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.
The chart below outlines the benefits covered by each of the 10 standardized Medicare Supplement Insurance plans available in most states.
|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.
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?
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.
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.
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.
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.
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.
There are additional reasons you might consider that Medicare Supplement Insurance is worth the monthly premiums.
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 areaVisit MedicareSupplement.com
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1 AHIP. The State of Medigap 2018. (June, 2018). Retrieved from www.ahip.org/wp-content/uploads/2018/06/State_of_Medigap18_FINAL.pdf.
2 TZ Insurance Solutions LLC internal sales data, 2019. This data is based on the Medicare Supplement Insurance policies TZ Insurance Solutions LLC has sold. It is not a comprehensive national average of all available Medicare Supplement Insurance plan premiums.
MedicareAdvantage.com is a website owned and operated by TZ Insurance Solutions LLC. TZ Insurance Solutions LLC and TruBridge, Inc. represent Medicare Advantage Organizations and Prescription Drug Plans having Medicare contracts; enrollment in any plan depends upon contract renewal.
Plan availability varies by region and state. For a complete list of available plans, please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.
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