Supplemental Medical Insurance for Seniors
Medicare supplement plans help patients cover extra expenses—but which ones are the best choices?
New enrollees to Medicare are often surprised to find that the comprehensive medical insurance, wide-ranging as it is, doesn’t address every single cost incurred in a medical visit or hospital stay. Thanks to private insurers, there’s a reasonable source for defraying some of those incidental charges.
Medicare supplement plans—slangily known as “Medigap” plans—are sold by private insurers to help Medicare patients cover secondary costs original Medicare doesn’t cover. Medigap policies help defray extra expenses that would otherwise fall in the laps—and pocketbooks—of the insured.
So when a healthcare expense is incurred, the primary insurer (i.e., Medicare) pays everything up to the coverage limits. This coverage may not address expenses for copayments or total deductibles or leave the policyholder on the hook for additional expenses.
That’s where Medigap plans come in. This supplemental insurance pays for certain parts of medical treatment—most often, the above-mentioned copayments and deductibles—as sort of “backup” funding for the patient. Since Medigap plans are sold by private insurers outside Medicare, they offer a level of fluidity older patients often require for emergencies and unexpected circumstances.
“Medigap gives you flexibility without having to worry about a physician network,” insurance broker Garrett Ball explained in 2017. “Medigap’s more predictable (with) out-of-pocket costs. With Medigap, you don’t have copays in most cases. You pay a higher monthly premium, but you know you’re only going to have a certain amount of OOP costs.”
Supplemental insurance plans are only available for those who already have Medicare coverage, and can be tricky to get because of some quirks in certain states. (Those with Medicare Advantage plans can’t get Medigap plans, either.) But they’ve helped a huge number of older citizens stave off a mountain of excessive costs for late-life medical care.
What Medicare Supplemental Insurance Plans Cover
Each of the 10 Medigap plans offers one aspect of full coverage across the board, with no exceptions. That’s the Medicare Part A coinsurance and hospital costs. Part A basically addresses any inpatient hospital stay the policyholder may experience, including skilled nursing care, hospice care, and some aspects of home healthcare. All Medigap plans pay 100% of the coinsurance and copayment charges incurred.
From there, each plan offers different coverage levels for different things:
- Medical Part B Coinsurance and Copayments — Simply stated, this refers to medical insurance that doesn’t involve a stay in the hospital. It includes doctor office visits, preventative care, vaccines or shots, outpatient mental health and rehab, chemotherapy or physical therapy, wheelchairs, and other equipment and services.
- First Three Pints of Blood — Some patients have to pay for the initial stages of their blood transfusions. Some Medigap plans cover all or part of the first three pints.
- Medicare Part A Hospice Care Coinsurance or Copayments — For those facing life expectancies of six months or less or are receiving palliative care rather than efforts to cure an illness.
- Skilled Nursing Care Facility Coinsurance — This is coverage for in-patient rehab centers with on-site, trained medical staffers handling some specific therapy needs for patients.
- Deductibles for Parts A & B — Medigap plans offer different percentages of recouping for patient-paid upfront costs; some cover all, some cover half and others cover none.
- Part B Excess Charges — These address some of the overage fees in case you visit a doctor not in the Medicare network.
- Foreign Travel Emergencies — Since Medicare doesn’t cover the treatment you receive if you’re visiting a foreign country, some Medigap plans offer to cover a large amount of your incurred expenses away from America. Some do not.
There are some catches to Medigap coverage. For one thing, the plans are generally administered on a state-by-state basis—they’re not universal, across-the-board offerings. Some states don’t offer every single plan. Others have alternate requirements regarding eligibility age. There are other minute variations as well. It’s worth checking out your state’s offerings and conditions before you sign up.
Another complication is that two of the plans—Plan C and the hugely popular Plan F—are no longer available for those who weren’t eligible for Medicare before January 1, 2020. Both those plans have very close substitutes, with only minor variations in coverage, for people turning 65 this year or later.
How does each plan stack up? The best approach, probably, is to handle them all in alphabetical order.
The most basic of Medigap plans, supplemental Plan A covers all of the coinsurance and copayments for hospital stays (Part A), everyday medical (Part B), and hospice care. It also covers your first three units of blood in case you need a transfusion. It doesn’t pick up any portion of the Part A & B deductibles and won’t cover foreign travel emergencies or skilled nursing facility coinsurance. Just like when buying bare-minimum auto insurance, you may save on monthly premiums for Plan A—but with more money coming out of your pocket for what it doesn’t cover, it could be more costly in the long term.
For a bit more in monthly premium charges, Plan B covers (and doesn’t cover) everything in Plan A, but also pays 100% of your in-hospital deductible, which Plan A omits. This extra coverage could be helpful in case of emergency or unforeseen hospital stays.
Your coverage starts to get more comprehensive beginning with Plan C. Along with all that Plans A and B handle, Plan C offers full deductible payments for both hospital visits and outpatient medical services. It also pays 80% of your expenses if you suffer a medical emergency while visiting a foreign country. Unfortunately, Plan C is one of the two Medigap plans that are no longer available for those who haven’t turned 65 by January 1, 2020.
This plan covers almost everything Plan C does and is available for those who weren’t eligible for Medicare before 2020. The only difference is that Plan D doesn’t cover the deductible for standard medical insurance (or Part B).
Supplemental Plan F is—or, rather, was—the most popular of all the coverage options for one very understandable reason: It covers everything, 100%. No out-of-pocket expense, not even copayment. The sole exception is for emergencies in foreign countries, of which Plan F still handles 80%. Of course, this means your monthly premium for this plan is more expensive, but many consider the peace of mind worth the price. However, along with Plan C, this plan is no longer available for those who weren’t eligible for Medicare before January 1, 2020.
Plan G is catching up to Plan F’s popularity, as it duplicates every one of its features except one: The Part B deductible, which the insurance holder handles entirely on their own. But leaving out that one feature makes a huge difference in the premium cost—it’s between $40 and $100 a month less than Plan F, which some believe makes it a better long-term value. And unlike Plan F, it’s available for newly eligible Medicare enrollees.
Medicare enrollees with more flexibility when it comes to money may consider Plan K. It covers 50% of certain components: Part B coinsurance and copay, the three pints of blood for transfusion, hospice care, skilled nursing facilities, and the hospital stay deductible. Plan K offers no coverage for outpatient medical deductibles, excess charges, or emergencies in foreign lands, but does it restrict the policyholder’s out-of-pocket expenses to no more than $5,880 a year. The upside is that Plan K is dirt cheap, with the lowest monthly premiums of all Medigap plans.
For about $100 more a month, Plan L offers everything Plan K does but pays 75% of the expenses that Plan K only covers by 50%. The out-of-pocket limit is lower, too: $2,940 a year.
The premiums for Plan M are, on average, pretty high. But it covers hospital stays, overall medical, hospice care, and skilled nursing facility coinsurance and copayments entirely, and also covers the first three pints in a blood transfusion. In fact, the only difference between Plan D and Plan M is that the latter only pays half of your hospital visit deductible.
Plan N is a lower-cost option than Plan M—in fact, on average, it’s one of the cheapest of the Medigap plans. The only variation between the two concerns medical insurance copayments (the Part B charges if you’re still keeping score). With Plan N you’ll have to cover the $20 copay to certain offices, and $50 for visits to the emergency room if they don’t wind up with your getting admitted for a longer stay. If you typically always have that kind of cash on hand, the smaller premiums Plan N charges may be worth it.