Medicare Supplement plans, also known as Medigap plans, are private insurance policies that help cover some of the out-of-pocket costs associated with Original Medicare.
What are Medicare Supplement plans? Like Medicare Advantage plans, Medicare Supplement plans are designed to fill the gaps in coverage left by Original Medicare. Original Medicare includes Part A (hospital insurance) and Part B (medical insurance), but beneficiaries are still responsible for paying deductibles, coinsurance, and other out-of-pocket costs. With Original Medicare alone, you could wind up paying 20% of certain costs, like surgeries and hospitalizations, which can mean huge expenses especially if you’re on a fixed income in retirement. Medicare Supplement plans help pay for some of these costs, such as deductibles, copayments, and coinsurance to help make sure you can better budget for your medical expenses.
How do Medicare Supplement plans work? Here’s what you need to know about how Medicare Supplement plans work:
- The benefits are standardized: There are ten standardized Medicare Supplement plans available in most states, labeled with letters A through N. Each plan offers a different combination of benefits, but the benefits for each plan are standardized across all insurance companies. For example, if you choose Plan F from one insurance company, it will provide the same benefits as Plan F from another insurance company. The only difference will be the cost.
- They work with Original Medicare: Medicare Supplement plans are designed to work alongside Original Medicare. You must be enrolled in both Part A and Part B to be eligible for a Medicare Supplement plan. Medicare Supplement plans do not work with Medicare Advantage plans, so if you have a Medicare Advantage plan, you cannot also enroll in a Medicare Supplement plan.
- They do not include prescription drug coverage: Medicare Supplement plans do not include prescription drug coverage. If you want prescription drug coverage, you’ll need to enroll in a separate Medicare Part D plan.
- They have a monthly premium: Medicare Supplement plans have a monthly premium that you must pay in addition to your monthly Medicare Part B premium. The cost of the premium varies depending on the plan you choose and the insurance company offering the plan.
- They are guaranteed renewable: Once you enroll in a Medicare Supplement plan, the insurance company cannot cancel your coverage as long as you continue to pay your premiums. You can also keep your plan even if you move to a different state.
- They cover different amounts of out-of-pocket costs: Each Medicare Supplement plan covers different amounts of out-of-pocket costs. For example, Plan F (which is now available to you only if you were eligible for Medicare prior to January 1, 2020) covers 100% of Medicare Part A and Part B deductibles and coinsurance, while Plan G covers everything except the Part B deductible (adjusted annually—$226 for 2023). Typically, the more comprehensive the plan, the higher the monthly premium.
- You should enroll within your Medigap Open Enrollment Period: Unlike a Medicare Advantage plan, you will typically only enroll in a Medicare Supplement plan once and not need to make changes to it over time. The best time to enroll in a Medicare Supplement plan is during your six-month open enrollment period, which starts the month you are enrolled in Medicare Part B and you are 65 or older. During this period, insurance companies cannot deny you coverage or charge you more because of pre-existing conditions. You’ll pay the same amount as others your age, regardless of health. If you miss this enrollment period, you may be medically underwritten — which means you can be denied coverage or forced to pay much more for the same plan.
Which one is right for you? Choosing the right Medicare Supplement plan depends on your individual health needs and budget. If you can afford it, getting into a comprehensive plan like Plan F or Plan G can help you save significant money in the long run by almost entirely eliminating out-of-pocket costs. If you’re generally healthy and don’t anticipate needing a lot of medical care, a lower-cost plan with fewer benefits may be a good option, or you may be better off choosing a Medicare Advantage plan.
When you’re ready to evaluate which option is best for you, give us a call at 888-970-2940 and one of our licensed agents can help walk you through the process and evaluate your options. There’s no reason to try to evaluate your options alone. Our advice comes at no extra cost to you!
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