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Medicare 101

Medicare Supplement Vs Supplemental Insurance

Christian Worstell

by Christian Worstell | Published February 18, 2021 | Reviewed by John Krahnert

Supplemental health insurance is any type of health insurance policy that you can buy to “supplement” your current health care coverage. 

Medicare Supplement Insurance (Medigap) is standardized type of private insurance that is only available to people who have Medicare. A lot of people use the words “supplement” and “supplemental” interchangeably, but as we can see, they actually are two different things. 

Read on to learn more about the differences between supplemental health insurance and Medicare Supplement Insurance.

Doctor with clipboardWhat Is Supplemental Health Insurance?

Supplemental insurance is any coverage that goes beyond what is included in your standard health care plan. Depending on the type of plan you buy, supplemental insurance may help cover some out-of-pocket costs (such as deductibles, coinsurance or copays) or pay a lump sum of cash in the event of a specific event or illness.

You can purchase supplemental health insurance to cover different types of illnesses or possible conditions. Critical illness insurance, accident insurance and hospital indemnity insurance are some of the most common types of supplemental policies available.

  • Critical illness insurance generally works by paying out a lump sum of cash if you are diagnosed with a serious illness that has been predetermined within the policy. 

    Cancerheart attack and stroke are the three common conditions covered by critical illness insurance. The payout of these plans can be used for whatever you need while recovering, such as medical bills, living expenses or child care while you are in the hospital.  

  • Hospital indemnity insurance will pay out every time the policyholder checks into the hospital for an overnight stay, whether that be due to an accident or serious illness. With these plans, you may get paid in a lump sum or in installments for every day you are in the hospital.

    Hospital insurance is not tied to a specific condition like critical illness policies. With these plans, you are covered for whatever brings you to the hospital, provided the reason isn’t excluded by the policy.

  • Accident insurance works like critical illness insurance, but it covers accidental injuries, such as broken bones and dislocations. Like other kinds of supplemental insurance, you can use your payout for whatever expenses you choose.

The cost of supplemental insurance varies based on the carrier and type of policy you buy. For most plans, especially illness-related insurance, the provider will likely use your medical history to determine the monthly premium. Higher-risk applicants may face higher premiums or be denied coverage altogether.

Anyone who is unhappy with the extent of their current medical coverage can purchase theses policies; you don’t have to have a specific type of health insurance to get most types of supplemental health insurance.

What Is Medicare Supplement Insurance?  

Medicare Supplement Insurance, also known as Medigap, is only available to people enrolled in Original Medicare (Part A and Part B). You may not have a Medicare Supplement Insurance plan and a Medicare Advantage plan (Part C) at the same time.

These policies are sold by private insurance companies and help Medicare beneficiaries by covering some of the program’s out-of-pocket costs, such as Medicare copayments, coinsurance and deductibles.

You are not required to have Medigap if you are on Medicare. Medigap policies can cover a lot of what is included in other supplemental insurance policies, including extended stays in the hospital or emergency medical cover while abroad.

If you sign up for Medicare Supplement Insurance during your Medigap open enrollment period, insurance companies cannot use your medical history to charge you more for a policy or deny your application. Your open enrollment period lasts for six months and automatically begins the month you are both 65 and enrolled in Medicare Part B.

In most states, there are 10 standardized Medigap plans that include different levels of basic benefits. The plans are named by letter (Plans A, B, C, D, F, G, K, L, M and N).

Important: Plan C and Plan F are not available to beneficiaries who became eligible for Medicare on or after January 1, 2020.

The chart below shows which benefits are included in each of the standardized Medigap plans. A check mark means the plan covers that benefit. 

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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

A B C* D F1* G1 K2 L3 M N4
50% 75%
50% 75%
50% 75%
50% 75%
50% 75% 50%
80% 80% 80% 80% 80% 80%

* 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.

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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.

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Have Questions About Medicare Supplement Insurance?

You can call to speak with a licensed insurance agent today to learn more about Medicare Supplement Insurance, including plans available where you live.

 

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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.

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Compare Medigap Plans 2021

See how the 10 Medigap plans differ. Review our chart for a detailed comparison of Medicare Supplement insurance benefits and compare Medigap options where you live. Read more
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