To compare Medicare supplemental insurance plans, also known as Medigap, a person needs to consider their specific healthcare coverage needs in addition to plan costs.
Plans with comprehensive coverage may have a higher monthly premium compared to plans where a person pays a portion of copays and coinsurances.
This article looks at the Medigap plans, coverage and out-of-pocket costs. It also examines eligibility and costs.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare supplement insurance, also known as Medigap, is voluntary.
While Medicare pays for a portion of many medical and health services, it does not always cover them completely. Medigap policies are designed to reduce a person’s unexpected, out-of-pocket healthcare costs.
Medigap policies are standardized, with the exception of Massachusetts, Minnesota, and Wisconsin. Plans are identified by letters A–N, and all plans in a certain letter must offer the same coverage. For example, if a person has a Medigap Plan D policy in California, their policy will offer the same coverage as a person who enrolls in Plan D in New York.
Once a person knows what Medigap policy they want, they can contact companies that offer those policies. Because plans are generally standardized, the main differences between Medigap policies is costs.
Medigap plans are lettered A–N. However, insurance companies no longer offer plans E, H, I, and J due to changing regulations.
Also, as of January 1, 2020, a person who is new to Medicare cannot purchase Plan C or F. However, if a person was eligible for Medicare before this time, they may still be able to purchase Plan C or F.
More plan details are shown in the chart below, where ‘yes’ means the benefit is covered 100%, ‘No’ means it is not covered, and a percentage indicates the amount of benefit that is covered. ‘N/A’ means the plan does not offer that particular benefit.
|Plan A||Plan B||Plan C||Plan D||Plan F||Plan G||Plan K||Plan L||Plan M||Plan N|
|Part A coinsurance and hospital costs, up to 365 days after using up Medicare benefits||yes||yes||yes||yes||yes||yes||yes||yes||yes||yes|
|Part B coinsurance or copayments||yes||yes||yes||yes||yes||yes||50%||75%||yes||yes|
|First 3 pints of transfused blood||yes||yes||yes||yes||yes||yes||50%||75%||yes||yes|
|Part A hospice care coinsurance or copayment||yes||yes||yes||yes||yes||yes||50%||75%||yes||yes|
|Coinsurance for skilled nursing facility care||no||no||yes||yes||yes||yes||50%||75%||yes||yes|
|Part A deductible||no||yes||yes||yes||yes||yes||50%||75%||50%||yes|
|Part B deductible||no||no||yes||no||yes||no||no||no||no||no|
|Part B excess charge||no||no||no||no||yes||yes||no||no||no||no|
|Foreign travel exchange (up to the plan’s spending limits)||no||no||80%||80%||80%||80%||no||no||80%||80%|
|Out-of-pocket limit for 2020||N/A||N/A||N/A||N/A||N/A||N/A||$5,880||$2,940||N/A||N/A|
Plans K and L will pay 100% of covered services for the calendar year after a person meets the out-of-pocket limits, which are $5,880 for Plan K and $2,940 for Plan L in 2020. In addition, a person must pay the annual Part B deductible, which is $198 in 2020.
Plan N may require a copayment of up to $20 for some office visits and $50 copayment for emergency room visits that do not result in an inpatient admission. Otherwise, Plan N will pay for 100% of the Part B coinsurance.
Some Medigap companies offer Plan F and Plan G as a high-deductible plan, which means the plan provider does not pay for Medicare-covered costs until a person has paid the deductible, which is $2,340 for 2020. Medicare costs will then be covered until the end of the calendar year. Traditionally, high-deductible Medigap policies have a lower monthly premium.
The following items may be important for a person in deciding on a Medigap plan:
- How much is the monthly premium?
- Does the plan include coverage for foreign travel?
- Does the plan include coverage for care at a skilled nursing facility?
- Are blood supplies covered in the plan?
In general, plans that offer the most benefits may also have higher premiums, and plans with fewer benefits may cost less. For example:
- Fewer benefits, but lower premiums: Plan A and Plan B cover most basic benefits. The main difference between A and B is that Plan B covers the Part A deductible.
- Higher benefits, but higher premiums: Plans C, F, and G are the most comprehensive plan offerings, but are typically pricier.
- Cost-sharing plans, lower premiums: Plans K and L are cost-sharing premiums. This means a person will pay a percentage of costs, such as coinsurance or copays.
- Co-payments for doctor’s visits with an average premium: the monthly premiums for Plan N are in the mid-range for costs, although a person must paying copays for emergency room and doctor’s visits.
A person can check various plans online at the Find a Medicare Plan website. The information includes plan availability in a person’s area, cost estimates, and contact details for companies that sell Medigap plans. Each individual company website may offer additional information about costs and enrollment.
A person can enroll in Medigap at any time. However, when a person is in a guaranteed issue right period, an insurance company must give them an insurance policy without taking into account the person’s preexisting health conditions or current health problems.
There are several circumstances when a person may be in a guaranteed issue right period, including:
- A person has enrolled in Medicare because of a disability or because they turned age 65.
- A person has moved out of a Medicare Advantage plan service area or their Medicare Advantage plan is leaving Medicare, and they are switching to original medicare.
- A person had original Medicare and an employer-based health plan, but the employer-based plan coverage is ending.
Outside the guaranteed issue rights period, a person may be refused a Medigap policy due to age or preexisting health conditions.
The premiums for Medigap are not standardized. They vary by the area in which a person lives, the person’s age, and, sometimes, preexisting health conditions.
According to Medicare’s Plan Finder, a 65-year-old female, who does not use tobacco, may be offered the following plans and premiums:
- Los Angeles, CA: Plan A ranges from $85–$257; Plan G: $130–$300; Plan N: $99–$254
- Houston, TX: Plan A ranges from $101–$553; Plan G: $112–$384; Plan N: $90–$308
- Chicago, IL: Plan A ranges from $73–$294; Plan G: $106–$351; Plan N: $84–$334
- New York, NY: Plan A ranges from $169–$336; Plan G: $268–$545; Plan N: $190–$309
Medigap plans may help reduce out-of-pocket costs, and help a person manage their healthcare expenses.
A person is not required to buy a Medigap plan if they have original Medicare. However, they will usually experience the greatest cost-savings if they purchase a Medigap plan when they are first eligible for Medicare.
Tools such as the Medicare Plan Finder can help a person compare potential policies and companies offering Medigap plans.