How to Get the Most of Your Medicare: Supplemental Insurance for Seniors

Rohan Mathew

Updated on:

As you retire and grow older, you face a difficult problem. It becomes increasingly more challenging to afford the cost of rising health care as your income continuously shrinks.

The United States government is well aware of this problem. Currently, 18% of the country’s GDP is annually spent on wellness programs, of which more than 5% goes toward the elderly.

It’s estimated that a couple that retires at the age of 65 needs at least $280,000 in savings to cover future medical costs. However, this excludes long-term care or assisted living and only includes Part B premiums and Part D drug coverage.

Although most senior health care is paid for by private insurers and government programs like Medicare, there’s always a shortfall. Therefore, to help avoid medical debt, it’s advisable to take out supplemental health insurance for seniors.

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What Is Medicare?


Medicare is the wellness program instituted by the federal government for individuals older than 65 that have worked full time for at least ten years. The program is paid for by a combination of monthly premiums, 2.9% payroll tax, and the government. It consists of four parts:

  • Part A – For most people, this category comes at no charge. It helps to cover care in a skilled nursing facility, hospice care, hospitalization, and some healthcare.
  • Part B – Monthly premiums of about $100 apply. It covers most outpatient services, including doctor’s visits, certain surgeries, and preventative care.
  • Part C – Also called Medicare Advantage. Premiums vary, and it enables individuals to enroll in health plans sold by insurance companies contracted to Medicare.
  • Part D – Cover the cost of prescription drugs.

What Is Medicaid?

This health care plan is partially funded by the federal government and run by the individual states. It’s typically last resort insurance for low-income individuals. To qualify for this program’s benefits, you first have to spend the majority of your available capital. It pays for most of the cost incurred by several different types of long-term health care, including hospice and nursing homes.

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Private Health Insurance as an Option


This type of healthcare is available to anyone that can afford the monthly premium. It can be purchased by:

  • Individuals – This is typically an expensive option, as the insurer considers the applicant’s age, health, and other risk factors. People, especially seniors, can face excessive premiums or be denied coverage altogether.
  • Employer-sponsored – Unless you’re part of a union or pension plan, these generally end when the individual retires.

Some insurers provide their clients with Medicare supplemental insurance, typically referred to as Medigap. Long-term care policies are also provided by these vendors to help pay for costs incurred by services such as home health care or assisted living.

Medigap – Supplemental Insurance for Seniors

Although Medicare is tailored to cover most healthcare needs, there are some services and costs that it doesn’t cover. For this reason, it’s vital to opt for supplemental health care, also known as Medigap.


Gap insurance pays for out-of-pocket expenses such as co-payments, deductibles, and coinsurance. It’s sold by private insurance companies and is applied after Medicare paid its share of the expenses incurred by healthcare costs.

These policies aren’t the same as Medicare Advantage. It doesn’t provide any additional benefits. It does, however, supplement the existing services covered by your Medicare plan. It also doesn’t include long-term vision or dental care, eyeglasses, hearing aids, and private duty nursing. Additionally, plans purchased since 2006 aren’t permitted to cover prescription drugs.

It’s essential to take note of the following:

  • Medigap is only available to individuals that have Medicare part A and B plans.
  • It’s vital to sign up for Medigap within six months after your 65th birthday. If you fail to do this, you may be denied coverage or pay more on your monthly premium.
  • Standard Medigap plans come with guaranteed renewability.
  • These policies only cover one individual. If both you and your spouse want Medigap coverage, you each have to buy a separate plan.

Cost Vs. Benefits – Is it Worth It?

Most people make the mistake of focusing on the cost of a Medigap plan. Some plans are cheaper than others, but they may not offer all of the ‘gap’ coverage you expect or need. Be sure to compare the benefits of all the plans available before you decide to buy a policy simply because it’s less expensive.

Supplemental insurance goes a long way to combat the ever-rising cost of health care. In the long-term, though, this type of insurance can mean the difference between being able to afford healthcare expenses or ending up accumulating medical debt.