Filling the Gap with Medicare Supplement Insurance

A Medigap Plan May Be Your Missing Puzzle Piece

Medigap Supplement Insurance
There may be a piece missing from your Medicare benefits that a Medigap plan can fill. Anthony Harvie/Photodisc/Getty Images

Medicare does not pay for everything. There are monthly premiums you have to pay as well as annual deductibles, coinsurance, and copayments. For most services, you will pay 20 percent of health costs. Those out of pocket expenses can add up over the year.

What is Medicare Supplement Insurance? 

Many beneficiaries look for a way to keep costs down. This is where Medicare supplement insurance, also known as Medigap, can be of help.

These plans can be used in conjunction with Original Medicare (Part A and Part B) but not a Medicare Advantage plan (Part C).

Medigap plans do not add extra health services to your Medicare benefits but they help to pay down your out of pocket costs for Parts A and B. Current Medigap plans do not cover expenses for Part D plans.

It is possible to have a Medigap plan which offers prescription drug coverage if you purchased it before Part D came into existence in 2006.  If this is the case, be sure that your Medigap plans offer creditable drug coverage or you could be subjected to Part D late penalties if you miss your enrollment window. However, these plans are gradually being phased out.

The question is whether the cost of premiums for a Medigap plan will offset the costs you would have paid for Original Medicare without the supplement. You need to look closely at your medical expenses to make an informed decision.

 

How Do Medigap Plans Work?

Similar to Medicare, Medigap supplement plans are named by letters of the alphabet. Current available plans are A, B, C, D, F, G, K L, M, and N.

These plans are not offered through the federal government but the government does set the standard for what these plans must cover.

You purchase these plans through private insurance companies. Any company that offers these plans must at least offer plans C and F. They are not obligated to offer all plans. It is in your best interest to shop around for the best rate since these plans are the same regardless of where you purchase them.

What Do Medigap Plans Cover?

Plan benefits are standard as outlined below. Exceptions are Massachusetts, Minnesota and Wisconsin. These states elected to set up their Medigap plans in a different way.

Part A Coverage

  • Part A deductible - Plans B, C, D, F, G, M, and N will pay 100 percent of costs while plans K and M pay 50 percent and plan L 75 percent.
  • Part A coinsurance and hospital costs up to 365 days beyond Medicare's standard benefit - All plans cover this 100 percent.
  • Part A hospice coinsurance or copayment - Plans A, B, C, D, F, G, M, and N will pay 100 percent of costs while plans K and L pay 50 percent and 75 percent respectively.
  • Skilled nursing facility coinsurance - Plans C, D, F, G, M, and N will pay 100 percent of costs while plans K and L pay 50 percent and 75 percent respectively.

    Part B Coverage

    • Part B deductible - Plans C and F will cover 100 percent of the cost.
    • Part B copayments or coinsurance - Plans A, B, C, D, F, G, M, and N will pay 100 percent of costs while plans K and L pay 50 percent and 75 percent respectively.
    • Part B excess charges - Plans F and G cover 100 percent of the cost.

    Coverage for Both Parts A and B

    • Blood transfusion (three pints) - Plans A, B, C, D, F, G, M and N will pay 100 percent of costs while plans K and L pay 50 percent and 75 percent respectively.  
    • Health care during foreign travel -  Plans C, D, F, G, M, and N will pay 80 percent of costs.
    • Out of pocket limits - Plans K and L will pay 100 percent of all covered costs after you spend the out of pocket limit of $4,940 and $2,470 respectively in 2015.

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