Key Takeaways

• Medicare Supplement plans can fill the gaps in Original Medicare, but they come at a cost. Whether they are worth it depends on your healthcare needs and budget.

• USPS retirees and employees transitioning to Medicare should evaluate how these plans fit into their Postal Service Health Benefits (PSHB) and Medicare coverage.

Understanding Medicare Supplement Plans

Medicare Supplement plans, also called Medigap, help cover the out-of-pocket costs of Original Medicare, such as copayments, coinsurance, and deductibles. These plans are offered by private insurance companies and work alongside Medicare Parts A and B.

How Medigap Works with Original Medicare

• Covers costs that Medicare doesn’t, reducing out-of-pocket expenses.

• Works only with Original Medicare (not Medicare Advantage).

• Requires a separate monthly premium in addition to your Medicare Part B premium.

• Standardized across most states, offering similar coverage regardless of provider.

For USPS retirees, the need for a Medigap plan depends on whether your PSHB plan already provides sufficient coverage when combined with Medicare.

Comparing Medigap to Other Coverage Options

Medigap isn’t the only option for handling healthcare costs in retirement. You may also have access to:

• PSHB Plans: As a USPS retiree, your PSHB plan might coordinate with Medicare, reducing or eliminating the need for a Medigap plan.

• Medicare Advantage Plans: These combine Medicare Parts A and B and often include additional benefits, but they operate differently from Medigap plans.

• Employer or Union Coverage: Some retirees maintain benefits through past employment, which may offer similar cost-sharing protections as Medigap.

• Health Savings Accounts (HSAs): If you have an HSA from your working years, you may be able to use these funds to cover medical expenses in retirement, including Medicare-related costs.

• State Assistance Programs: Certain states offer programs to help lower-income retirees cover Medicare expenses, potentially reducing the need for Medigap.

Key Considerations Before Choosing a Medigap Plan

1. Assess Your Healthcare Needs

• Do you frequently visit doctors or specialists?

• Do you have chronic conditions requiring ongoing treatment?

• Are you planning to travel outside the U.S.? (Some Medigap plans cover emergency care abroad.)

• Do you anticipate needing skilled nursing or extended hospital stays?

• Will your prescriptions be a major factor in your out-of-pocket costs? (Medigap does not cover drugs, so you’ll need Part D.)

2. Understand the Costs

• Medigap plans require a separate monthly premium.

• Original Medicare still applies, meaning you’ll continue paying Part B premiums.

• Prescription drugs are not covered by Medigap; a separate Part D plan is needed.

• Some Medigap plans cover additional expenses, such as foreign travel emergency costs.

• If you delay enrolling in Medigap, future premiums may be higher due to underwriting.

3. Enrollment Timing Matters

• Your best opportunity to enroll is during the Medigap Open Enrollment Period (the six months after enrolling in Medicare Part B at age 65).

• After this window, you may be subject to medical underwriting, which could result in higher costs or denial of coverage.

• If you delay enrollment and develop a medical condition, insurers may charge higher rates or deny coverage.

• Certain states offer guaranteed issue rights, allowing you to enroll in Medigap without underwriting under specific circumstances.

4. How It Works with Your USPS Retirement Benefits

• If your PSHB plan offers significant coverage, a Medigap plan may be unnecessary.

• If your USPS benefits do not cover certain costs, Medigap might be useful for additional financial protection.

• Some PSHB plans may offer retiree-specific benefits that reduce out-of-pocket costs, making Medigap redundant.

Is a Medigap Plan Worth It for USPS Retirees?

The value of a Medigap plan depends on personal circumstances. Consider these factors:

• Financial Situation: Can you afford the extra premium, or would your PSHB plan be sufficient?

• Healthcare Needs: If you have high medical expenses, Medigap can prevent large out-of-pocket costs.

• Provider Choice: Medigap allows freedom to see any provider accepting Medicare, unlike some Medicare Advantage plans that have network restrictions.

• Emergency Coverage: If you travel often, some Medigap plans provide emergency coverage abroad, which Original Medicare does not cover.

• Future Health Changes: If you anticipate needing extensive medical care later, enrolling in Medigap early may be beneficial, as waiting too long could result in higher premiums or denied coverage.

What Happens If You Skip Medigap?

Without a Medigap plan, you would be responsible for:

• Medicare Part A hospital deductible and coinsurance.

• Medicare Part B 20% coinsurance on outpatient services.

• Excess charges if providers do not accept Medicare assignment.

• No out-of-pocket limit under Original Medicare.

• Potential high costs if you experience a serious illness or hospitalization.

• Gaps in coverage if your PSHB plan does not provide sufficient support.

If your PSHB plan or other retiree benefits provide adequate coverage, you might not need a Medigap plan. However, if you rely only on Original Medicare, out-of-pocket costs can quickly add up.

Making the Right Choice

• Compare your current PSHB benefits with what Medigap covers.

• Determine if you need additional coverage beyond what Medicare and PSHB provide.

• Keep in mind that your decision should align with both your health needs and financial situation.

• Review your options annually, as your health and financial situation may change.

• Speak with a professional to understand how Medicare, PSHB, and Medigap interact.

Get the Right Coverage for Your Needs

Choosing the right Medicare coverage is essential for managing your healthcare costs in retirement. If you’re unsure about whether a Medigap plan is right for you, consider speaking with a licensed agent listed on this website for personalized guidance.