Deciding on healthcare coverage can be an overwhelming process. It's essential to have a comprehensive understanding of the options available to make the best choice that suits your medical needs. Medicare, a federal program available for individuals who are 65 or older, provides vital healthcare coverage for millions of Americans. Though the coverage offered by Medicare is extensive, there are still gaps and limitations that leave many beneficiaries with out-of-pocket expenses. For this reason, Medicare Supplement Plans have been designed and often referred to as Medigap.
For many beneficiaries, Original Medicare alone will not cover all the healthcare expenses beneficiaries can incur.
Medicare beneficiaries can choose from 10 Medigap plans to supplement their Medicare costs. Each plan is standardized across insurance companies and provides specific benefits and coverages, catering to various healthcare needs.
When choosing your Medicare Supplement plan, consider your healthcare needs, budget, and the insurance company's reputation.
Below, we will provide you with a comprehensive guide on the Medicare Supplement Plans to help you understand your options and choose a plan with confidence.
Understanding the basics of Medicare
The Original Medicare program is traditionally offered in two parts: Medicare Parts A and B. Part A provides coverage for inpatient medical care in hospitals, skilled nursing facilities, hospice care, and home health. Part B covers services in outpatient settings such as clinics, durable medical equipment, vaccines, screenings, and certain home health services.
Coverage gaps with Original Medicare
For many beneficiaries, Original Medicare alone will not cover all the healthcare expenses beneficiaries can incur. Being well-informed of these coverage gaps is crucial to be prepared when seeking medical care. Below is a brief breakdown of the typical coverage gaps to expect:
Part A coverage gaps:
- Medicare Part A has an annual $1,600 deductible, which must be met before Medicare covers a hospital stay.
- Once the deductible is met, the inpatient hospital stay will be covered at 100% for the first 60 days. For days 61–90, the patient will owe a $400 copayment each day.
- Only the first 20 days are covered at a skilled nursing facility, with partial coverage for days 21 to 100.
Part B coverage gaps:
- All beneficiaries must pay a monthly premium, annual deductible, and coinsurance based on the rates set by the Social Security Act, which are income-based.
- After the deductible is met, beneficiaries are required to pay 20% for their Part B services
Prescription Drug coverage gaps:
- Original Medicare does not provide prescription drug coverage, leading beneficiaries to enroll in a Medicare Part D plan designed to cover drug costs.
Routine vision, dental, and hearing services:
- Vision, dental, and hearing services are not covered under Original Medicare, and many beneficiaries sign up for a Medicare Advantage plan to have these services covered.
In addition to the limitations described above, Medicare does not cover Medicare care received outside of U.S. borders. Acupuncture and specific durable medical equipment are also rarely or barely covered by Medicare.
What are Medicare Supplement plans (Medigap)?
With the many coverage gaps found with Original Medicare, it is not a mystery why beneficiaries seek additional forms of coverage. After all, many beneficiaries of Medicare live on a fixed income with little room for extra medical costs.
Medicare Supplement plans are an extra insurance policy offered by private health insurance companies to help cover the financial gaps in Original Medicare. To purchase this type of policy, one must first be actively enrolled in Original Medicare.
How Medigap works with Medicare
Medigap plans work to fill in any gaps in the Medicare coverage. Imagine the following scenario: you have both Original Medicare and a Medicare Supplement plan and have to have an operation with an inpatient stay at the hospital. Original Medicare will cover the approved amount of the healthcare costs provided to you during your hospital stay.
Any remaining charges will be forwarded to your Medicare Supplement for additional coverage. The supplement plan will cover their approved amount, leaving you to pay any remaining costs.
Benefits of using a Medigap Plan
The extra coverage provided with a Medicare Supplement Plan provides an improvement in financial stability and an increased peace of mind. After all, medical costs can pile up quickly, especially with certain chronic conditions that require daily medications, therapies, and medical equipment. Below is an overview of some of the benefits of using a Medigap plan:
- Medigap offers comprehensive and standardized coverage.
- Medigap plans make out-of-pocket expenses more predictable.
- Medigap plans use a broad Medicare provider network
- Prior authorization of services is not required under Medigap plans.
- Coverage is available under Medigap when receiving emergency medical care while traveling throughout and outside the United States.
- The plan is easily portable to a different state of residence.
Aside from the additional security that Medigap plans provide, they are also easy to renew, and coverage cannot be denied due to age or preexisting health conditions. Most policies are straightforward and easy to understand. With these benefits, many Medicare beneficiaries purchase a Medigap or Medicare Supplement plan.
Types of Medigap Plans available
Currently, ten types of Medigap plans are offered to help supplement your medical costs. These plans are labeled as Plan A, B, C, D, F, G, K, L, M, and N. Each plan provides specific benefits and coverages, catering to various healthcare needs. Use the chart below to compare Medigap plans and the offerings of each.
|Plan type||Part A Coinsurance & Hospital Costs||Part B Coinsurance & Copayment||Blood||Part A Hospice Care Coinsurance or Copayment||Skilled Nursing Facility||Part A Deductible||Part B Deductible||Part B Excess Charges||Foreign Travel Emergency|
From the initial glance, it is evident that each plan is different. Below, we provide a brief overview of each plan.
With Plan A, coinsurance, copayments, and blood-related services from Medicare Parts A and B will be covered at 100%. However, Plan A does not offer any coverage for skilled nursing facility coinsurance, deductible payments for Medicare Parts A and B, Part B excess charges, or medical care received in foreign countries.
Under Plan B, beneficiaries will benefit from 100% coverage for the Medicare Parts A and B coinsurance costs and copayments, blood services, hospice care, and even the Medicare Part A deductible. There is no coverage of skilled nursing facility services, the Part B deductible, excess charges, or emergencies during foreign travel.
Those who opt for Plan C can access coverage for almost everything except Medicare Part B excess charges. With this comprehensive plan, even foreign travel emergencies are covered at 80%. It is worth noting that for beneficiaries who turned 65 years old after January 1, 2020, this plan will not be available to them.
The coverage and benefits under Plan D are also fairly comprehensive, offering 100% coverage for almost everything except the Medicare Part B deductible costs and excess charges.
One of the most generous Medicare Supplement plans is Plan F, which offers 100% coverage and even 80% coverage for foreign travel emergencies. It is important to note that this plan often comes with a high deductible that must be met before its coverage comes into effect. Those beneficiaries who turned 65 years old after January 1, 2020, this plan will not be available to them.
With Plan G, there may also be a high deductible. Once the deductible is met, beneficiaries will get 100% for everything except the Part B deductible. As with Plan F, foreign travel emergencies will be covered at 80%.
Plan K isn’t as comprehensive as the other plans, which offers 100% coverage for Part A coinsurance and hospital costs but only 50% for everything else. The Part B deductible, excess charges, and foreign travel emergencies are not covered.
Plan L is similar to Plan K. It offers 100% coverage for Part A coinsurance and hospital costs. However, Part B coinsurance and copayment costs, blood, hospice costs, skilled nursing, and a Part A deductible are covered at 75% under Plan L. There is no coverage for the Part B deductible, excess charges, and foreign medical emergencies.
With Plan M, most needs are covered at 100%, but the Part A deductible will only be covered at 50%. The Part B deductible and excess charges are not covered, but foreign travel emergencies are covered at 80%.
Plan N offers 100% coverage for almost everything except the Part B deductible and excess charges, which are not covered. As with many of the other plans, medical emergencies that occur abroad are covered at 80%. Part B services are fully covered, but some copayments will be an out-of-pocket expense for beneficiaries.
Which Medigap Plan is right for you?
As evident by the plan comparison chart, each plan offers different forms of coverage, and determining the plan you need most can be overwhelming. To simplify your decision, ask yourself the following questions and choose a Medicare Supplement plan based on your answers.
What are your healthcare needs?
Most importantly, take the time to think about your healthcare needs and priorities. What is currently being covered by Medicare, and in what areas do you need additional coverage? You may find that the areas lacking in coverage the most are:
- Prescription medications
- Vision, dental, and hearing services
- Dental services
- Certain medical equipment
- Deductibles, coinsurance, copayments
Your healthcare needs will be the driving force behind the Medicare Supplement plan you purchase.
What are the benefits, coverage, and out-of-pocket costs of each plan?
After taking note of all your healthcare needs, you must compare the coverage and benefits available with each plan. The plan that helps you cover most of your needs while costing the least in out-of-pocket expenses will be the optimal choice. The chart above is an excellent side-by-side comparison that will help you get a complete picture of each plan’s coverage and benefits.
What do you know about the reputation of the insurance companies offering these plans?
Not all Medicare Supplemental companies are created equally. Take your time learning about each insurance company that offers Medicare Supplemental plans. Here are some key aspects to consider before buying a policy with any health insurance company:
- What do the customer reviews and testimonials say about this company?
- Does this insurance company have a solid financial rating?
- What is the company’s track record for processing claims and making timely payouts?
- Assess the customer service provided by the company; is it friendly, responsive, and helpful? Can you reach them by phone, chat, or email?
- Does the policy offer clear and transparent communication on the terms, benefits, exclusions, and limitations?
As you review the available health plans and answer these questions about each, you will get a good sense of the reputation of each company. This will allow you to choose the best health insurance provider to cover your healthcare needs.
What is your financial budget?
Your financial budget is another critical consideration as you choose your Medicare Supplement plan. How much are you comfortable spending on your monthly premium? What about the copays? Though these questions are essential, remember that a Medicare Supplement plan will help you experience stability and predictability with your medical expenses.
Medicare Supplement plans do not cover prescription medications, medical equipment, vision, dental, and hearing services, and separate plans are needed to cover these healthcare costs. Medicare Supplement plans are available and essential for covering the healthcare costs where Original Medicare cannot. As you choose your Medicare Supplement plan, feel free to use the information provided in this article to guide your choice.
What is the most common Medigap plan?
Plan F is the most commonly chosen Medigap plan among Medicare beneficiaries due to its comprehensive coverage.
Who is the largest Medicare Supplement provider?
United Health Care is the largest Medicare Supplement provider, serving over 43 million people across the United States.
- Medicare.gov. Parts of Medicare.
- Medicare.gov. Costs.
- Centers for Medicare & Medicaid Services. 2023 Medicare Parts A & B Premiums and Deductibles 2023 Medicare Part D Income-Related Monthly Adjustment Amounts.
- Medicare.gov. What's Medicare Supplement Insurance (Medigap)?
- Medicare.gov. Learn How Medigap Works.