Is a Medicare Supplement Insurance Plan Worth the Cost?

One out of every three fee-for-service Medicare beneficiaries (people enrolled in Medicare Part A and Part B) were enrolled in a Medicare Supplement Insurance (Medigap) plan in 2016 (34 percent).1

The high enrollment rate suggests that millions of seniors feel that their Medicare Supplement Insurance plan is worth the cost.

But how do you know if Medicare Supplement Insurance is worth it for you?

This guide will help you understand the benefits of different types of Medigap plans as well as the average cost of Medicare Supplement Insurance. A licensed insurance agent can also help you explore the Medigap plans that are available where you live.

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What are the benefits of 2019 Medicare Supplement Insurance plans?

The chart below outlines the benefits covered by each of the 10 standardized Medicare Supplement Insurance plans available in most states.

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.

What is the average cost of Medicare Supplement Insurance?

The average Medigap Plan G premium in 2018 was $122.78 per month, which is $1,473 per year.2

So how does $1,473 per year compare to some of the out-of-pocket Medicare costs that are covered by Plan G?

2019 Medicare Part A deductible

Medicare Part A comes with a deductible of $1,364 per benefit period. This means that you must pay $1,364 out of your own pocket before Medicare Part A will begin to cover your inpatient hospital costs.

And because the Part A deductible isn’t annual, you could potentially be required to pay the deductible more than one time in a year.

Because Medigap Plan G covers the Part A deductible in full, you could potentially pay less out of pocket for the average Plan G premium than you would if you were required to pay the Part A deductible more than once in the year.

2019 Medicare Part A coinsurance

Medicare Part A does not require any coinsurance for the first 60 days of a hospital stay.

But starting on day 61 of your stay, you are required to pay $341 per day in 2019 until day 90 of your stay and additional costs after day 91.

While a hospital stay of longer than 60 days may not be common, the daily Part A coinsurance requirement can add up quickly.

Medigap Plan G covers Part A coinsurance costs in full, helping to keep you from having to pay potentially thousands of dollars in hospital costs, even if it is unlikely to encounter such a hospital stay.

2019 Medicare Part B coinsurance

Part B of Medicare typically requires a 20 percent coinsurance payment for covered services and items after you reach your Part B deductible.

There is no limit to how much you could potentially pay in Part B coinsurance costs.

  • If you get knee-replacement surgery, for example, your 20 percent coinsurance costs could add up to a significant amount.
  • If you underwent cancer treatment, the coinsurance costs could be even higher.

Medigap Plan G covers Part B coinsurance costs in full, which can protect you from having to potentially limitless coinsurance costs for your necessary medical care.

Foreign emergency care

Medigap Plan G covers 80 percent of the costs for emergency medical care received outside of the U.S.

Medicare Part A and Part B don’t typically cover the costs of foreign emergency care. If you travel outside of the U.S., the added security of having Medigap Plan G could help put your mind at ease while you travel.

The four scenarios described above all paint a picture of how the cost of monthly premiums for a Medicare Supplement Insurance plan can be less than the potential out-of-pocket Medicare costs you can face without a Medigap plan.

Some Medicare Supplement Insurance plans, such as Plan L, feature an annual out-of-pocket spending limit.

Plan L has an out-of-pocket spending limit of $2,780 in 2019. This means Plan L will  pay for 100 percent of your covered services once you’ve spent $2,780 out of pocket on covered care.

Original Medicare (Part A and Part B) has no out-of-pocket limit, which could potentially leave you on the hook for considerably high costs.

Why should I buy a Medigap plan?

There are additional reasons you might consider that Medicare Supplement Insurance is worth the monthly premiums.

  • Cost predictability
    Receiving health care services without Medicare Supplement Insurance can mean unpredictable bills due to Medicare’s cost-sharing requirements. But with a Medigap plan, you may be able to better predict your health care spending.

  • Provider freedom
    Medigap plans are accepted by any health care provider or hospital that accepts Medicare.

    Also, if you have a Medigap plan that covers Medicare Part B excess charges, you are free to visit providers who do not accept Medicare assignment (meaning that they don’t accept Medicare reimbursement as payment in full) without having to pay additional costs they may charge.

  • Better use of your Medicare coverage
    With no help paying for Medicare out-of-pocket costs, you may be reluctant to seek care out of fear for what it might cost.

    But when some of those out-of-pocket costs are covered, you may experience greater peace of mind to seek the care that you need when you need it.

Find Medigap plans in your area

One way to see how Medicare Supplement Insurance may be worth it for you is to examine your health care costs from the previous year and see how much money you might have saved with a Medigap plan.

Another way is to speak to a licensed insurance agent who can help you learn more about Medicare Supplement Insurance plans and the costs they cover.

 

Learn about Medigap plans in your area

Visit MedicareSupplement.com