Medigap plans are a great way to supplement your Original Medicare coverage. Original Medicare provides truly comprehensive coverage but these supplemental plans do help to fill in the gaps. However, not all supplements are created equally.
When you turn 65, you’ll be eligible for Original Medicare which is Part A & Part B. Part A is your hospital insurance. Part B is your outpatient insurance. Together, they will cover a large portion of your medical needs.
Medicare.gov is an excellent resource and if you logon to medicare.gov you’ll see the full range of benefits offered by Part A & Part B.
Unfortunately, there are gaps. There are benefits that are simply not offered by Original Medicare such as dental, vision, hearing, and prescription drugs. For these benefits you will need additional insurance options.
But there also deductible and copays and coinsurance. There is also no out of pocket maximum with Original Medicare.
Premium & Deductible
You will have to pay a monthly premium at the very least for Part B. Most people are eligible for free Part A through theirs or their spouse’s work history.
Additionally there is a deductible for Part A and for Part B. For Part A it is applied per benefit period. Benefit periods can be a little tricky to understand, so you can think of it as a hospital stay. If you need to be hospitalized for a surgery for example, you would first need to meet your Part A deductible. If you needed to be hospitalized again in that same year, that would be a new benefit period and you would once again have to meet your Part A deductible.
Your Part B deductible is annual. You only need to meet it once per year.
Copays & Coinsurance
Then there are copays and coinsurance. For Part A, again it is a little more difficult to understand. Your coinsurance depends upon your length of stay and the type of facility.
Part B is a little more straightforward. It will usually be 20% of the Medicare approved amount, unless there are Part B excess charges.
Medigap plans also known as Medicare Supplements will help to cover these financial gaps. They can help with deductibles and copays and coinsurance. They will either cover all of your medical bills or impose an out of pocket max. But not all supplements are created equally.
Plans A & B
There are similar issues with Plan A & Plan B. They do not cover skilled nursing facility care. This can be be a major expense. If your need to recover in a skilled nursing facility for more than 20 days, it can cost almost $200 per day! Additionally, Plan A does not cover the Part A deductible. When you compare the monthly premiums of these plans with more comprehensive options, they do not seem worth the investment.
High Deductible Plan F & Plan G
Plan F and Plan G are very comprehensive supplements. Unfortunately, their high deductible versions leave a lot to be desired. This comes down to doing the math. Premiums for the high deductible versions are lower than the standard versions, but often not low enough to offset the extremely high deductibles.
Finally, there is Plan F. Plan F is actually great. If you look at Medicare.gov you’ll see that it covers a LOT!
The problem is two fold. These plans are no longer offered to new enrollees, so that will likely count you out. But even if you are eligible for Plan F, you may want to avoid it. Plan F, when compared to Plan G, usually has a much higher monthly premium despite offering very similar coverage. Also, although Medicare Supplements usually increase on a yearly basis, Plan F historically has had much steeper increases than other plans.
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.