How Can a Medicare Supplement Insurance Plan Help Me?

Medicare provides coverage for a variety of services and items, such as hospital care costs and different outpatient medical care services. So do you really need a Medicare Supplement Insurance (Medigap) plan?

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What is Medigap?

A Medicare Supplement Insurance plan provides coverage for some of the out-of-pocket expenses that Medicare Part A and Part B (also called Original Medicare) don’t cover.

These costs can include deductibles, coinsurance, copayments and more. Medigap pays for the coverage gaps in Medicare, hence the name “Medigap.”  

The chart below shows the Medicare costs that each type of standardized Medigap plan will cover. These 10 standardized plans are sold in most states, and you can learn more about Medigap plans in your state.

Medicare Supplement Insurance Plans 2019
Medicare Supplement Benefits A B C D F1 G K2 L3 M N4
Part A co-insurance and hospital costs
Part B co-insurance or co-payment 50% 75%
First 3 pints of blood 50% 75%
Part A hospice care co-insurance or co-payment 50% 75%
Co-insurance for skilled nursing facility     50% 75%
Medicare Part A deductible   50% 75% 50%
Medicare Part B deductible                
Medicare Part B excess charges                
Foreign travel emergency     80% 80% 80% 80%     80% 80%
1. Plan F offers a high-deductible plan. This plan requires you to pay a $2,300 deductible in 2019 before it covers anything.
2. Plan K has an out-of-pocket yearly limit of $5,560 in 2019. After you pay the out-of-pocket yearly limit and yearly Part B deductible, it pays 100% of covered services for the rest of the calendar year.
3. Plan L has an out-of-pocket yearly limit of $2,780 in 2019. After you pay the out-of-pocket yearly limit and yearly Part B deductible, it pays 100% of covered services for the rest of the calendar year.
4. Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to a $50 copayment for emergency room visits that don’t result in an inpatient admission.
View an image version of this table.

How do I pick a Medicare Supplement plan?

There are nine benefit areas that can be covered by each of the 10 types of standardized Medicare Supplement plan.

The Medicare coverage gaps filled in by Medicare Supplement Insurance plans can include:

  • Part A coinsurance and hospital costs
  • Part B coinsurance or copayments
  • First three pints of blood needed for a blood transfusion
  • Part A hospice care coinsurance or copayments
  • Coinsurance for skilled nursing facility
  • Part A deductible
  • Part B deductible
  • Part B excess charges
  • Foreign travel emergency care

More than one out of every three Medicare beneficiaries are enrolled in a Medicare Supplement Insurance plan in 2019.1 Close to 20 million people decided that they need a Medigap plan, so what are some potential reasons why? 

Medicare costs can add up quickly when you’re in the hospital

Medical bills are the leading cause of bankruptcy in the U.S., and a lengthy hospital stay can push even the most well-prepared people into financial difficulties.2 

Under Medicare Part A coverage for inpatient hospital care, you must meet a deductible of $1,364 in each benefit period in 2019 before your Part A benefits kick in.

The Part A deductible is not annual. A benefit period begins the day you are admitted to a hospital as an inpatient and ends once you have stopped receiving inpatient care for 60 consecutive days.

If you are admitted to the hospital again later the same year, a new benefit period begins and you must meet the Part A deductible again. 

You may face additional Medicare costs if you experience an extended hospital stay.

While you won’t owe any coinsurance for the first 60 days of your stay, you’ll start paying $341 per day in 2019, beginning on day 61 of your stay. On day 91 of an inpatient stay, your Part A coinsurance doubles to $682 per day.

While a hospital stay that lasts longer than 60 days may not be common, these costs can add up quickly if you are required to pay them.

Each of the 10 standardized Medicare Supplement Insurance plans that are available in most states provide full coverage for Part A coinsurance costs.

Some other Medigap plans provide either full or partial coverage for the Part A deductible:

Plans that provide full coverage for the Part A deductible include:

Plans that provide partial coverage for the Part A deductible include:

Medigap plans can help make your Medicare costs more predictable

Health care can be difficult to budget for because of the uncertainty of potential out-of-pocket costs you may face.

Will you have to contribute to your deductible next month?

Will you accumulate any coinsurance or copayments? 

A Medigap plan may reduce your Medicare out-of-pocket spending by trading in unexpected and unpredictable expenses for a monthly premium. This cost predictability can help you better budget for and manage your health care costs.     

Original Medicare has no annual out-of-pocket spending limit

Original Medicare has no annual out-of-pocket limit. This means there is no limit to the amount of Medicare coinsurance, deductibles and other costs you could potentially be required to pay in a year.

Medicare Supplement Insurance Plan K and Plan L come with an annual out-of-pocket limit:

Once you’ve reached that limit in a calendar year, the plan pays for 100 percent of your covered health care expenses for the remainder of the calendar year. 

Some Medigap plans can give you first-dollar coverage

Medicare Part A and Part B each require you to meet a deductible before any coverage takes effect.

Some Medigap plans cover both the Part A and B deductibles, which means your Medicare coverage will begin with your very first covered service or item. This is referred to as “first-dollar coverage.”   

Plan F and Plan C are the two Medigap plans that fully cover both the Part A and Part B deductibles.

Medicare beneficiaries who become eligible for Medicare on or after January 1, 2020, will no longer be able to enroll in a new Medigap Plan F or Plan C plan. If you have Plan F or Plan C before Jan. 1, 2020, you will be able to keep your plan.

If you become eligible for Medicare before Jan. 1, 2020, you may be able to enroll in Plan F or Plan C, if either plan is available where you live.

A group looks at a map while traveling abroad

Some Medigap plans help cover foreign travel emergency care

Medicare only provides coverage for emergency care received outside of the U.S. in limited situations.

If you’re planning on spending much of your retirement seeing the world, you will typically not be able to use your Medicare coverage abroad. 

Some Medicare Supplement Insurance plans help cover 80 percent of the costs of foreign emergency care up to certain plan limits.

The Medigap plans that help cover foreign travel emergency care include:

What is the Average Cost of Medicare Supplement Insurance?

Medicare Supplement Insurance is sold by private insurance companies, so the cost of a plan can vary according to location, carrier or plan selection. 

In 2018, the average premium paid for a Medicare Supplement Insurance plan was $125.93 per month.3

The average cost of a Medigap plan can vary based on your age, gender, smoking status, health and where you live. Plans with fewer benefits may also come with lower premiums than some plans that offer more benefits.

Is Medicare Supplement Insurance worth it?

If you’re on the fence about signing up for Medicare Supplement Insurance, consider how the cost of a plan compares with the cost of the out-of-pocket expenses you would leave yourself exposed to by not signing up for a plan. 

  • The cost of a single Part A benefit period deductible is close to the average annual cost of a Medicare Supplement Insurance plan.

    While it’s not common, you could potentially encounter more than one Part A benefit period in the same year.

  • You typically pay a 20 percent coinsurance for Part B covered services and items, after you meet your Part B deductible.

    If you face a $650 bill for Part B covered services (after meeting your deductible), your Part B coinsurance would equal just one month of the 2018 average Medigap plan premium (20 percent of $650 is $130).

  • Three pints of blood received in a hospital can cost more than $600.4 This is several times more than the average 2018 Medigap plan premium.  

Can I buy Medicare Supplement Insurance at any time?

You may enroll in a Medicare Supplement Insurance plan at any time. However, the best time to do so is during your Medigap Open Enrollment Period (OEP)

Your Medigap OEP is a six-month period that begins the day you are both 65 years old and enrolled in Medicare Part B.

During this time, you have guaranteed issue rights, which means insurance companies are not allowed to use medical underwriting to determine your premiums or whether or not you can be issued a policy.

If you apply for a Medigap plan after your Medigap Open Enrollment Period, insurance companies reserve the right to base your premiums on the quality of your health. Certain health conditions can lead to higher premiums, and a company can even deny you coverage altogether if they decide you are too risky to insure. 

Guaranteed issue rights may be granted outside of your open enrollment period for certain circumstances, such as moving to a new service area or losing health insurance through no fault of your own. 

You are allowed to cancel a Medicare Supplement Insurance plan for a full refund within the first 30 days.

Outside of your open enrollment period, you may still cancel your Medigap plan at any time, but you will likely have to face medical underwriting if you apply for a new Medigap plan without having guaranteed issue rights.  

If you wish to change Medigap plans, you may take advantage of a 30-day “free look period” in which you may try out a different plan. You’ll remain enrolled in your old plan (and must pay the premiums for both plans for that month) and may then choose between the two plans at the end of the month. 

How do I sign up for a Medicare Supplement plan?

A licensed insurance agent can help you determine your Medigap eligibility, help answer your Medicare Supplement Insurance questions and compare plans that are available where you live.

Call to speak with a licensed insurance agent today and find a Medigap plan that may fit your coverage needs.

 

Learn more about Medigap plans in your area

Visit MedicareSupplement.com