Medicare supplement plans are private insurance plans designed to fill some of the gaps in Medicare coverage. For this reason, people also call these policies Medigap. Medicare supplement insurance cover things like deductibles and copayments.
If you use medical services when you have Medicare supplement insurance, Medicare pays its portion first, then your Medicare supplement plan will pay for any remaining covered costs.
There are many factors to consider when choosing a Medicare supplement plan. Read on for tips on deciding if you need a Medigap plan and a comparison of options.
Medigap plans are sold by private companies to help cover costs left over from original Medicare. Some of these costs include deductibles, copayments, and coinsurance. A Medigap policy only begins paying for your costs after both you and Medicare have paid your share for medical services.
Currently, there are 10 Medigap plans available: A, B, C, D, F, G, K, L, M, and N.
Some older Medigap plans are no longer for sale to those who are new to Medicare. These include plans C, F, E, H, I, and J. However, if you’ve already bought one of these plans, you can keep it as long as the company still offers it. If you were eligible for Medicare before January 1, 2020, you can still buy Plan C or Plan F.
Medicare supplement plans are standardized in most states. This means the policy you buy should offer the same benefits no matter what insurance company you buy it from. Exceptions are Medigap policies in Massachusetts, Minnesota, and Wisconsin. These plans may have different standardized benefits based on the legal requirements in that state.
If an insurance company sells a Medicare supplement plan, they must offer at least Medigap Plan A as well as either Plan C or Plan F. However, the government doesn’t require that an insurance company offer every plan.
An insurance company can’t sell you or a loved one a Medicare supplement insurance plan if you already have coverage through Medicaid or Medicare Advantage. Also, Medicare supplement plans only cover one person — not a married couple.
Advantages and disadvantages of Medigap
Benefits of choosing a Medigap plan
- Medicare supplement insurance plans can help cover costs like deductibles, coinsurance, and copayments.
- Some Medigap plans can virtually eliminate out-of-pocket costs for a person.
- If you enroll in the open enrollment period after you turn 65 years old, insurance companies can’t exclude you based on health conditions.
- Medigap plans will cover 80 percent of your emergency healthcare services when you’re traveling outside the United States.
- Many different plan options to choose from to best suit your individual healthcare needs.
Drawbacks of choosing a Medigap plan
- While a Medigap policy can help cover some of your Medicare costs, it does not cover prescription drug, vision, dental, hearing, or any other health perks, such as fitness memberships or transportation.
- To receive coverage for the medical services listed above, you will need to add a Medicare Part D policy or choose a Medicare Advantage (Part C) plan.
- Attained-age-rated Medigap policies charge higher premiums as you age.
- Not all plans offer coverage for skilled nursing facility or hospice care, so check your plan’s benefits if you may need these services.
Every Medigap plan covers some of your costs for Part A, including coinsurance, extended hospital costs, and hospice care coinsurance or copayments.
All Medigap plans also cover some of your Part B costs, like coinsurance or copayments, deductible, and your first 3 pints of blood if you need a transfusion.
Coverage for the Part B premium
If you became eligible on or after January 1, 2020, you are not able to purchase a plan that covers the Part B premium. These include Medigap Plan C and Plan F.
However, if you already had one of these plans, you can keep it. Additionally, if you were eligible for Medicare before January 1, 2020, you may be able to purchase Plan C or Plan F as well.
Medicare supplement plan comparison chart
The chart below compares coverage with each type of Medigap plan:
| Benefit | Plan A | Plan B | Plan C | Plan D | Plan F | Plan G | Plan K | Plan L | Plan M | Plan N | Benefit |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Part A deductible | No | Yes | Yes | Yes | Yes | Yes | 50% | 75% | 50% | Yes | Part A deductible |
| Part A coinsurance and hospital costs (up to an additional 365 days after Medicare benefits used) | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Part A coinsurance and hospital costs (up to an additional 365 days after Medicare benefits are used) |
| Part A hospice care coinsurance or copayments | Yes | Yes | Yes | Yes | Yes | Yes | 50% | 75% | Yes | Yes | Part A hospice care coinsurance or copayment |
| Part B deductible | No | No | Yes | No | Yes | No | No | No | No | No | Part B deductible |
| Part B coinsurance or copayments | Yes | Yes | Yes | Yes | Yes | Yes | 50% | 75% | Yes | Yes | Part B coinsurance or copayment |
| Part B premium | No | No | Yes | No | Yes | No | No | No | No | No | Part B premium |
| Part B excess charges | No | No | No | No | Yes | Yes | No | No | No | No | Part B excess charge |
| Out-of-pocket limit | No | No | No | No | No | No | $6,220 | $3,110 | No | No | Out-of-pocket limit |
| Foreign travel medical cost coverage | No | No | 80% | 80% | 80% | 80% | No | No | 80% | 80% | Foreign travel exchange (up to plan limits) |
| Skilled nursing facility coinsurance | No | No | Yes | Yes | Yes | Yes | 50% | 75% | Yes | Yes | Skilled nursing facility care co-insurance |
Even though Medicare supplement plans are standard in terms of the benefits they offer, they can vary in price based on the insurance company that sells them.
It’s kind of like shopping at a sale: Sometimes, the plan you want costs less at one store and more at another, but it’s the same product.
Insurance companies usually price Medigap policies in one of three ways:
- Community rated. Most people pay the same, regardless of age or sex. This means if a person’s insurance premium goes up, the decision to increase it is related more to the economy than a person’s health.
- Issue-age rated. This premium is related to a person’s age when they bought it. As a general rule, younger people pay less and older people pay more. A person’s premium may increase as they get older due to inflation, but not because they’re getting older.
- Attained-age rated. This premium is lower for younger people and goes up as a person gets older. It may be the least expensive as a person first buys it, but it can become the most expensive as they age.
Sometimes, insurance companies will offer discounts for certain considerations. This includes discounts for people who don’t smoke, women (who tend to have lower healthcare costs), and if a person pays in advance on a yearly basis.
You are eligible to enroll in a Medicare supplement plan during the Medigap initial enrollment period. The initial enrollment period is triggered by the start of the month when you turn 65 years old and sign up for Part B. You can sign up for a Medicare supplement plan for 6 months from that date.
If you stay enrolled and pay your premium, the insurance company can’t cancel the plan. However, if you already have Medicare, an insurance company can deny selling you a Medicare supplement policy based on your health.
Buying a Medicare supplement plan can some take time and effort, but it’s well worth it. This is because most people keep their Medigap policies for the rest of their lives.
Here are the basic steps to buying a Medigap policy:
- Evaluate what benefits are more important to you. Are you willing to pay some of a deductible, or do you need full deductible coverage? Do you anticipate needing medical care in a foreign country or not? (This is helpful if you travel a lot.) Look at our Medigap chart to determine what plans offer you the best benefits for your life, finances, and health.
- Search for companies that offer Medicare supplement plans by using the Medigap plan search tool from Medicare. This website gives information on policies and their coverage as well as insurance companies in your area that sell the policies.
- Call 800-MEDICARE (800-633-4227) if you don’t have internet access. The representatives who staff this center can help provide the information you need.
- Contact insurance companies who offer policies in your area. While it takes some time, don’t just call one company. The rates can vary by company, so it’s best to compare. Cost isn’t everything, though. Your state’s insurance department and services like weissratings.com can help you find out if a company has a lot of complaints against it.
- Know that an insurance company should never pressure you to buy a policy. They also shouldn’t claim to work for Medicare or claim that their policy is a part of Medicare. Medigap policies are private and not government insurance.
- Choose a plan. Once you have looked over all the information, you can decide on a policy and apply for it.
Medicare supplement plans can be difficult to navigate. If you have a specific question, you can call your State Health Insurance Assistance Program (SHIP). These are federally funded state agencies that provide free counseling to people with questions about Medicare and supplement plans.
Tips for helping a loved one enrollIf you’re helping a loved one enroll in Medicare, consider these tips:
- Ensure they enroll in the time period allotted. Otherwise, they could face greater costs and penalties for enrolling late.
- Ask how the insurance company prices its policies, such as “issue age” or “attained age.” This can help you anticipate how your loved one’s policy could increase in price.
- Ask how much the policy or policies you’re closely evaluating have increased in costs over the past few years. This can help you evaluate if your loved one has enough funds to cover the costs.
- Ensure your loved one has a secured way to pay for the policy. Some policies are payable by check monthly, while others are drafted from a bank account.
Medicare supplement insurance policies can be a way to reduce the fear of the unpredictable, in terms of healthcare costs. They can help pay for out-of-pocket costs that Medicare may not cover.
Using free state resources, such as your state’s insurance department, can help you or a loved one make the best decision regarding coverage.