Medicare offers insurance plans (Medigap) to help people pay original Medicare Part A and Part B out-of-pocket costs. Medigap Plan M covers several costs and benefits.
The Medicare Modernization Act created Medigap Plan M in 2003. It has a lower monthly premium, but people enrolled in the plan must pay for their Part B deductible and half of their Part A hospital deductible.
This article explains Medicare Plan M, plan availability and benefits, what is not covered, 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.
Medigap policies help people pay for the gaps in insurance left by original Medicare. People can choose the Medigap plan that best suits their circumstances. Medigap plans help pay for coinsurance, copays, and deductibles.
Medicare standardizes their supplement insurance plans, and all Medigap plans with the same letter provide the same coverage level, no matter in which state a person lives.
Therefore, although plan premiums and availabilities may vary by state, a Medigap Plan M policy bought in Texas offers the same benefits as a Plan M policy bought in New York.
Medigap Plan M covers the following costs and benefits:
- Part A hospital coinsurance and expenses up to an additional 365 days after someone exhausts their original Medicare benefits
- Part A deductible to 50%
- Part A hospice care copays and coinsurance
- Part B copays and coinsurance
- First 3 pints of blood for a medical procedure
- Skilled nursing facility (SNF) care coinsurance
- Foreign travel emergency coverage to 80%
Generally, when a person becomes 65 years old, they are eligible for Medicare Part B. Medicare offers a 6 month Open Enrollment Period, which begins in the month a person turns 65 years of age.
For many people, this initial enrollment period is the preferred time to buy a Medigap policy because it is usually the most cost-effective. Also, Medigap carriers cannot deny enrollment into a Medigap plan or require an individual to declare preexisting medical conditions during this window.
Outside the Open Enrollment Period, the carrier can deny coverage or require medical underwriting. The Medigap policy may also have a higher premium because of current or past medical problems.
Medigap carriers offer 10 standardized Medigap plans, including A, B, C, D, F, G, K, L, M, and N. However, not all plans are carried in every state, and a person can use this tool to find which plans are available in their area.
In Wisconsin, Massachusetts, and Minnesota, Medicare standardizes the plans differently than in other states.
Medicare Plan M does not cover vision, dental, or hearing care. Individuals who want this coverage may consider a Medicare Advantage plan, which is provided by private insurance companies.
If an individual has a Medicare Advantage plan, they cannot also have a Medigap plan.
Medigap Plan M does not have a limit for out-of-pocket expenses. Someone enrolled in Medigap Plan M has to pay all out-of-pocket costs not covered by original Medicare or Medigap Plan M.
Some Medigap plans have an out-of-pocket expenses limit, which means that after a person has spent that amount on copays, coinsurance, and deductibles, the policy then pays the additional total costs for covered services during the year.
There are several items not covered by Medigap Plan M, including the following:
Medigap Plan M does not cover the Part B deductible. It also does not cover the Part B excess charge, which is the additional amount a doctor may charge a person for a service or visit.
Medicare Supplement Plan M does not cover outpatient prescription drug charges.
If a person requires prescription drug coverage, they may want to get Medicare Part D from a private insurance company. Each insurance provider must offer a standard level of coverage for their Part D plans. However, policies can vary in price and specific drugs. A person can check their policy to make sure it covers their prescription drugs.
Medigap plans give coverage to only one person. Plans do not cover a married couple, as each individual must get their own policy.
The cost of Medigap Plan M premiums varies widely by location. People who wish to enroll might want to contact several insurance companies in the area to find the best price.
Laws covering Medigap policies and costs also vary by state. A person can contact their State Health Insurance Assistance Program for information about state-specific guidelines.
In addition, companies can use three different methods to price their Medigap plans as shown below.
Community-rated pricing
People generally pay the same amount for their premium regardless of their age. For example, a person who is 65 years old pays the same as an 85-year-old enrollee. If the insurance company changes its premium price, the changed amount is the same for all enrolled individuals.
However, premiums may increase with inflation changes and other factors, such as medical costs.
Issue-age-rated pricing
Providers who use this method base the plan premiums on the enrollee’s age at the time of purchase. If a person enrolls in a plan as soon as they are eligible for Medicare coverage, the premium will be at the lowest cost.
Premiums may also increase with inflation changes and other costs.
Attained-age-rated pricing
With attained-age-rated pricing, the premium increases as someone gets older. It may also increase with inflation changes and medical care costs.
These Medigap plans may be the least expensive choice when someone first becomes eligible for coverage, as they will be in the youngest group of enrollees.
Original Medicare does not cover all medical expenses, and people must pay out-of-pocket costs. Medicare supplement Plan M helps people pay for some or all these expenses.
Medicare Plan M does not offer additional benefits, such as vision, dental, and hearing, nor does it cover prescription drugs.