Now that you have enrolled in Medicare and selected a Medigap or Medicare Advantage Plan you may be wondering if you are completely covered and prepared for all that life has left to throw at you. Unfortunately, the answer is no. Even with the coverage, you have now there are still holes that leave you vulnerable to out of pocket expenses. The good news is that there are products available to fill in the remaining holes in your coverage.
In the insurance business these products are known as Ancillary Products; however, these products are a lot more important than the name “ancillary” would imply. Ancillary products consist of the following: Dental/Vision/Hearing Insurance, Indemnity Insurance, Short-term Care Insurance, and Final Expense Insurance. Let’s take a closer look at these products and see why each are a necessary addition to your insurance portfolio.
Dental, Vision, and Hearing, while arguably the most common forms of care sought by people both before and after retirement, are not covered by Medicare, nor are they covered under any of the Medigap plans. Although they are not covered under Medicare or a Medigap plan, various Medicare Advantage plans, do include, or offer at an additional cost, some Dental, Vision and Hearing coverage.
The coverage under these plans is limited to a select network of Dentists, Optometrists (eye doctor), and Audiologists (hearing doctor). If you already have a dentist, optometrist, or audiologist, there is no guarantee that they are in the network, and they may not accept your insurance plan. For many standalone Dental, Vision, and Hearing Plans you can see any dentist or doctor you want, though they may have a network of dentists and doctors you can see to receive discounted services.
Coverage under these plans works much in the same way regardless of what plan you have. Typically these plans will have a deductible which you need to meet first, but not all plans do.
After you meet the deductible, you will either have a set copay or coinsurance percentage which you will have to pay for each office visit or service you have done. Along with the deductible, copay, and coinsurance, many of these plans have a yearly benefit amount, which is the maximum amount of money the plan will pay out per policy year. Because these plans don’t require any underwriting, many include what is known as waiting periods. This just means that you need to be on the plan for a set amount of time before coverage for certain services become available.
Next, let’s take a look at Indemnity Insurance and why it is a great addition to your insurance portfolio. Indemnity Plans can come in all shapes and sizes and are, more often than not, tailored to your individual needs. If you’ve elected to use Part C of Medicare also known as a Medicare Advantage plan for your health coverage then, a Hospital Indemnity plan is a good fit for you. With these plans, you are on the hook for some out of pocket expenses in the form of copays or coinsurance when it comes to your healthcare.
These copays can be low, from $10 to $50 for office visits, but they could also be up in the hundreds for a hospital stay or outpatient surgery. Because not all Medicare Advantage plans are the same, Hospital indemnity plans can be tailored only to give you the coverage you need based on the copays of your plan.
The Hospital Indemnity plan, along with other Indemnity plans such as ones for Cancer, Heart Attack, or Stroke, can also pay out in a lump sum payment. This means instead of being tailored to your individual copays you would just choose a lump sum amount of anywhere between $1,000 and $75,000.
Different Indemnity plans have different lump sum payout amounts. You only receive the lump sum once certain conditions are met such as being admitted to the hospital, getting cancer, or having a heart attack or stroke. Once you receive the lump sum, however, you can use it for whatever you need it for.
Those of you who have selected to supplement your Medicare with a Medigap plan may be thinking an indemnity plan is not for you because you don’t have out of pocket expenses under your plan. Not true. One of the major benefits of lump sum payout is that it is not tied to your health care expenses so you can use it how you need to. For example, if you were to get cancer many of the expenses you will face not directly related to your health care and therefore won’t be covered by Medicare or your plan.
These expenses include but are not limited to transportation to and from the hospital and chemo clinic, travel expenses (as the specialist you need to see could be across the country), and loss of income for you and a family member who is taking time off to take care of you. With the lump sum, you will have the money available to handle these costly expenses, which is why an Indemnity Plan, no matter how you supplement your Medicare, is a great addition to your insurance portfolio.
Now let’s look at Short-term Care Insurance and why it is important. Medicare, even with a Medigap or Medicare Advantage plan, does not provide much coverage towards post-hospital care. But what is post-hospital care? Simply put post-hospital care is care that you would typically receive after a hospital stay or surgical procedure to help you get better.
Post-hospital care is broken down into three different categories: Skilled Care, Intermediate Care, and Custodial Care. Skilled Care is provided daily by a nursing staff or professional therapists to help you recover from an illness or injury. Intermediate Care is similar to Skilled Care but is not provided on a daily basis. Custodial Care is different from the other forms of care in the fact that it does not help you get better.
You will receive Custodial Care if you need help with at least 2 activities of daily living (eating, bathing, dressing, etc.) anywhere from 2 to 7 days a week. Custodial care can be received at home or in a skilled nursing facility. Of the three categories, Custodial and Intermediate Care are by far the most common forms of care received.
When it comes to posting-hospital care, Medicare only provides coverage for Skilled Care and only for 100 days with a daily copay for days 20-100. Medicare also only provides this coverage if certain criteria are met. For Medicare to cover the Skilled Care, you must first have had a qualifying hospital stay which is four days and three nights in the hospital.
Also you need to get these services in a skilled nursing facility that is certified by Medicare and your doctor must certify that you need daily skilled care. With a Medicare Advantage Plan, the coverage is more or less identical while a Medigap plan will cover the daily copay for days 20-100.
Short-term Care Insurance provides coverage for Skilled Care, Intermediate Care, and Custodial Care which makes it a necessary addition to complete your healthcare coverage. Three different things go into building your Short-term Care policy: an elimination period (the amount of time you need to pay on your own before your coverage begins), a maximum lifetime benefit period (the total amount of time the plan will provide coverage), and the daily benefit (the amount the plan will pay out per day while receiving care). This way you get to build a personalized plan that provides the coverage you need while remaining in your budget.
Now that your health coverage is complete we can take a look at the last Ancillary Product. Final Expense insurance is exactly what it sounds like, insurance for your final expense. While this something no one wants to talk about, it is just as important. Currently, the average funeral cost is around $10,000. A Final Expense policy is a whole life insurance policy that provides just enough death benefit to cover funeral costs.
These policies have minimal underwriting and low monthly premium making it available and affordable for most people. If you already have life insurance in place from when you were working and protecting an income source for your family, it may make sense to exchange your current policy for a Final expense policy to lower your monthly premium. Other benefits of getting a final expense policy are that the death benefit can be paid directly to whoever is taking care of your funeral cost without having to go through probate/estate tax, and the death benefit is income tax exempt to the person receiving it.
This means that even if you have money tucked away to cover funeral costs, you would be better off using that money to purchase a Final Expense policy.
Now that we’ve reviewed all of the various Ancillary Products it’s time for a quick recap. Even with Medicare plus a supplemental Medigap or Medicare Advantage plan, there are still plenty of holes in your healthcare coverage. Ancillary Products such as Dental, Vision, Hearing Insurance, Indemnity Insurance, and Short-term Care Insurance help fill in the remaining holes in your coverage. Indemnity Insurance and Short-term Care insurance can both be tailored to fit your needs and budget. Final Expense Insurance is an obtainable and affordable Whole Life insurance policy that provides enough coverage for funeral costs.
Though these are all Ancillary Products, it is easy to see why they are an essential part of any Insurance portfolio. Seniors in Pennsylvania, New Jersey, or Delaware can contact BGA Insurance Group to learn more about how to incorporate these services into their plan.