Medicare Plan K is one of two unique Medicare supplements with shared-cost coverage and an annual out-of-pocket limit. This is a plan that works for people looking for help with certain Original Medicare costs, but need a lower monthly premium for affordability. If this sounds like you, then read on because Medigap Plan K might work for your situation.
Medicare Plan K saves its policyholders money by only paying 50% of most of its covered benefits. The exception is the Medicare Part A coinsurance and hospital costs for an extra year (after you’ve used up what Original Medicare covers). Plan K covers these costs in full. See our Medicare Supplement Plan Comparison Chart to compare all plans side-by-side.
The trade-off with this plan is that the monthly premium is lower and there’s an annual out-of-pocket limit. The cost-sharing and out-of-pocket limit with Plan K make it more like a Medicare Advantage plan in terms of overall cost, but you retain freedom of choice with Plan K.
You can see Medigap Plan K’s benefits side-by-side with other plans on this Medicare Supplement Plans Comparison Chart:
Medicare Plan K Out-of-Pocket Limit
Medicare Supplement Plan K is one of two Medigap plans with an annual out-of-pocket limit. The other plan is Medigap Plan L.
Plan K’s out-of-pocket limit in 2020 is $5,880. Once your out-of-pocket costs reach the limit, which includes your Medicare Part B deductible, but does not include your prescriptions, your Plan K policy generally covers 100% of your Medicare-covered costs for the remainder of the year.
The out-of-pocket limit is great because Original Medicare does not come with an annual out-of-pocket limit like Medicare Advantage plans have. With Original Medicare, there’s no limit on your health-care costs. As a result, Plan K’s yearly out-of-pocket limit offers peace-of-mind if you are healthy, and don’t expect a lot of shared-costs, but want protection from high out-of-pocket costs in the event of a serious illness or injury.
Medicare Plan K Coverage Benefits
As previously mentioned, Medicare Plan K gives you 50% coverage on the top costs in Original Medicare that you pay out of pocket if you don’t have a Medigap plan, including:
- Medicare Part A deductible
- Medicare Part A hospice care coinsurance or copayment
- Skilled nursing facility care coinsurance
- Medicare Part B copayment or coinsurance
- First three pints of blood for a covered medical procedure
If you have Plan K coverage, you are responsible for paying the annual Medicare Part B deductible and Part B excess charges out of pocket. You only incur Part B excess charges if you use a doctor that does not accept Medicare’s standard rates for services. When this happens, your provider can charge up to 15% more than the Medicare rate and you pay the excess.
As an example, with Original Medicare, you typically pay 20% of the Medicare-approved cost to see your doctor. So, assuming the approved amount set by Medicare is $100 for a doctor’s appointment, if your doctor doesn’t accept Medicare assignment they may choose to charge up to 15% over this amount in excess charges (i.e., up to $15). In this case, Medicare covers 80% of the standard cost, or $80. However, you are responsible for the balance of the standard cost ($20), plus the additional $15 excess charge, for a total out-of-pocket cost of $35.
Another plan that lets you share some of the doctor costs for sizeable savings on the monthly premiums is Medigap Plan N. And, although Medigap Plan K and Plan N do not cover Part B excess charges, Medicare Plan G does.
As mentioned above, Medicare Plan K only offers partial coverage on most of its benefits, however, the plan completely covers your Medicare Part A coinsurance hospital costs up to an additional 365 days after Medicare benefits are exhausted.
Medicare Plan K Costs
In most areas of the country Medigap Plan K, premiums are very attractive. But, it’s important to keep in mind that you might have higher out-of-pocket costs than you might with other Medigap plans. This is not a good plan for anyone aging into Medicare with one or more chronic conditions.
This plan’s 50% coverage on most costs means that you’re still responsible for half of the costs on everything from routine doctor visits, the Part A deductible, skilled nursing care coinsurance, hospice care coinsurance, and blood if you have a serious emergency. But, you may find that the lower Plan K premium is worth the risk of taking on a greater percentage of costs.
Since everyone’s situation is different, it’s a good idea to evaluate your typical out-of-pocket costs for healthcare and how much risk your budget can stand. Many healthy seniors find they have minimal out-of-pocket costs. If this is the case for you, Medigap Plan K could be just the right amount of coverage for your needs.
If you do have a chronic health condition or two, Plan K is probably not the best option. Other Medigap plans can save you quite a bit on your premiums without as much risk.
MedicareWire has a plan comparison tool that makes it easy to find all of the Medigap plans available in your area. When looking at costs, it’s important to pay close attention to both the monthly premium and how the insurance company prices its premiums. Each insurer sets its premiums differently, and the method that it uses to rate plans will affect how much you pay both now and down the road.
Do you have questions about a Plan K policy or your other Medicare Supplement coverage options? Call 1-855-266-4865 to talk with a HealthPlanOne agent. Ask for your free rate plan analysis on all major carriers that service your area.