree health plan against Medicare and a Medigap plan.

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