If you’re enrolled in Medicare Part A and Part B (aka, Original Medicare), you’re most likely fully aware that you will pay some costs out-of-pocket or buy additional insurance. With Original Medicare, beneficiaries pay deductibles, coinsurance, and copayments that equal about 20% of the total cost of Medicare-approved services.
To help pay the 20% gap in coverage, Medicare beneficiaries can buy Medicare supplement insurance, commonly called Medigap plans, from private insurance companies. These plans cover some of the costs. You can choose the level based on the different portions (e.g., deductibles, coinsurance, etc.) of your Medicare costs you want to be covered.
In all but three states, Medigap plans are standardized in using letters (A, B, C, D, F, G K, L, M, and N). Massachusetts, Minnesota, and Wisconsin have their own standardized plans.
Medigap Plan L offers less coverage than most Medicare supplements, but it’s one of two plans that have shared-costs and features an annual cap on your out-of-pocket spending. In this way, it’s similar to the financial benefit of Medicare Advantage plans.
Due to its high level of cost-sharing on most covered costs, Medicare Plan L policies generally have lower premiums than comprehensive Medigap plans, like Medicare Plan G. Although Medigap Plan L covers all of the basic benefits, it only pays at 75% on most benefits until the annual cap is met.
You can see Medigap Plan L’s benefits side-by-side with other plans on this Medigap Plan Comparison Chart:
Medicare Plan L Out-of-Pocket Limit
Medicare Supplement Plan L is one of two Medigap plans with an annual out-of-pocket limit. The other plan is Medigap Plan K.
As of 2020, Plan L’s out-of-pocket limit is $2,940. Once you reach the out-of-pocket limit, which includes the Part B deductible, but does not include your prescriptions, your Plan L policy generally covers 100% of your Medicare-covered costs for the remainder of the year.
Plan L’s out-of-pocket cap is a big benefit because Original Medicare doesn’t have out-of-pocket limits. This is one of the reasons that so many seniors get in trouble with medical bills. They mistakenly believe that Medicare covers everything, or that they can handle the deductibles and copayments themselves. This is where Plan L’s yearly out-of-pocket limit saves the day. If you don’t expect a lot of shared-costs and feel you can handle the basic medical bills, but want protection from high out-of-pocket costs in the event of a serious illness or injury, Medicare Plan L might be right for you.
Medicare Plan L Coverage Benefits
As previously mentioned, Medicare Plan L gives you 75% 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 a Medigap Plan L policy, you pay the annual Medicare Part B deductible and Part B excess charges out of pocket. Excess charges are not a big deal unless you use providers that do not accept Medicare’s standard rates. If you do, just be aware that your healthcare providers can charge up to 15% more than Medicare’s standard rate and you are responsible for the overage.
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 L and Plan N do not cover Part B excess charges, Medicare Plan G does.
As previously mentioned, Medigap Plan L only pays 75% of most of the costs, however, it completely covers your Medicare Part A coinsurance hospital costs up to an additional 365 days after Medicare benefits are exhausted.
Medicare Plan L Costs
In most areas Medicare Plan L premiums are very lower than more comprehensive policies, such as Medigap Plan N. But, it’s important to remember that you may have higher out-of-pocket costs. As a result, Plan L isn’t the best plan for people aging into Medicare with one or more chronic conditions.
This plan’s 75% coverage on most costs means that you’re still responsible for 25% of all costs including routine doctor visits, the inpatient deductible, skilled nursing care coinsurance, hospice care coinsurance, and blood, should you need it. But, you may find that the lower premium on this plan is worth the risk of taking on a greater percentage of costs.
As your situation is different than others, it’s important to evaluate your typical out-of-pocket costs for healthcare and whether or not your budget can handle the potential out-of-pocket costs. Many healthy seniors find they have minimal out-of-pocket costs and that Medigap Plan L offers just the right amount of coverage.
If you do have a chronic health condition or two, Medicare Plan L may not be the ideal option. Other plans have similar premiums with less 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 L 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.