How to Compare Medicare Supplement Plans

Like other forms of indemnity insurance, Medicare Supplements (Medigap plans) are a financial instrument. In this article, we’ll explain how to compare Medicare Supplement Plans so you can buy the right amount of coverage for you.

Standardized Medigap Plans

One of the best things the federal government did when creating the Medicare program was to outline standardized coverage for additional insurance. From the outset, Medicare has been and will likely remain an 80/20 system.

The government covers 80 percent of all major medical costs through payroll tax contributions, and the beneficiary covers the remaining 20 percent. But, as we all know, the remaining 20 percent can add up to a very hefty sum. That’s where Medigap comes in.

Private insurance companies sell Medigap insurance policies to help Medicare beneficiaries pay some of the approved costs that Medicare does not cover (i.e., the 20 percent). To make coverage as easy as possible, policies are standardized by lettered plans (e.g., A, B, C, D, etc.), not to be confused with Medicare’s parts.

The standardized Medigap plans make them easy to compare and shop. A simple chart is needed to see what each lettered plan covers.

Medicare Supplement Plan Comparison Chart

The following chart shows the coverage gaps in Original Medicare (left column) and how each lettered Medigap plan covers them.

How Much Medicare Supplement Coverage is Enough?

An easy way to consider Medicare Supplement coverage is to compare it to automobile insurance. A good car insurance policy covers your financial risk.

With your car, you have the risk of injuring other motorists and pedestrians, as well as damaging other people’s property. There’s also the risk of damage to your vehicle.

Similarly, with Medicare, you have the risk of hospitalization, a chronic illness, and a life-threatening accident or illness that requires costly healthcare services. And, even though Medicare covers 80 percent of these costs, the 20 percent you are responsible for can add up to tens of thousands of dollars or more.

Understanding how much coverage you need is all about understanding your financial risk.

Are you in good health or poor health? This is the first and most important question you need to ask. You have less risk if you are in good health and have no family history of serious health conditions. If you are in poor health or your family has a history of serious health problems, you have more risk.

What are Medicare’s Coverage Risks?

To understand your risk, we need to discuss all of the Medicare coverage gaps. The chart above is our guide.

Medicare Part A Deductible

Medicare Part A covers your inpatient care. But, before Medicare pays a dime, you have a deductible that must be paid. In the case of Part A services, the deductible is not an annual cost; it is a per-benefit period cost.

A benefit period begins the day you’re admitted as an inpatient in a hospital or skilled nursing facility (SNF). The benefit period ends when you haven’t received inpatient hospital care (or skilled nursing care in an SNF) for 60 days.

For the 2024 calendar year, you’ll pay $1,632 per benefit period. However, a benefit period only covers up to 60 days in the hospital or SNF. The Medicare Part A coinsurance begins after you use up your 60-day benefit period.

All Medigap plans, except Plan A, cover some or all of the Part A deductible. Plan K and Plan L cover 50 and 75 percent of the deductible, respectively.

Note: Don’t be confused by the “parts” and “plans” terminology. Medicare coverage comes in parts. Medigap policy coverage comes in plans.

Medicare Part A Coinsurance

All Medigap plans cover the greatest risk, the Medicare Part A coinsurance. This is the amount you pay per day if you are hospitalized for more than 60 days. Here is what you’ll pay after the 60th day (2024 rates):

• $408 per inpatient day, days 61-90 of the benefit period.
• $816 per inpatient day for day 91 and beyond of the benefit period (lifetime reserve days).

But, that’s not all you’ll be paying. Part A covers the cost of hospitalization, but it does not cover your medical costs. Medical services are covered by Part B.

Medicare Part B Deductible

Medicare Part B, which covers your medical costs (i.e., doctor visits, lab tests, diagnostics, etc.), has a deductible. The Part B deductible is annual; you pay it in full before Medicare begins paying its share. For the 2024 calendar year, the Part B deductible is $240.

Only Plan C and Plan F cover the Part B deductible. And, as of 1 January 2020, these plans are no longer available to new Medicare beneficiaries.

Medicare Part B Coinsurance or Copayments

All Medigap plans cover some or all of the Part B coinsurance or copayments. Plans K and L cover a percentage (50% and 75%, respectively), and with Plan N, policyholders pay a small flat fee when they see their doctor ($20) or use the emergency room ($50). The Part B coinsurance or copays are covered in full with all other plans. This includes the medical services and medications you need when you are hospitalized.

These costs add up at a staggering rate, too. Imagine you need an MRI scan so your doctor can diagnose the severe pain you’re having in your abdominal area. That diagnostic test costs about $2,600, and you’re responsible for 20 percent. What if that pain turns out to be appendicitis? Appendectomy surgery costs about $33,000, leaving you with a $6,600 bill for the surgical procedure. Medigap plans help with some or all of these costs.

Medicare Part B Excess Charges

Part B Excess Charges are additional fees (up to 15%) that doctors may charge if they do not accept Medicare-assignment (Medicare’s standard rates). Only Plan F and Plan G cover Excess Charges.

Blood

Medicare Part A covers blood you get as a hospital inpatient. Medicare Part B covers blood you get as a hospital outpatient.

Most of the time hospitals get blood from a blood bank at no cost. When that happens, you do not have to pay for it. If the hospital has to buy blood, you must pay the hospital for the first 3 units of blood you get in a calendar year. At an average of $180 to $300 per pint, this isn’t a huge cost, but it adds up.

All Medigap plans cover some or all of the cost of the first three pints of blood.

Skilled Nursing Facility Coinsurance

Medicare Part A covers most of your costs in a skilled nursing facility. However, as with hospital inpatient care, you must pay coinsurance after your 20th day in the facility. For 2024, here are the coinsurance costs:

• Days 1–20: $0 for each benefit period.
• Days 21–100: $204 per day of each benefit period.
• Days 101 and beyond: all costs.

Medicare Part A Hospice Coinsurance or Copayments

It is reassuring to know that Medicare pays most of our healthcare costs when our end is near. Hospice care covers:

• All items and services needed for pain relief and symptom management.
• Medical, nursing, and social services.
• Drugs for pain management.
• Durable medical equipment for pain relief and symptom management.
• Aide and homemaker services.
• Other covered services you need to manage your pain and other symptoms, as well as spiritual and grief counseling for you and your family.
• Medicare-certified hospice care is usually given in your home or another facility where you live, like a nursing home.

You pay nothing for hospice care. You may need to pay a copayment of no more than $5 for each prescription drug and similar products for pain relief and symptom control while at home.

If the hospice benefit doesn’t cover your drug, your hospice provider should contact your Medicare drug plan to see if it’s covered under Part D. You may need to pay 5% of the Medicare-approved amount for inpatient respite care.

However, Medicare doesn’t cover room and board when you get hospice care in your home or another facility where you live (like a nursing home).

All Medigap plans, except Plan A and Plan B, cover some or all of the minor costs that Medicare does not pay in full.

Foreign Travel Emergencies

Medicare itself does not cover any medical costs outside of the United States and its territories. However, Medicare does allow Medicare Supplement Insurance to cover foreign travel emergencies.

Medigap Plans C, D, F, G, M, and Plan N all cover 80 percent of your emergency healthcare when you travel outside of the United States, up to the limits of the policy. If you travel, this is a significant safety net benefit.

Prescription Drug Coverage

Three of the ten standardized Medigap plans, (plans H, I, and J) include prescription drug coverage. These plans have a $250 deductible for the drug benefit and a 50 percent coinsurance. However, they are no longer available to new Medicare enrollees.

To get prescription drug coverage with a Medicare Supplement now you must join a Medicare Part D plan. In 2024, these plans have a maximum deductible of $545 and come with an initial coverage limit of $5,030. When you reach this limit in retail spending you pay all costs until you reach the catastrophic threshold ($8,000).

Which Medicare Supplement is Best for You?

Now that you better understand all of your out-of-pocket costs with Medicare, you can evaluate your needs and balance them against what each plan covers. When shopping and comparing Medicare supplement plans, the most important thing to understand is the amount of coverage you need.

It is not economical to buy more or less insurance than you actually need. We have an entire article to help you choose the best Medigap insurance.

You can learn about all standardized Medigap plans here:

• Medigap Plan A
• Medigap Plan B
• Medigap Plan C
• Medigap Plan D
• Medigap Plan F
• Medigap Plan G
• Medigap Plan K
• Medigap Plan L
• Medigap Plan M
• Medigap Plan N

Medicare Supplement Open Enrollment

If you are new to Medicare you might be wondering when you can enroll in a Medicare Supplement. That’s understandable, because TV commercials would have us believe it is in the fall. However, this is not the case.

When is Medicare Supplement Open Enrollment?

Unlike Medicare Advantage Plans and Medicare Part D Plans, which do have an annual enrollment period in the fall, Medicare Supplements do not. The reason for this is because Medigap plans are not health insurance and their benefits and providers do not change every year.

Your Medicare Supplement Open Enrollment Period is based on when you first sign up for both Medicare Part A and Part B. For most people this occurs are age 65. However, if you are still working and have employer health benefits (creditable coverage), you can delay enrollment.

Rules are different if you are under the age of 65.

How Long Does Medicare Supplement Open Enrollment Last?

Your Medicare Supplement Open Enrollment Period lasts six months. During this period, you cannot be denied coverage, you cannot be asked health questions, and you cannot be charged more due to a pre-existing health condition.

What If I Miss My Medicare Supplement Open Enrollment Period?

If you fail to buy a Medigap policy during your Medicare Supplement Open Enrollment Period you can still apply for a policy, but you no longer have the federal government’s Medigap protections. That means the insurance carriers to submit application to can ask you health questions and deny coverage or charge you more based on a pre-existing condition.