Do I Need a Medicare Supplement Plan?
Original Medicare (Part A and Part B, which are administered by the federal government) covers a wide array of both inpatient and outpatient services and equipment.
So do you really need anything else?
Consider the fact that over 38 million Americans are enrolled in Original Medicare (fee-for-service Medicare).1 Of those beneficiaries, 13.5 million belong to a Medicare Supplement Insurance (Medigap) plan. This accounts for 35 percent of all FFS Medicare beneficiaries.2
The numbers don’t lie: many Medicare beneficiaries want something more than just their Original Medicare insurance coverage alone. Could a Medicare Supplement plan be worth it for you?
Medicare Out-of-Pocket Costs Can Add Up Quick
Medicare Supplement Insurance helps pay for some of the out-of-pocket expenses that Medicare Part A and Part B don’t cover.
Original Medicare has deductibles, coinsurance and copayments that can all add up quickly. Without a Medigap plan, you may have to face these and other Medicare costs yourself. And it’s important to note that medical bills are the leading cause of bankruptcy in the U.S.3
Medicare Supplement Plans May Help
Medicare Part A helps cover your hospital costs if you are admitted as an inpatient.
So if you need to stay in the hospital, your costs are all set, right? Not so fast.
First, you’ll have to satisfy a deductible of $1,484 per benefit period in 2021 before any of your Part A coverage kicks in.
And while it’s not likely, you could potentially face multiple benefit periods in a year. If so, you’d have to meet the Part A deductible again each time you’re admitted for a new benefit period.
You’re hardly in the clear once you meet the deductible either. If your hospital stay extends beyond 60 days (which isn’t typical), you’ll begin daily copayments of $371 per day in 2021.
If you stay in the hospital for more than 90 days, you have to pay $742 per day in 2021 until your 60 lifetime reserve days are used up. After that point, you’re responsible for all of your hospital costs for the rest of the year.
Each of the 10 standardized Medicare Supplement Insurance plans available in most states provide full coverage of Medicare Part A coinsurance, and some plans help cover the Part A deductible.
Important: Plan F and Plan C are not available to beneficiaries who became eligible for Medicare on or after January 1, 2020.
You can use the chart below to compare the out-of-pocket costs that each type of standardized Medigap plan will cover in 2019.
Scroll to the right to continue reading the chart
Medicare Supplement Benefits
Part A coinsurance and hospital coverage
Part B coinsurance or copayment
Part A hospice care coinsurance or copayment
First 3 pints of blood
Skilled nursing facility coinsurance
Part A deductible
Part B deductible
Part B excess charges
Foreign travel emergency
* Plan F and Plan C are not available to Medicare beneficiaries who became eligible for Medicare on or after January 1, 2020. If you became eligible for Medicare before 2020, you may still be able to enroll in Plan F or Plan C as long as they are available in your area.+ Read more
1 Plans F and G offer high-deductible plans that each have an annual deductible of $2,370 in 2021. Once the annual deductible is met, the plan pays 100% of covered services for the rest of the year. The high-deductible Plan F is not available to new beneficiaries who became eligible for Medicare on or after January 1, 2020.
2 Plan K has an out-of-pocket yearly limit of $6,220 in 2021. 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 $3,110 in 2021. 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 $50 copayment for emergency room visits that don’t result in an inpatient admission.- Read less
Medigap Plans May Give You More Cost Predictability
Many medical bills cannot be anticipated, and it can be difficult to budget for unpredictable health care costs.
Medicare Supplement plans can give you more predictability with your health care costs in exchange for a set monthly premium.
By knowing that certain out-of-pocket Medicare costs will be covered, you may be better set up to budget and protect yourself from “surprise” medical bills.
Original Medicare Doesn’t Include an Out-of-Pocket Spending Limit
Under Original Medicare, there is no out-of-pocket spending limit. That means you could potentially face Medicare costs that continue to pile up. A Medigap plan may help alleviate that concern.
Additionally, two Medigap plans – Plan K and Plan L – include an annual out-of-pocket spending limit. Once you reach this limit in a calendar year, the plan then pays for 100% of all covered out-of-pocket costs for the remainder of the year.
What is “First-Dollar” Coverage?
Part A and Part B of Medicare require you to first meet a deductible before your coverage kicks in.
Medigap Plan F and Plan C provide full coverage for the Part A and Part B deductibles in 2021. This means your Medicare coverage will kick in at your very first appointment for Medicare-covered services. This is called “first-dollar coverage.”
Starting on January 1, 2020, Medigap plans won’t be allowed to provide “first-dollar” coverage to new beneficiaries by covering both the Part A and Part B deductibles. This means that new Medicare beneficiaries who become eligible for Medicare after Jan. 1, 2020, won’t be able to enroll in Plan F or Plan C.
If you are eligible for Medicare before Jan. 1, 2020, you may be able to enroll in Plan F or Plan C after 2020, but only if either plan is offered where you live.
If you already have Plan F or Plan C before 2020, you will be able to keep your plan.
Some Medigap Plans Help Cover Emergency Care When You Travel Abroad
Original Medicare doesn’t typically cover emergency care that you receive when traveling outside of the United States.
Some Medigap plans, however, can provide coverage for 80 percent of your foreign travel emergency care costs. This can help give you a sense of security when you take your next trip around the world.
The Medigap plans that include foreign travel emergency care coverage in 2019 are:
What Does Medicare Supplement Insurance Cover?
There are nine benefit areas that can be covered by the standardized Medicare Supplement Insurance plans.
These costs include:
- Part A coinsurance and hospital costs
Part A coinsurance can reach as high as $742 per day in 2021.
- Part B coinsurance or copayments
After meeting your deductible, you generally pay 20 percent of the Medicare-approved amount for services and items covered by Part B.
- First three pints of blood needed for a blood transfusion
Original Medicare only covers the cost of blood beginning with the fourth pint, so you have to pay out-of-pocket for the first three.
- Part A hospice care coinsurance or copayments
Part A often requires small copayments for prescription drugs used for hospice care as well as coinsurance for respite care.
- Coinsurance for skilled nursing facility
If a stay in a skilled nursing facility goes beyond 20 days, you must pay a coinsurance payment of $185.50 per day in 2021. If the stay lasts longer than 100 days, you’re responsible for all costs.
- Part A deductible
Medicare Part A requires a $1,484 deductible for each benefit period in 2021. A benefit period begins the day you are admitted to a hospital or skilled nursing facility as an inpatient and ends once you have not received inpatient care for 60 consecutive days.
- Part B deductible
Part B requires an annual deductible of $203 in 2021.
- Part B excess charges
Health care providers who do not accept Medicare assignment reserve the right to charge up to 15 percent more than the Medicare-approved amount for their services or items.
- Foreign travel emergency care
There are only a few rare circumstances under which Original Medicare provides any coverage for emergency care received outside of the U.S.
How Much Does a Medicare Supplement Insurance Plan Cost?
The cost of Medicare Supplement Insurance can vary based on your location, the type of plan you have, the insurance carrier who provides your plan, your smoking status and even your age.
In 2019, the average monthly premium paid for Medigap plan was $126 per month.4
Am I Eligible for a Medicare Supplement Plan?
You must be enrolled in both Medicare Part A and Part B before you can buy a Medigap plan.
If you are under 65 years of age and are qualified for Medicare because of a disability, you may or may not be able to purchase a plan, depending on the state in which you live.
When Should I Buy a Medicare Supplement Insurance Plan?
The day you are both 65 years old and enrolled in Medicare Part B, you’ll begin your Medigap Open Enrollment Period (OEP). This is the best time to enroll in a Medigap plan.
If you sign up for Medigap during this time, the insurance company that carries your Medigap plan is not allowed to charge you higher rates based on your health.
You may still be able to sign up for a Medigap plan outside of your Medigap OEP, but you may have to undergo medical underwriting. The underwriting process could lead to the insurance company charging you higher rates – or denying you a Medicare Supplement Insurance policy altogether – based on your health.
Some states have additional underwriting protections that may give you the same or similar benefits to your Medigap OEP. Check with your state’s department of insurance to learn more.
There are several Medigap guaranteed issue rights outside of your Medigap OEP that may allow you to sign up for a Medigap plan without medical underwriting. Your plan type options may be limited depending on the guaranteed issue right you have.
During the first 30 days that a Medigap plan is in effect, it may be cancelled for a full refund. After 30 days, you may still cancel at any time for no refund.
If you’re thinking about changing Medigap plans, you can use a 30-day “free look” period to try out a different plan and then choose between the two plans at the end of the period.
You’ll have to pay the premiums for each plan during the free look period.
Get Help Choosing a Medicare Supplement Insurance Plan
Not every Medicare Supplement Insurance plan will be available in every location.
A licensed insurance agent can help you compare each of the Medigap plans that are available in your location. A licensed agent can discuss your coverage needs with you and help you comb through the details of each available plan, including their costs, benefits and more.
Last year, we helped 40,000 people find a Medicare Supplement Insurance plan.5 Call today so we can help you, too.
A licensed insurance agent can help you compare the costs and coverage of Medicare Supplement Insurance plans that are available where you live.
Compare Medigap plans in your area.Find a plan
1 CMS. Medicare Enrollment Dashboard. Retrieved Aug. 2019, from www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Dashboard/Medicare-Enrollment/Enrollment%20Dashboard.html.
2 AHIP. The State of Medigap 2019. (May, 2019). Retrieved from www.ahip.org/wp-content/uploads/IB_StateofMedigap2019.pdf.
3 Cornish, Lorie. This is the real reason most Americans file for bankruptcy. (Feb. 11, 2019). CNBC. Retrieved from https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most-americans-file-for-bankruptcy.html.
4 TZ Insurance Solutions LLC internal sales data, 2019. This data is based on the Medicare Supplement Insurance policies TZ Insurance Solutions LLC has sold. It is not a comprehensive national average of all available Medicare Supplement Insurance plan premiums.
5 According to TRANZACT internal data estimating that 40,253 Medicare Supplement Insurance policies were placed in 2018.
Christian Worstell is a health care and policy writer for MedicareSupplement.com. He has written hundreds of articles helping people better understand their Medicare coverage options.