A Guide to Medicare Supplement (Medigap) Plans
If you’re around 65, close to retiring, or already retired, chances are you’re researching Medicare. During your research, perhaps you’ve come to like what Original Medicare, or Medicare Part A and Part B, offers. But there’s a glaring problem you may have spotted: it doesn’t cover some of the costs your employer-provided insurance likely used to cover. Luckily, with a Medicare Supplement plan, you can get coverage more like what you were used to.
A Medicare Supplement plan provides an excellent option for people who like the idea of the government-run Medicare program but would like to have a few more of their costs covered. This article will help explain what a Medicare Supplement plan is, how it works, the benefits offered by each plan, and more.
What is a Medicare Supplement plan?
A Medicare Supplement (also known as Medigap) plan is a supplemental insurance plan sold by a private company. This kind of insurance helps cover the costs that Original Medicare doesn’t, like deductibles, copayments, or coinsurance.
Want to learn more about Medigap vs Medicare Advantage? Check out the last video in our Medicare Prepared series.
Discovering the gaps in Original Medicare
Original Medicare covers a wide range of illnesses, ailments, and preventive treatments. But under this insurance, you may still end up paying quite a bit more than you were expecting for services that you thought should be better covered. For example, hospital stays are covered under Medicare Part A, but only for up to 90 days. If you were to contract an illness requiring a more extended stay, you’d face steep medical bills. This situation is one of many “gaps” that people often wish were filled.
Original Medicare is like a dam holding back a reservoir of medical costs you’ll never have to worry about. In many cases, these costs don’t affect you if you’re covered by Medicare and continue to pay your premiums. But in this same dam are a few leaks—costs that will get passed to you, especially if you’re a frequent user of your Medicare health insurance. This is where Medicare Supplement (also known as Medigap) plans help.
A Medicare Supplement plan is like a private insurance company plugging some of the leakier holes in the dam of Medicare coverage. But unfortunately, it’s not free. And the more leaks insurance companies fill, the more it will cost you in premiums (monthly payments). But in the long run, you can avoid spending a lot of money out of pocket later if you’re willing to pay a little more in premiums in the short term.
How do Medicare Supplement plans work?
Once you enroll in both Part A and Part B, then you have the option to add a Medicare Supplement plan to give yourself additional coverage. Medicare Supplement plans work in addition to your existing Medicare coverage, so the benefits of the Medigap plan kick in once coverage from Part A or Part B ends.
Additionally, the federal government regulates which benefits are provided by each plan. The plans themselves provide the same benefits no matter which company sells them. This means that no matter which company you purchase a Plan F (one of many Medigap policies) from, the benefits must all match the Plan F benefits set by law.
It’s worth noting, however, that premiums for a plan can vary widely from one company to the next. For this reason, you may be able to find better deals if you get quotes from various companies.
Disclaimer: For beneficiaries in Massachusetts, Minnesota, and Wisconsin, your Medigap policies are different and regulated by your state rather than federally.
A word of caution:
It’s quite easy to get Medicare Supplement plans confused with Medicare parts because some of them share names. Keep in mind, they are not the same.
Medicare Part A, Part B, Part C, and Part D are all sections of Medicare. Medicare Supplement Plans A, B, C, D, F, G, K, L, M, and N are Medigap policies that supplement your Original Medicare coverage. The plans supplement coverage for the parts.
Here’s another way to think of it: Medicare Part A is a part of Original Medicare. Medigap Plan A is a plan to supplement Original Medicare.
The above chart is based on information from Medicare.gov and is for illustration purposes only. Data effective 11/18/2019.
Medicare Supplement plan comparison
This table compares the benefits of all ten available Medigap plans. If you’re unclear on the meaning of each benefit, see below for the full explanation.
Medicare Supplement plan benefits
|1. Part A coinsurance/hospital costs||Yes||Yes||Yes||Yees||Yes||Yes||Yes||Yes||Yes||Yes|
|2. Part B coinsurance/copayment||Yes||Yes||Yes||Yes||Yes||Yes||50%||75%||Yes||Yes|
|3. Blood (first 3 pints)||Yes||Yes||Yes||Yes||Yes||Yes||50%||75%||Yes||Yes|
|4. Part A hospice care coinsurance||Yes||Yes||Yes||Yes||Yes||Yes||50%||75%||Yes||Yes|
|5. Skilled nursing facility care coinsurance||No||No||Yes||Yes||Yes||Yes||50%||75%||Yes||Yes|
|6. Part A deductible||No||Yes||Yes||Yes||Yes||Yes||50%||75%||50%||Yes|
|7. Part B deductible||No||No||Yes||No||Yes||No||No||No||No||No|
|8. Part B excess charge||No||No||No||No||Yes||Yes||No||No||No||No|
|9. Foreign travel coverage||No||No||80%||80%||80%||80%||No||No||80%||80%|
|10. Out-of-pocket limit||No||No||No||No||No||No||$5,560||$2,780||No||–|
What do these benefits mean?
1. Part A coinsurance and hospital costs
Remember the example from the beginning, about the person who stayed in a hospital longer than 90 days? This benefit is great for those worst-case-scenario hospital stays. Under Medicare Part A, a hospital stay past 60 days (until day 90) will cost you coinsurance payments. Days 90 and beyond are far more expensive. The Part A coinsurance and hospital benefit remedies these potentially high costs, kicking in for up to a full year, once your Original Medicare benefits are used up.
2. Part B coinsurance and copayment
This covers the coinsurance or copayments doctors and other providers typically charge you under the Part B umbrella.
3. Blood (first 3 pints)
Under Original Medicare, you have to pay for every pint of blood you receive until you hit four pints in a calendar year. You’re covered for the first three pints you get in a year with this benefit.
4. Part A hospice care coinsurance and copayment
Medicare Part A covers hospice care, but there can be a few copayments. For instance, with just Original Medicare, you have to pay $5 per prescription drug. And if your hospice facility needs to temporarily move you to another facility, like a nursing home, you’ll have to pay 5% of respite care costs. With Part A hospice care copayment coverage, all these copayments would be taken care of, so hospice would essentially be free.
5. Skilled nursing facility care coinsurance
At a Skilled Nursing Facility (SNF), you receive care from skilled nursing or therapy staff. These facilities can be part of a nursing home or even a hospital and are registered as SNFs by Medicare. Treatment in SNFs includes physical therapy, audiology, occupational therapy, and others.
Although Original Medicare covers treatment from an SNF for up to 20 days, after day 20, you face daily coinsurance fees (currently $176 per day in 2020).1 Those fees are completely covered if you purchase a plan with the SNF care coinsurance benefit.
6. Part A deductible
Medicare Part A will cover your first 60 days in a hospital, but only after you meet your not-so-small deductible in your benefit period ($1,408 in 2020).2 A plan with this benefit covers your Part A deductible completely.
7. Part B deductible
This is a significant benefit, covering your deductible for any Medicare-approved Part B service. Basically, with this deductible covered, you can go to the doctor without any up-front cost.
The Part B deductible benefit is slightly controversial, however—so much so that Congress will no longer allow plans covering the Part B deductible (Plan F and Plan C) to be sold past January 1, 2020. Newly eligible beneficiaries after 2020 will not be able to buy Plan F or Plan C, but anyone who already had either of these plans before can keep them.
Learn more about the future of coverage for the Part B deductible.
8. Part B excess charge
If you go to a doctor who doesn’t accept “assignment” (another way of saying the doctor agrees to the Medicare-approved amount for a service), they can legally overcharge you for the service. These pesky excess charges are paid for with the Part B excess charge benefit.
9. Foreign travel coverage
In general, Original Medicare doesn’t cover emergency services outside the US. There are a few rare exceptions, such as traveling through foreign countries to US territories (e.g., driving through Canada to go to Alaska). So if you enjoy foreign travel, foreign travel coverage is a useful benefit to consider.
10. Out-of-pocket limit
A benefit many are typically used to with private insurance, the out-of-pocket limit applies only to Plans K and L. When you reach your Part B deductible and the out-of-pocket limit for your plan, your Medigap plan pays for 100% of your covered services until the end of the year.
How much does a Medigap plan cost?
It depends! Generally, the more coverage on a plan, the higher the cost. But prices also vary depending on the insurance company, where a beneficiary is located, and how many other people are on that plan in your area. Again, every plan must cover the same benefits by law, so shopping around can save you money.
When should I enroll in a Medicare Supplement plan?
You should enroll within six months of signing up for Medicare Part B.
Besides picking a plan that suits your needs best, timing is everything when purchasing a Medigap plan. For anyone 65 and over, within a six-month window of signing up for Medicare Part B, federal law guarantees the following protections:
- You cannot be refused a Medicare Supplement policy that is offered in your area.
- You cannot be charged higher premiums based on pre-existing health conditions.
- You cannot be required to undergo a waiting period before your coverage begins.
Federal law assures these protections (called guaranteed issue rights) within that six-month window. But once that window is up, Medigap providers can deny you a policy, charge you more based on your health, or force you to wait longer for coverage to begin.
If you are considering a Medigap plan, do your absolute best to get your policy during the time frame when you have guaranteed issue rights. To see other situations where these protections may apply, see the full list on Medicare.gov.
How do I apply for a Medigap policy?
We walk you through the whole process in this guide. Or if you just want a quote on how much a policy would be for you, we have an easy online tool you can use.
I’m not sure about Medigap after all. What other options are there?
Medigap plans don’t offer prescription drug coverage. If you’re looking for drug coverage, you’ll want to check out Medicare Part D.
If you want the benefits of Original Medicare, but you want additional coverage (perhaps vision, dental, or more), Medicare Part C is a great option as well. Private insurance companies offer Medicare Part C (also known as Medicare Advantage, or MA), which provides all the benefits of Medicare Part A and Part B, plus more. To learn about MA plans, read our guide on Medicare Advantage Plans.
1. Medicare, “Skilled Nursing Facility (SNF) Care”
2. Medicare, “Medicare Costs at a Glance"
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