Medicare is great, but it leaves some gaps that are the result of deductibles, coinsurance, and copayments. That’s where Medicare Supplement insurance comes in.

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This type of policy helps with Medicare’s out-of-pocket costs. It’s different than traditional insurance because it only covers the specific benefits not covered by Medicare.

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If you are on the verge of turning 65, you’ll be getting information on Medicare Part A and Part B and you will soon realize that although your health insurance coverage will be more reasonable than you may have expected, there can still be considerable out-of-pocket healthcare expenses to deal with.

If you watch any television, you’ve likely been bombarded with advertisements about Medicare Supplement (Medigap) insurance, and now it’s time to discover how do Medicare Supplement plans work.

What are Medicare Supplement Plans?

Medicare Supplement plans, also known as Medigap, are supplement insurance plans that work with Original Medicare Part A and Part B.

Simply put, they are designed to fill in the gaps found in Medicare to reduce your out-of-pocket healthcare costs. For many seniors, Medicare and Medicare Supplement insurance can be confusing or even overwhelming because there are numerous plans to choose from.

Currently, there are ten standardized Medicare Supplement plans to choose from with each having different coverages than the next.

In this article, we’ll help you drill down into Medicare Supplement insurance and arm you with the information you’ll need to find an affordable plan that is right for your individual needs.



Who Regulates Medicare Supplement Plans?

Although Medicare Supplements (Medigap) plans are sold by private insurance companies, the federal government (CMS) regulates each plan’s design in terms of coverages offered.

This means that each Medicare Supplement Plan must have the same coverage across all insurance companies that offer them. What differentiates the plans offered by each company (and there are many) is the price you’ll pay for the plan and if there are additional benefits (not regulated by CMS) available with the plan.

To make shopping for a plan a little more confusing, the states also have a say-so about if they will allow the standardized plans sold within their borders or if they want to opt-out of the standardized selection of plans. Currently, three states are not using standardized Medigap plans: Massachusetts, Minnesota, and Wisconsin.

How Does Medicare Supplement Plans Work?

While there are 10 Medigap plans to choose from in all but three states, each plan, although different from the next, works in the same manner. Medicare would pay its share and then the Medicare Supplement Plan would pay its share.

Here is a typical example:

Frank Barnes is enrolled in Medicare Part A (hospital), Part B (doctor visits), and Part D (prescription drug coverage).

Frank is also enrolled in Medicare Supplement Plan G.

While doing some yardwork, Frank steps in a hole, twists his ankle, and is in severe pain when he puts his weight on it. Frank’s doctor’s office agrees to work him in and treat his ankle injury.

The doctor does an X-ray of Frank’s ankle and determines the ankle is sprained and not broken and then puts a temporary cast on it and advises Frank to try and keep his weight off of it until the swelling and the pain subsides. Frank’s doctor also prescribes some pain medication for Frank to take when needed and sends Frank on his way.

The total charge for the doctor visit, x-ray, and temporary cast is $395.00 and since Frank’s doctor accepts Medicare and Frank has Medicare Supplement insurance, Frank is only responsible for any part of the Part B deductible that has not been met for the year.

The balance of Frank’s doctor’s visit would be handled by Medicare and Frank’s Medicare Supplement Plan:

Medicare Part BMedicare Part DMedigap Plan GFrank Barnes
80% of visit chargePrescription20% of visit chargePart B Deductible

Which Medicare Supplement Plans Provide the Best Coverage?

Having multiple Medigap plans to choose from enables the policy shopper to select a plan that will best meet their individual needs and their individual budget. It’s also important to keep in mind that the Medigap Plan you select will have a monthly premium charge over and above your Medicare Part B premium.

Medigap BenefitsPlan
Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used upYesYesYesYesYesYesYesYesYesYes
Part B coinsurance or copaymentYesYesYesYesYesYes50%75%YesYes***
Blood (first 3 pints)YesYesYesYesYesYes50% 75% YesYes
Part A hospice care coinsurance or copaymentYesYesYesYesYesYes50%75%YesYes
Skilled nursing facility care coinsuranceNoNoYesYesYesYes50%75%YesYes
Part A deductibleNoYesYesYesYesYes50%75%50%Yes
Part B deductibleNoNoYesNoYesNoNoNoNoNo
Part B excess chargeNoNoNoNoYesYesNoNoNoNo
Foreign travel exchange (up to plan limits)NoNo80%80%80%80%NoNo80%80%
Out-of-pocket limit**N/AN/AN/AN/AN/AN/A$6,620 in 2022$3,310 in 2022N/AN/A
* Plans F and G also offer a high-deductible plan in some states. With this option, you must pay for Medicare-covered costs (coinsurance, copayments, and deductibles) up to the deductible amount of$2,490 in 2022 before your policy pays anything. (Plans C and F aren’t available to people who were newly eligible for Medicare on or after January 1, 2020.)
** For Plans K and L, after you meet your out-of-pocket yearly limit and your yearly Part B deductible, the Medigap plan pays 100% of covered services for the rest of the calendar year.
*** 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 inpatient admission.



What are High-Deductible Medicare Supplement Plans?

There are two high-deductible Medicare Supplement Plans available. High deductible Plan F and Plan G both have a regular version and a “high-deductible” version. Since the policyholder is agreeing to accept more out-of-pocket expenses for their annual healthcare expenses, the insurance company offers the plan at a lower monthly premium.

The difference between the standard version of Plan F and Plan G and the high-deductible versions is that the policyholder must cover the first $2,370 of healthcare expenses before the Medicare Supplement Plan starts paying.

These are calendar year deductibles and are subject to change each year according to approval by CMS.

High-deductible Medicare Supplement Plans are typically a good fit for the following individuals:

  • Individuals who prefer a low monthly premium
  • Individuals who are in good health and rarely require healthcare services
  • Individuals who can afford a large portion of healthcare expenses and prefer to have a type of catastrophic policy in place
  • Individuals who frequently travel abroad and are looking for a lower monthly premium.

The good news about purchasing a Medicare Supplement plan is that you have the option to change plans anytime you wish, but you will have to answer underwriting questions (in most states) or during the annual enrollment period, you can switch to a Medicare Advantage Plan.

If you feel like you need to change plans or shop for a new one, your best bet is to contact a Medicare Supplement Specialist like the Medicare Solutions Team at at 844-528-8688.

A Medicare Solutions Team Member will gladly help by answering your questions and finding the best Medicare Supplement plan for your circumstances and budget.

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