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Are Medicare Supplement Insurance Plans Worth It?

Medicare Supplement Insurance plans (also called Medigap) help cover certain Medicare out-of-pocket costs, such as deductibles, copayments, coinsurance and more.

So how do you decide if Medicare Supplement Insurance is worth it for you?

In this guide, we break down some of the Medicare costs that a Medigap plan might cover so that you can decide the best way to prepare for your health insurance costs.

If you’d like to get help analyzing your costs and deciding if a Medigap plan is right for you, you can speak to a licensed insurance agent today by calling 1-866-359-2759.

What’s the difference between Medicare Advantage plans and Medicare Supplement plans?

Depending on your coverage needs, you may decide that a Medicare Supplement Insurance plan is worth it, or you may decide to opt for a Medicare Advantage plan.

If you are considering Medicare Supplement Insurance or a Medicare Advantage plan, keep the following in mind:

  • Medicare Supplement Insurance plans are used in conjunction with your Original Medicare coverage (Part A and Part B). Medigap plans provide coverage for some of the out-of-pocket costs that Original Medicare doesn’t cover, but they don’t provide additional benefits.
  • Medicare Advantage plans replace your Original Medicare coverage, and many Medicare Advantage plans provide benefits not covered by Part A and Part B.
  • You cannot have Medicare Advantage and Medigap at the same time. Medigap policies do not work with Medicare Advantage plans.

If you need help deciding between these two types of coverage, you can get help from a licensed insurance agent by calling 1-866-359-2759 or request a free, no-obligation quote online.

What do Medicare Supplement Insurance plans cover?

There are 10 Medicare Supplement Insurance plans from which to choose in most states, and the benefits of each type of plan are standardized, no matter what state you live in.

The chart below outlines the benefits of each type of Medigap plan:

Medicare Supplement Benefits A B C D F1 G K2 L3 M N4
Part A co-insurance and hospital costs
Part B co-insurance or co-payment 50% 75%
First 3 pints of blood 50% 75%
Part A hospice care co-insurance or co-payment 50% 75%
Co-insurance for skilled nursing facility     50% 75%
Medicare Part A deductible   50% 75% 50%
MedicarePart B deductible                
Medicare Part B excess charges                
Foreign travel emergency     80% 80% 80% 80%     80% 80%
1. Plan F offers a high-deductible plan. This plan requires you to pay a $2,300 deductible in 2019 before it covers anything.
2. Plan K has an out-of-pocket yearly limit of $5,560 in 2019. After you pay the out-of-pocket yearly limit and yearly Part B deductible, it pays 100% of covered services for the rest of the calendar year.
3. Plan L has an out-of-pocket yearly limit of $2,780 in 2019. After you pay the out-of-pocket yearly limit and yearly Part B deductible, it pays 100% of covered services
for the rest of the calendar year.
4. 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 an inpatient admission.

Medigap Plan F provides the most benefits of the 10 standardized Medigap plans available in most states. This plan provides full coverage for each of the following:

  • Medicare Part A deductible
  • Medicare Part A coinsurance
  • Medicare Part A hospice care coinsurance or copayment
  • Medicare Part B deductible
  • Medicare Part B coinsurance or copayment
  • Medicare Part B excess charges
  • Skilled nursing facility coinsurance
  • First three pints of blood used for a transfusion

Lastly, Plan F provides 80 percent coverage of emergency care received outside of the U.S.

Starting in 2020, newly eligible Medicare beneficiaries won’t be able to enroll in Medigap Plan F. However, if you already have Plan F prior to 2020, you will be able to keep your plan. If you are eligible for Medicare before 2020 and you don’t have Plan F, you may able to buy it in 2020 and beyond.

What costs can a Medigap plan help me pay for?

Let’s use Plan F as an example to see how a Medicare Supplement Insurance plan can be worth it for some beneficiaries.

Because Medicare Supplement Insurance is sold by private insurers, the cost of a plan can vary from one location or provider to another (although the benefits of each type of plan remain the same).

Business Insider published the average cost of a Medigap Plan F premium in every state in 2018. These averages ranged from a low of $109 per month (Hawaii) to a high of $162 per month (Massachusetts). Nationwide, the average monthly cost of Plan F in 2018 was $143.1

So how does $143 per month (or $1,712 per year) stack up against some of Original Medicare’s out-of-pocket costs?

Medicare Part A deductible

The Medicare Part A deductible operates on a “benefit period” cycle. A benefit period begins the day you are admitted to a hospital or skilled nursing facility as an inpatient and ends when you have not been an inpatient for 60 consecutive days.

A benefit period (and therefore your deductible) can reset several times throughout the year.

In 2019, the Part A deductible is $1,364 for each benefit period. That means if you are admitted to a hospital or skilled nursing facility, you are responsible for the first $1,364 before Original Medicare will begin paying.

If you enrolled in Plan F, your 2019 Part A deductible would be taken care of, and your Original Medicare coverage would begin right away. Paying the full Part A deductible even a single time in 2019 would almost equal the average cost of a full year of 2019 Medigap Plan F premiums.

Medicare Part A coinsurance

The first 60 days of a hospital stay require no coinsurance under Original Medicare. But beginning with day 61, a beneficiary is on the hook for $341 per day in 2019.

It would take only five days of these payments to equal the average annual cost of a Medigap Plan F.

Medicare Part B coinsurance

Once you reach your Part B deductible ($185 per year in 2019), you will typically owe 20 percent of the Medicare-approved amount for doctor’s appointments and other services covered under Part B.

If you have to take a ride in an ambulance or have a procedure performed at an outpatient facility, your 20 percent share of the bill can easily add up to more than annual cost of a Medigap plan that would have covered those payments in full, such as Medigap Plan F.

Skilled nursing facility coinsurance

The first 20 days of a stay in a skilled nursing facility are covered in full by Medicare Part A. But beginning with day 21, a coinsurance payment of $170.50 per day is required in 2019, which is more than the average monthly cost of Medigap Plan F.

What are some other potential benefits of Medicare Supplement Insurance?

Let’s use Plan F as an example to see how a Medicare Supplement Insurance plan can be worth it for some beneficiaries.

The numbers above illustrate just a few examples of how a Medicare Supplement Insurance plan can be well worth it for some beneficiaries.

But to fully understand the value Medigap plans can offer, it helps to look beyond the numbers and consider what else a Medigap plan may mean for your health coverage.

  • Price predictability
    When you visit a doctor without a Medigap plan, you will potentially be on the hook for 20 percent of the bill. The problem is, you don’t know how much that bill will be, and therefore you don’t know how much you will have to end up paying for the visit.

    With a Medigap plan that covers your Part B coinsurance, that 20 percent will be covered. This allows you to better estimate how much you’ll spend on your health care in a given month, and it can give you the ability to have more insight and control over your budget.

  • Greater freedom
    If you visit a non-participating Medicare doctor, they can charge you up to 15 percent more than the Medicare-approved amount for their services. But some Medigap plans cover these costs, known as Medicare excess charges.

    This coverage can help give you the flexibility to visit a greater number of doctors and medical suppliers, as you will have some coverage for any Medicare excess charges.

    Medigap plans are accepted by any health care provider who accepts Medicare, which means you can use your Medigap plan anywhere in the U.S.A. and are not confined to a plan network.

    A Medigap plan with foreign emergency care coverage can offer even more freedom by offering some coverage when you travel abroad.

  • Peace of mind
    Without a Medigap plan, you may be reluctant to seek out health care simply because of potentially high out-of-pocket costs. A Medigap plan that meets your coverage needs can help you set those worries aside and seek the care you that you need.

Your health insurance choices are unique to your health care needs. Be sure to carefully compare your options and find the coverage that works for you.

Compare Medicare Supplement Insurance plans today

Learn more about how a Medicare Supplement Insurance plan can be worthwhile for your health care needs.

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1 Hoffower, Hillary. Medicare isn’t enough for retirees – here’s how much extra coverage costs in every state, ranked. (June 17, 2018). Business Insider. Retrieved from https://www.businessinsider.com/how-much-medigap-plans-cost-every-state-ranked-2018-6.

2 According to TRANZACT internal data.

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