Medicare Supplement, also called Medigap, helps beneficiaries with Original Medicare (Parts A and B) pay out-of-pocket costs, such as copays, deductibles and coinsurance.
Original Medicare pays for hospitalizations, doctor visits, outpatient care and other services, but it doesn’t cover all costs. That’s where Medigap can help.
What Does Medigap Cover?
Medicare Supplement helps pay for Original Medicare costs, including:
Copay: What you pay at the time of service, such as at a physician’s office, urgent care center or emergency room.
Deductible: The amount you must pay before Medicare begins picking up the cost of care. The Part A deductible is $1,716 per hospital stay, and the Part B deductible is $288 annually.
Coinsurance: The percentage you must pay for health care services after you reach your deductible, such as 20%. Medicare picks up the rest of the costs.
There are 10 Medicare Supplement plans ranging from A-N. Plans C and F are no longer available to people who became eligible for Medicare on or after January 1, 2020.
Here are highlights about the coverage:
- Part A coinsurance and hospital costs: All plans cover 100% of costs up to an additional 365 days after you exhaust Medicare benefits
- Part A hospice care coinsurance or copayment: All but Plans K and L cover 100%; Plan K covers 50% and Part L covers 75% of costs
- Part A deductible: Six Medigap plans cover 100%; three cover a lower percentage and one (Plan A) doesn’t pay for the Part A deductible
- Skilled nursing facility care (SNF) coinsurance costs: Some Medigap plans cover 100%, while others cover a lower percentage or not at all
- Part B coinsurance or copayment: All but Plans K and L cover 100%; Plan K covers 50%, and Part L covers 75% of costs
- Part B deductible: Only two plans cover 100% (Plans C and F), while the rest don’t cover the Part B deductible at all
- Care outside of U.S.: Six Medigap plans help pay for 80% of costs; the other four don’t cover that care
- Out-of-pocket limits: Only two Medicare Supplement plans (Plans K and L) have out-of-pocket limits, while the rest don’t have those limits
What Does Medicare Supplement Not Cover?
Medigap doesn’t cover everything. Medicare Supplement plans likely won’t cover:
- Dental care
- Glasses
- Long-term care
- Prescription drugs (you can buy a separate Part D plan for that coverage instead)
- Private nursing
- Vision care
Medicare Supplement companies can also deny coverage for pre-existing conditions for up to six months after you buy coverage for any conditions that were treated during the six-month look-back period before the Medigap policy begins. Following the pre-existing condition waiting period, Medigap plans must cover the pre-existing conditions.
How Does Medicare Supplement Work?
You must enroll in Original Medicare (Parts A and B) to get Medicare Supplement. Medicare Advantage beneficiaries aren’t eligible for Medigap.
When you receive care, the medical office sends the medical claim to Medicare, which pays what it owes. Medigap then picks up its portion if you agree to have the medical claims sent directly to the Medigap company. Once Medicare and the Medigap company pay their portions, you’ll get a bill for what you owe.
Medicare Supplement policies renew each year unless you stop paying premiums, the company goes bankrupt or out of business, or the company finds that you were untruthful on your application.
What Does Medicare Supplement Cost?
Medicare Supplement costs are between $32 and $550 per month on average. Plan F and G may be high-deductible plans and cost less than plans with comprehensive coverage.
Plan A is another low-cost plan, but it doesn’t offer as much coverage as other plans. For instance, Plan A doesn’t help pay for SNF care, the Part A deductible or Part B deductible, which is standard in other Medigap plans.
What Impacts Medigap Costs?
Costs are affected by multiple factors:
- Age
- Insurance company
- Location
- Plan type
- Tobacco use
- Underwriting process
Medigap companies have the option to set rates when the policy is first issued, to use the person’s current age or to not use age as a factor.
Who Is Eligible for Medicare Supplement?
Medicare Supplement eligibility is connected to whether you have Original Medicare coverage. If you have Parts A and B, you’re eligible to buy Medicare Supplement.
It’s best to sign up for Medigap coverage during the initial Medicare enrollment. That begins the three months before you turn 65 and lasts three months after that month.
At that time, insurers can’t deny coverage or charge you higher rates based on pre-existing conditions. After the initial enrollment period, insurance companies can deny you or charge more based on your health.
Who Should Buy Medicare Supplement?
You should buy Medigap coverage if you want help paying out-of-pocket costs for Original Medicare. It can be an especially good idea if you expect to need many health care services over the next year.
For instance, if you have a costly surgery planned or you’ve been hospitalized recently, a Medicare Supplement plan could help reduce out-of-pocket costs like deductibles and coinsurance.
If you have Original Medicare and plan on traveling internationally, a Medigap plan that helps pay for care outside of the U.S. can help. Original Medicare doesn’t typically cover international care, but Medigap Plans C, D, F, G, M and N typically cover 80% of that care up to policy limits.
How Do You Enroll in Medicare Supplement?
If you’re eligible for Medigap, you can buy coverage at any time. You don’t have to wait until Medicare’s annual enrollment period.
If you want to buy Medicare Supplement, you can visit Medicare.gov to review options in your area. It’s a good idea to narrow the list of Medigap plans that fit your needs, such as costs and coverage. Once you’ve narrowed down the plans that interest you, compare costs by company and any expanded benefits offered.
When Is Medicare Supplement Open Enrollment?
The Medicare Supplement Open Enrollment period is the six-month timeframe when you first become eligible for Medicare. This is the best time to buy supplemental coverage.
If you buy a Medigap plan during that period, the insurance company:
- Can’t charge you more
- Can’t deny you
If you try to buy coverage after this period, an insurer can charge you more based on your health. They can even reject you depending on your pre-existing conditions, which is any health issue, diagnosis or treatment you had before applying for supplemental coverage.
Unlike other types of Medicare, such as Medicare Advantage, you don’t have to wait until the annual open enrollment period, which runs from October 15 to December 7, to buy a Medigap plan (if you don’t sign up for Medigap when you’re first eligible). You can instead attempt to buy supplemental coverage at any time but remember that once you pass your initial open enrollment period, insurers can charge you more or reject you for Medicare Supplement.
So, it’s best for you to buy Medicare Supplement coverage at the same time that you buy Medicare Part B when you first become eligible for Medicare.
Medicare Supplement Plans F, G and N: Which Is Best?
Medicare Supplement plans F, G and N are the most popular Medigap plans with the highest rates of enrollment nationwide. Which one is best depends on the beneficiary and their specific health care needs.
Medicare Supplement Plan G
Plan G has the largest membership. Nearly four out of 10 Medigap policyholders have a Plan G policy, according to KFF. Plan G offers comprehensive coverage, but it also comes with one of the highest price tags.
Plan G beneficiaries only have to pay their annual Medicare Part B deductible, after which the plan provides 100% coverage on all Medicare-covered medical expenses.
The plan could be a good supplemental policy if you expect to need many health care services over the next year. If you’re healthy and don’t often need to see a doctor, a lower-cost Medigap policy is likely a better fit.
Medicare Supplement Plan F
Plan F is the second largest plan with 36% of Medigap members enrolled, according to KFF. Plan F pays 100% of costs associated with Medicare deductibles, copays and other costs associated with Medicare-covered services, so beneficiaries don’t have to worry about out-of-pocket expenses.
But there is one huge caveat. Plan F is no longer available to any Medicare beneficiary who became eligible for Medicare on or after January 1, 2020.
Medicare Supplement Plan N
Plan N could be a cheaper option than Plan G and may be a good fit for someone with fewer medical needs. KFF estimates that 10% of Medigap members have a Plan N, which is the third highest percentage.
Plan N provides 100% of Medicare Part B coinsurance costs, with the exception of $20 copays for office visits and $50 copays for emergency room visits. Beneficiaries are responsible for the annual Part B deductible as well. This structure keeps the cost of the plan relatively low despite risking higher out-of-pocket expenses.
Pros and Cons of Medicare Supplement
Medicare Supplement helps pay for care, but it does have potential drawbacks.
Pros
- Helps offset copays, coinsurance and deductibles
- Depending on the plan, it can offer coverage not found in Original Medicare, such as covering care while traveling outside the U.S.
- May offer expanded benefits like discounts on fitness membership and meal delivery
- Covers hospice costs with some plans paying 100% of costs
Cons
- Another monthly premium you have to pay
- Doesn’t typically cover prescription drug benefits, so you need to buy a separate Part D plan
- Doesn’t cover long-term care, and neither does Original Medicare
- Doesn’t pay for dental, vision or hearing costs
Medicare Supplement Frequently Asked Questions (FAQs)
Should I choose Medicare Advantage or Medicare Supplement?
Another option is to enroll in a Medicare Advantage plan. Private health insurers offer these plans, which combine coverage typically found in Parts A and B and often provide expanded coverage not found in Original Medicare, such as vision, dental and prescription drug benefits.
There are many pros and cons when comparing Medicare Supplement vs. Medicare Advantage, so you’ll want to go through the benefits and drawbacks when choosing between Medicare Advantage or Original Medicare with a Medigap plan.
Why do I need Medicare Supplement if I have Original Medicare?
Original Medicare doesn’t pick up all costs for care, which is where Medigap can help. That includes paying your deductible and coinsurance, depending on the individual plan.
Can I be denied Medicare Supplement coverage?
A Medicare Supplement company can’t deny you if you buy coverage during your initial enrollment period. However, companies can deny you or charge you more based on your pre-existing conditions after that initial period.
That means if you decide to forgo Medigap coverage until years after the initial period, a company could decide your health is too big a risk and deny coverage.