Medicare supplement insurance, also called Medigap, is designed to help fill the gaps in Original Medicare by covering certain out-of-pocket healthcare expenses. While Original Medicare covers many health costs, depending on your needs and frequency of care, it may not be enough to keep your healthcare affordable.
Medigap, an optional plan that works to supplement your Original Medicare enrollment, can help pay some of the copayments, coinsurance, and deductibles associated with Medicare. Different Medigap plans provide varying levels of coverage for these out-of-pocket expenses. For example, Medigap Plan A offers minimal coverage but also boasts the lowest premium, which is ideal for those who want help paying for Medicare expenses but do not necessarily need comprehensive coverage. Learn how much you can expect to spend for Medigap coverage, depending on your chosen plan.
How Much Does Medigap Cost?
Medigap costs depend on whether the insurer uses community-rated, issue age-rated, or attained age-rated premiums, and whether you select a higher or lower coverage plan. Unlike Original Medicare, which the federal government runs, Medigap plans are offered by private companies. However, they are federally standardized and subject to state regulations.
Insurers may utilize one of the following pricing models to set Medigap premiums:
- Community rated: Everyone using the plan pays the same premium, regardless of their age.
- Issue age-related: The premium is based on the age when you are issued the Medigap policy.
- Attained age-related: The premium is based on your current age and is likely to increase as you get older.
Different plans also have corresponding premium costs associated with them. Medigap plans are lettered A through N, and all plans with the same letter must offer the same level of benefits no matter which insurer offers it. Plans with less coverage typically cost less, while more comprehensive plans usually have higher premiums.
Paying for a Medigap plan may seem counter to spending less on your Medicare coverage, but the benefits of Medicare supplement insurance could help you save money in the long run. For example, there are no out-of-pocket maximums with Original Medicare. If you need numerous or costly procedures, your copays and coinsurance could climb without limit, even with Medicare coverage.
However, a Medigap plan may include an out-of-pocket maximum that can help restrict how much you spend on Medicare-approved healthcare. Once you reach your Medigap plan’s out-of-pocket maximum, your plan will pay for the remainder of your Medicare costs until the following year.
A trusted insurance agent can help you estimate how much your healthcare coverage may cost with and without Medigap. This information can help you decide which Medigap plan best fits your needs and budget.
What Do Medicare Supplement Plans Cover?
| Benefits | Plan A | Plan B | Plan C | Plan D | Plan F | Plan G | Plan K | Plan L | Plan M | Plan N |
|---|---|---|---|---|---|---|---|---|---|---|
| Part A coinsurance and hospital costs for up to 365 additional days after Medicare benefits are disbursed | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Part B coinsurance or copayment | Yes | Yes | Yes | Yes | Yes | Yes | 50% | 75% | Yes | 100% coinsurance; but copays may still apply |
| Part A hospice care coinsurance or copayment | Yes | Yes | Yes | Yes | Yes | Yes | 50% | 75% | Yes | Yes |
| Part A deductible | Not covered | Yes | Yes | Yes | Yes | Yes | 50% | 75% | 50% | Yes |
| Part B deductible | Not covered | Not covered | Yes | Not covered | Yes | Not covered | Not covered | Not covered | Not covered | Not covered |
| Part B excess charge | Not covered | Not covered | Not covered | Not covered | Yes | 100% | Not covered | Not covered | Not covered | Not covered |
| Out-of-pocket limit | N/A | N/A | N/A | N/A | N/A | N/A | $6,940 in 2023 | $3,470 in 2023 | N/A | N/A |
| Blood (first three pints) | Yes | Yes | Yes | Yes | Yes | Yes | 50% | 75% | Yes | Yes |
| Skilled nursing facility care coinsurance | Not covered | Not covered | Yes | Yes | Yes | Yes | 50% | 75% | Yes | Yes |
| Foreign travel exchange up to plan limits | Not covered | Not covered | 80% | 80% | 80% | 80% | Not covered | Not covered | 80% | 80% |
Medigap covers many of Original Medicare’s out-of-pocket costs, including:
Deductibles
In 2023, Medicare Part A has a $1,600 deductible for each hospital benefit period before Part A coverage kicks in. Medigap plans may pay 50% to 100% of this amount.
In 2023, Medicare Part B has a $226 annual deductible before Part B coverage kicks in. Some Medigap plans may cover this amount too.
Coinsurance
After you reach your deductible, coinsurance may apply. Coinsurance is the percentage of cost-sharing between Medicare and you. For example, after you meet your annual Part B deductible, you are responsible for paying 20% of your bill for covered services. Medicare Part B covers the remaining 80% of the Medicare-approved amount. However, depending on the cost of these services, your 20% may still be expensive.
Medigap plans reduce your coinsurance amount. In fact, many plans cover 100% of your Part B coinsurance as well as 100% of your Part A coinsurance costs.
Hospitalization
With Original Medicare coverage, after you meet your Part A deductible, there is no copayment fee for up to 60 days of a single hospital stay. However, after the 60th day, there is a daily copayment due:
- Days 61-90: $400 copayment per day
- Days 91-150: $800 copayment per day
- After 150 days: You are responsible for 100% of all costs
However, Medigap plans cover Part A’s hospital copayments for up to 365 days after your Medicare benefits run out.
Durable Medical Equipment
Your Part A coverage helps with the costs of durable medical equipment like oxygen, canes, walkers, and wheelchairs. You pay 20% of the Medicare-approved amount, and Medicare covers 80% of the cost. With Medigap, all plans help cover some or all of your Part A coinsurance.
Specific Benefits
Medigap plans help cover 50% to 100% of the first three pints of blood you receive, depending on your chosen plan. Each plan also covers 50% to 100% of Part A hospice care coinsurance or copayments. In addition, unlike Original Medicare, which cannot be used outside of the U.S., some Medigap plans provide coverage for foreign travel emergencies up to the plan’s limits.
Remember that you must be enrolled in Original Medicare to purchase a Medigap plan. Medigap cannot be used with Medicare Advantage. Medicare Advantage plans provide another way to access Medicare Parts A and B, but are offered by private insurance companies following rules set by Medicare. Most Medicare Advantage plans include Part D (prescription drug) coverage and other additional benefits, such as vision care. However, while Original Medicare is accepted nationwide, Medicare Advantage plans have their own health networks and may be subject to location coverage limitations.
Comparing Medigap Plans
There is more to choosing a Medigap plan than considering the premium prices. When comparing Medigap plans, consider your current and future healthcare needs, your budget, and which Original Medicare benefits you are likely to use.
For example, suppose you plan to undergo major surgery in the upcoming year. In that case, you will need to meet your Part A deductible, then pay your portion of the Part A coinsurance once your benefits kick in. Some Medigap plans offer partial or complete coverage of the Part A deductible, and all provide some coverage of Part A coinsurance, helping lower overall care costs.
Taking a close look at your anticipated out-of-pocket costs for Original Medicare can help you calculate which Medigap plan may most effectively help you reduce those costs.
How to Enroll in Medigap
You can enroll in Medigap during your 6-month Medigap initial enrollment period. This period begins the first month you are at least 65 years old and have Medicare Part B coverage. For example, if you are of eligible age and your Part B coverage begins June 1, your Medigap open enrollment period would run from June 1 until November 30.
Everyone only has one Medigap open enrollment period, and it is critical to enroll during this window. During the Medigap open enrollment period, you can purchase any Medigap policy sold in your area, regardless of your health status. Insurers must also offer all applicants the same premium rate as someone who is healthy.
If you miss that initial enrollment window, you do not have to wait for another enrollment period to apply for a policy. You may apply at any time throughout the year. However, outside of your Medigap open enrollment period, your plan will likely cost more because insurance companies can base premiums on your current or past health history, or deny coverage altogether. However, even with a higher premium, you may find that the right Medigap policy can help you with your Original Medicare expenses.