How do I Choose a Medicare Supplement Plan?
Medicare Supplement, or Medigap plans, are insurance policies sold by private insurance companies affiliated with Medicare. They supplement Original Medicare Part A and B benefits by filling in some of the financial gaps. Depending on the type of Medigap plan you get, it can help lower your Medicare costs, including coinsurance, copayments, and foreign travel emergency medical expenses, among other expenses
You can purchase a Medigap plan during the six-month open enrollment period for Medigap that begins when you are 65 and enrolled in Part B. This enrollment period gives you a one-time guaranteed issue right to purchase a Medigap plan, no matter what your health status is. You won’t be subject to medical underwriting. If you wait until this period ends to purchase a Medigap policy, you can be charged more or refused coverage based on pre-existing conditions.
If you’ve been considering purchasing a Medigap plan to supplement your Original Medicare benefits, you may be wondering which plan to choose. This article provides insight into how to choose a plan that’s best for your medical needs and your budget.
Which Medigap plan is right for you?
To choose the right Medigap plan, consider the amount of Medicare out-of-pocket expenses you can cover yourself. If you are in great health, a more comprehensive plan might cost more in monthly premiums than the amount of expense you need covered.
But also consider your future health care needs. You may be visiting doctors more in the future, or you may need the security of extended long-term care coverage. Or if you travel a lot, it might be good to have the additional coverage for emergency medical care when you’re abroad.
There are ten standardized Medigap plans A, B, C, D, F, G, K, L, M, and N. However, Plans C and F are no longer available for those who became eligible for Medicare after January 1, 2020. If you were eligible for Medicare before that date, you may still have Plan C or F.
These ten plans are all standardized according to their letter. No matter what insurance company sells them, or in what state you purchase your plan, plans identified with the same letter must offer the same benefits. It’s important to note that Medigap plans in Massachusetts, Minnesota, or Wisconsin are standardized differently.
Plan G is the most comprehensive plan that Original Medicare beneficiaries can currently purchase.
Here’s a look at what Medigap Plan G covers:
- 100 percent of Part A coinsurance
- 100 percent of Part B coinsurance or copay
- 100 percent of the cost of first three pints of blood
- 100 percent of hospice coinsurance
- 100 percent of skilled nursing facility coinsurance
- 100 percent of Part A deductible
- 100 percent of Part B excess charges
- 80 percent of foreign travel emergency care up to plan limits
In comparison to Plan G, Plan A offers the most basic coverage:
- 100 percent of Part A coinsurance
- 100 percent of Part B coinsurance/copay
- 100 percent of the cost of first three pints of blood
- 100 percent of hospice coinsurance
The remaining plans offer benefits that range between Plan A and Plan G.
How much does a Medigap plan cost?
One Medigap plan covers one beneficiary, so if you want coverage for both you and your spouse, you need to purchase two plans. Each Medigap plan has a monthly premium which you pay in addition to your Medicare monthly premiums.
Because Medicare Supplement plans are sold by private insurance companies, they have the right to set their own monthly premiums for the plans that they offer. This means that costs of policies can vary greatly from company to company for the exact same coverage.
When you are looking for a Medigap plan, you should ask the insurance company how they rate their premiums as this can make a difference in the amount you pay throughout your life.
There are three ways companies rate their policies and set rates for premiums:
- Community, or no-age, rated means everyone who purchases the plan has the same monthly premium no matter what their age is. Premiums can only increase due to inflation or other factors aside from age.
- Issue-age rated means that premiums are set according to the age you are when you purchase the plan. Premiums can increase due to inflation or other factors, but not due to your age.
- Attained age rated means your premium is set according to your current age, so it increases as you get older. This is typically the least expensive option initially but can become the most expensive option later in life. Premiums can also increase due to inflation or other factors.
Choosing a Medigap plan is a personal decision – only you know how much gap coverage you need. You should carefully balance the plan’s costs versus its coverage to ensure that it makes sense for your financial situation. And remember that your health care needs can change over the years, and what’s right for you now might be different when you’re older.