What is a Medicare Supplement? A Medicare supplement is a type of health insurance sold by private insurers to cover the gaps in Medicare. This is what we refer to the plans as “Medigap Plans.”
Here’s an easy way to think of a Medicare supplement. Picture it as a card that sort of bolts onto the back of your Original Medicare. It serves to pay for the costs that normally Medicare would pass on to you. Medicare has gaps, like coinsurance, copayments, and deductibles. You must pay for these when accessing medically-approved services.
If you have a supplement policy, Medicare will first pay its share of your medical expenses. Then your policy will step in and pay its share. This is usually the remainder of your bill. However, it depends on which policy you choose from the standard offered plans.
The 10 Standard Medicare Supplements
What is Medicare Supplement insurance? It’s coverage for the deductibles and coinsurance that Medicare would otherwise require you to pay.
Every Medicare supplement has to follow the guidelines created by Medicare itself when it standardized all plans in 1990. Each standardized plan is identified by a letter. Medicare calls them plans. There is Medigap Plan A, Plan B, Plan C, D, F, G, K, L, M and N. Each one of these lettered policies provides the same set of benefits from company to company.
This means that the monthly premium is the main difference between supplements with the same letter. You can shop multiple insurance carriers for the best rate.
The plans that we get the most requests for quotes for are Medigap Plans F, G, and N.
What is a Medicare Supplement Plan F?
Medicare Supplement Plan F is one of the most popular supplements in the nation. It pays 100% of the costs that Medicare would normally bill to you. This means that when you have Medicare Supplement Plan F, you will not pay any deductibles. You will pay no copays. Plan F will pay ALL of your shares.
What is a Medicare Supplement Plan G?
Medicare Supplement Plan G has been gaining in popularity in recent years. It functions exactly like Plan F, except for the Part B deductible. You agree to pay the Part B deductible each year, and after that, it pays for everything else. The Part B deductible is $183 per year. Quite often we can find Medicare Supplement Plan G premiums that save you more than $183/year. This means that you come out ahead in the long run. Click here to learn more about Medigap Plan G.
What is Medicare Supplement Plan N?
Medicare Supplement Plan N is one of the newer Medigap plans. It was first offered in 2010. Plan N will usually have lower premiums than Plan F or Plan G. However you will do more cost-sharing along the way. You will pay a doctor copay up to $20 each time you see a doctor. Copays of up to $50 for an E.R. visit are owed by you.
You will also pay excess charges. Some doctors bill an extra 15% above Medicare’s rate. This is called an Excess Charge. Plan F or Plan G take care of this for you. On Plan N, you pay the excess charge yourself. See more on this in the glossary below. Click here to learn more about Medigap Plan N.
What is Not Covered by Medicare Supplement Plans?
Medicare supplements only pay after Medicare has first paid its share. If Medicare approves a claim and pays the part that Medicare owes, it will forward the remainder of the bill to your Medicare Supplement.
Some things that are not covered by Medicare or your Medicare Supplement are:
- Routine dental, vision and hearing exams
- Hearing aids
- Eyeglasses or contacts
- Long-term care or custodial care
- Retail prescription drugs
Glossary of Terms
Perhaps the most difficult thing about Medicare supplements is the terminology. Let’s look at the benefits as described by Medicare.
Medicare Part A coinsurance – all Medigap plans offer this benefit. It covers the very expensive daily hospital copays that you begin accruing after your 60th day in the hospital.
Medicare Part B coinsurance or copayment – every supplement also covers this benefit, which is one of the most important. Since Medicare only covers 80% of your Part B outpatient expenses, this benefit is what pays the other 20% for you. This can be crucial for high-ticket items like cancer treatments or dialysis.
Blood (First 3 pints) – this benefit is on all plans and pays for the first 3 pints of blood in a blood transfusion. Medicare only pays for the 4th pint and above. Blood is very expensive, so this is a good benefit.
Part A Hospice care coinsurance or copayment – Supplements pay for the parts of hospice that Medicare doesn’t under this benefit, so costs incurred by you are usually nothing.
Skilled Nursing Facility coinsurance – Medicare allows for 100 days of skilled nursing facility (SNF) care after you have been in a hospital and need nursing care while you recover. However, Medicare only pays for the first 20 days. A policy with SNF coverage will pay for the other 80 days.
Medicare Part A deductible – the 2018 Part A deductible is $1,340. You can pay this more than once a year if, for example, you have two inpatient hospital stays more than 60 days apart.
Medicare Part B deductible – in 2018, the Part B deductible is $183/year. You will pay the Part B deductible once per year for services such as doctor’s visits, lab-work, or physical therapy unless your Medicare supplement provides this benefit.
Medicare Part B excess charges – Medicare providers can either accept Medicare’s assigned rates for each service or, if they choose, they can charge you an excess charge. This charge can be up to 15% above the assigned rate. It can be pricey for items like diagnostic imaging or surgery. You may wish to choose a Medicare supplement that covers this expense.
Foreign travel emergency – Since Medicare is a U.S. health insurance program, it does not offer you coverage outside our country. Some Medicare supplements include a foreign travel benefit. It will pay 80% of your expenses up to $50,000 after a small deductible.
Choosing a Medicare Supplement
Since Medigap plans are standardized, you will know exactly which benefits you are purchasing. There are several factors which you will want to know about each insurance carrier before you choose your supplement:
- Rate trend history – Most policies will have an annual rate increase to keep up with medical inflation. What kind of rate increases as the carrier you are considering had over the last 3 years? Are the rate increases reasonable or significantly higher than the competitors?
- Financial ratings – A number of rating companies dig into the financial stability of each insurance carrier. These companies give reports, or grades, on the fiscal health of the insurer. Ask your agent what the A.M. Best and Weiss Ratings are for each carrier. Then consider this information when making your selection.