How much can I save with a Medicare Supplement Plan?
A Medicare Supplement plan makes a lot of sense for anyone looking to cut down on out-of-pocket medical expenses. But as with everything in the Medicare world, it pays to do your research. What difference can you realistically expect a Medigap plan to make to your health care costs?
What is a Medigap plan exactly?
As the name implies, this is insurance which helps with the gaps in coverage from your Medicare Parts A and B plans. Offered by private carriers, these standardized plans can pay your coinsurance, copayments, and deductibles*, your skilled nursing care facility bills, and even your hospital costs once you’ve exceeded your Medicare coverage. Some plans provide benefits beyond what Part A and Part B offer, such as foreign emergency care.
You have to be enrolled in Medicare to get a Medicare Supplement plan, but acceptance is guaranteed only if you sign up within your Medicare Supplement Open Enrollment Period, which begins the first day of your 65th year and lasts 6 months. Your choice of Medigap’s 10 lettered plans depends on where you live, and with the exception of Massachusetts, Minnesota, and Wisconsin (which have their own specific plans), each plan offers identical benefits, state to state, insurer to insurer. Take the time to look at our Medicare Supplement plan comparison chart to get a handle on what plan benefits fall under what lettered plan. To find out which plan is available where you live, just click on the HomeCompare Plans button and enter your zip code.
How can I figure my Medigap savings?
As a rule of thumb, your premium is going to be pegged to the level of coverage your plan offers — the more benefits, the higher the premium. Also, the cost is going to vary by insurer and your home state. Here, you can save by shopping for the lowest premium for the benefit set you need. The other savings variable is what your health is like now and how it may change in the future. Your key question: do you expect to be using the health care system more, and how much more?
One way to get a picture of your health-related spending is to do an accounting of your medical bills, and your Medicare Summary Notices from a year ago. Once you’ve added up your Part A and Part B combined deductibles, go back through your records and calculate your coinsurance and copayment outlay.
Here’s a good working checklist for your total health care spending:
This last category is typically not part of Medicare, and Medigap plans do not help with prescription drugs For this coverage, there’s one solution — enrolling in a D plan.
When you can see your annual health care spending pattern, it will help you decide whether a Medicare Supplement plan is right for you. If your out-of-pocket expenses exceed the monthly premium for a Medigap plan, then you just have to choose the plan with the best cost.
Just so you can see it all in one place, here are your fixed costs with Medicare Part A and Part B:
Knowing your expenses makes it easier to shop Medigap plans. Please review which ones are offered where you live. Be realistic about which plan has the benefits you can expect to need in the near future. Once you’ve found the right plan for your health situation, compare premiums — these can vary a lot among plans with identical benefits.
*As of January 1st, 2020, Part B deductible will no longer be covered by Medigap plans sold to new Medicare members.
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A good general rule is that your premium is going to depend on the level of coverage your plan offers — the more benefits, the higher the premium. And the rate is going to vary by insurer and your home state. You can save by shopping for the benefits you need at the lowest premium. The other key factor in saving is to assess what your health is like now and how it may change in the future. Do you expect to be using the health care system more, and how much more?
Your fixed costs with Medicare Part A and Part B include your 2023 Part A deductible of $1,600 per benefit period (beginning day 1 of your hospital or skilled nursing facility stay and ending 60 days after the last day of hospital or nursing facility care), your Part B deductible of $226 annually, your 2023 inpatient hospital stays copayments of $0/day from days 1-60; $400/day from days 61-90; and $800/day for a limited time thereafter. 2023 skilled nursing facility copayments are: $0/day for days 1-20 and $200/day for days 21-100.
- Best overall Medicare supplement for new enrollees: Plan G.
- Best overall Medicare supplement before 2020: Plan F.
- Best low cost Medicare supplement: Plan K.
- Best alternative to Plan G Medicare supplement: Plan N.
Medicare Supplement policies are private health insurance designed to cover gaps in Original Medicare. They are also known as Medigap plans. These take care of costs such as copays, coinsurance, and deductibles which can become expensive if you need regular care from a doctor or hospital. If you need medical care while traveling outside the U.S., you can buy Medigap policies to help cover those costs. As a supplement to Original Medicare, you’re required to have Part A and Part B before you canget a Medigap policy. This way, Medicare is responsible for the Medicare-approved costs of the covered care, and the remainder is covered by your Medigap plan.
Optimal coverage comes with higher costs, making Plan F the most expensive Medigap plan. Plan F is known as “first-dollar coverage” and it takes care of everything provided during a doctor or hospital visit. Your only responsibility is for dental, vision, medications, and equipment, such as hearing aids.
The Federal government ended the Plan F option for new enrollees last year to keep the healthcare system from being overused by patients who had their deductibles covered. The next best coverage after Plan F is Plan G.
Medigap Plan G offers every advantage of Plan F except for the deductible, which you have to cover. Because it isn’t as comprehensive as Plan F, Plan G is more affordable.
For people who don’t go to the doctor often, Plan K is worth considering. It is the most affordable because it provides just 50% of Medicare Part B coinsurance, the Part A deductible, blood, skilled nursing, and Part A hospice costs. For comparison, Plan G and others offer full coverage of these expenses, and more.
It’s hard to argue against plans which cut your traditional Medicare costs. For most people, having the extra coverage these supplemental plans provide is common sense, unless they want the specific features of a Medicare Advantage plan.
Most people would benefit from not having to pay out-of-pocket to stay healthy. Medicare supplement insurance or a Medicare Advantage plan offer vital savings now, but are indispensable should a catastrophic health issue occur.
Of the 10 Medicare-approved Medigap plans, Plan G and Plan N are the most popular. Plan F is no longer available to new Medicare enrollees as of 2020, but it is still popular among people who bought this plan prior to 2020.
- Plan F$128–$342
- Plan F (high deductible)$22–$88
- Plan G$106–$325
- Plan G (high deductible)$29–$58
Before getting a Medicare supplement plan, you need to be enrolled in Medicare Part A (hospital insurance) and Part B (medical insurance). People with Medicare Advantage Plans who want to go back to Original Medicare can buy a Medigap policy prior to switching.
The security of having lower or no out-of-pocket healthcare costs can offset the premiums you’ll have to pay for whichever Medigap plan you choose, which vary depending on the benefits offered.
The national average cost for Medicare Supplement Plan F is $1,824 annually, which is $152/month; Medigap Plan G will cost you around $143 per month.
Since Plan F was discontinued for new enrollees as of 2020, Plan G offers the most coverage for people 65 and older. It has a lower premium than Plan F and duplicates its benefits, except for the Part B deductible.
It depends on your specific needs, but for most people a Medigap plan is very useful in supplementing the coverage of Medicare Part A and Part B. A Medicare Advantage plan is an affordable way to get healthcare coverage not offered by Original Medicare.
Historically, Plan F has been the most popular because it covers all the out-of-pocket costs Medicare does’t pay for. This includes the 15% extra charge billed by providers who do not take Medicare as full payment.