Medicare Supplement Plans are sometimes referred to as Medigap Plans. They are a voluntary form of secondary insurance which cover the gaps of Original Medicare. There are 10 basic plans available:
A, B, C, D, F, G, K, L, M , & N
These plans are standardized. So, regardless of which carrier (insurance company) you choose, your benefits will be the same i.e. Plan G benefits will be the same whether your carrier is Humana, Aetna, Blue Cross Blue Shield, etc… Additionally, if your doctor accepts Medicare, they accept your supplement plan regardless of who your carrier is.
This makes comparison shopping much easier! Once you decide which plan suits your needs, you just want to pick a carrier that has a history of low, stable rate increases. Rates will increase on a yearly basis to accommodate for inflation and rising healthcare costs, but you don’t want to enroll in a plan that jumps dramatically.
Some additional points to mention about Medigap Plans:
- Medicare Supplement Plans are standardized differently in Minnesota, Wisconsin & Michigan. So if you live in one of these three states, you’ll need to do a little additional research.
- Plan C & Plan F are no longer being offered to new enrollees. So unless you are already enrolled in one of these plans, you can strike them from your list.
- Additionally, although there are technically 10 different basic plans, Plan G & Plan F also offer a high deductible version
Enrollment
You can enroll in a Medicare Supplement Plan year round, but the easiest way to ensure all of your options are open is to enroll during your individual open enrollment period. It’s only during this time that you can enroll without any medical underwriting. Should you have to undergo medical underwriting, your carrier can choose to charge you more or deny you outright!
So, when is your Individual Enrollment Period? Well, with Medicare Supplement Plans, it is the six month period after you turn 65 and enroll in Medicare Part B. If you are still working past 65, you may choose to defer Medicare Part B in favor of your employer sponsored group health insurance. In that case, you would need to follow the instructions on the back of the card and send it back! If you keep the card, you keep Medicare Part B. Not only will you be charged for it, but you may end up missing your IEP.
Evaluating What You Need
In order to enroll in the right plan, you first need to evaluate your needs. Ask yourself the following questions:
- Do I Need a Medicare Supplement Plan?
- What Benefits Do I Need?
- Do I Need a Supplement Plan or an Advantage Plan?
Do I Need a Medicare Supplement Plan?
Without a Medigap Plan or some type of supplementary coverage, you are relying solely on Original Medicare (Part A & Part B) for your health insurance. This may or may not work for you depending upon your needs. It also may work for a time, until your needs change.
Medicare parts A & B do NOT cover coinsurance, copayments, or deductibles.
Part A
In 2021, the deductible for Medicare Part A is $1484. As a reminder, your deductible is the amount that you must meet out of pocket before your insurance kicks in. This is not a once yearly deductible. It is applied to each hospital stay. So, if you have to visit the hospital for an overnight stay more than once in a given year, you will be responsible for meeting that deductible each time (even if it is only for one night).
For the first 60 days in the hospital, you will not be charged (after you’ve met your deductible), after that you will be charged coinsurance based on your length of stay. Honestly, it’s very unlikely that you would be held in the hospital for such an extended period of time. You would most likely be transferred to some type of skilled nursing facility and for that, there can be charges.
Part B
Medicare Part B also has a deductible and coinsurance to be aware of. In 2021, the deductible for Medicare Part B is $203. Unlike Part A, this is a once annual deductible, so it’s really not that big of a deal. You really need to be aware of Medicare Part B coinsurance.
Medicare Part B is your outpatient insurance. Original Medicare will cover approximately 80% of the costs, leaving you with about 20% of the costs. Honestly, if you really and truly are in good health and only visit your doctor twice a year (the minimum recommendation for seniors), 20% is not that big of a deal. BUT, there are other costs to take into account. Medicare Part B covers, not just doctor’s visits, but also outpatient surgery, ambulance services, diagnostic tests (like CT scans & and Xrays) and even Chemo drugs. 20% of these types of services can definitely be costly.
Finally, be aware that with Original Medicare, there is no out of pocket maximum. This can be a pretty significant risk. You are not covered from financial exposure as there is no limit as to what your healthcare bills may be.
What Benefits Do I Need?
You also need to weigh the benefits that you need to provide you peace of mind with the cost. The 10 basic plans offer different benefits at different price points.
Plans F, C, & G have historically provided the most comprehensive coverage, so you may find that their monthly premiums are a little higher. Plans K & L are cost sharing plans, so you may find the premiums a little lower. These are not hard and fast rules. Costs of the individual plans will always depend on your carrier, your location, your age and a few other factors.
Medicare Supplement or Medicare Advantage
You also need to determine whether a Medicare Supplement Plan or Medicare Advantage is right for you. This is an especially important decision.
Medicare Supplement Plans work in conjunction with Original Medicare. Although they will not offer additional benefits not already offered by Medicare, they limit your financial exposure and out of pocket costs. You’ll still have access to the extremely broad Original Medicare network.
Medicare Advantage Plans replace Original Medicare. They may offer you benefits not offered by Original Medicare, but generally there will be more out of pocket costs than with a Medicare Supplement Plan. Also, your network will be dependent on your plan and carrier and will be much smaller than Original Medicare.
Your budget, needs and location will largely determine whether you should choose a Medicare Supplement Plan or a Medicare Advantage Plan. We advise that you work with a broker to make this decision.
What Can and Can’t Be Covered by Medicare Supplement Plans
There are many different Medicare Supplement Plans all with different levels of coverage. In general, the thing to remember is that Medigap plans do not offer additional benefits not already offered by Original Medicare. This means they will not offer additional benefits such as dental, vision, etc…
Medicare Supplements cover the gaps of Original Medicare by limiting your financial exposure. Medicare Supplement Plans will lower or eliminate the various deductibles and coinsurance associated with Original Medicare. Basically, you’ll pay an additional premium to control additional costs associated with doctor visits, hospital stays and tests. In this way, you can basically estimate your healthcare costs for an entire year without unexpected bills.
If you’d like our assistance, you can reach us at iHealthBrokers at 888-918-0518 or schedule a call today! Our services are 100% FREE.
Jesse Smedley is the Principal Broker for iHealthBrokers and the founder, president, and CEO of Smedley Insurance Group, Inc. and iHealthBrokers.com. Since the inception of SIG in 2007, Jesse has been dedicated to helping people save money on their health insurance by providing them with resources to educate themselves on all their health insurance options, both under age 65 and Medicare beneficiaries. He is featured in many publications as well as writes regularly for expert columns regarding health insurance and Medicare.
