Medicare Supplement (also known as Medigap) insurance plans help cover certain out-of-pocket costs that Original Medicare, Part A and Part B, doesn’t cover. These plans, purchased from private insurance companies, are layered on top of traditional Medicare and help defray the cost of care for seniors.
There are eight different supplement plan types available to new Medicare enrollees, and two that are only available to seniors who became eligible for Medicare after Jan. 1, 2020.
Each plan type has its own letter designation and the coverage is the same for all plans in that category, regardless of the insurer. The only thing that differs between plans in a letter category is the premium that the insurer charges.
Plans are standardized throughout the country, except for in Massachusetts, Minnesota and Wisconsin, which set their own for each letter category.
How Supplement plans work
Essentially, Medigap plans fill in gaps in Original Medicare. You must have both Medicare Part A and Medicare Part B if you want to sign up for a Medigap plan.
How they do that varies among the different plan types. But they all have the following in common:
Covering out-of-pocket costs — Medigap plans help pay for out-of-pocket costs that traditional Medicare does not cover, including deductibles, copays and coinsurance.
Choice of providers — Medigap enrollees can go to any doctor that accepts Medicare patients.
No network restrictions — Enrollees are not confined to any one provider network, unlike those who are enrolled in Medicare Advantage plans, which operate more like typical health insurers, including preferred provider organizations and health maintenance organizations.
This also gives enrollees freedom if they travel a lot, as they can use their benefits anywhere in the country.
Renewals are guaranteed — If you enroll in a Medicare Supplement plan when you first become eligible for Medicare, an insurer cannot decline to renew your policy as long as you keep up on your premiums, and regardless of your health.
Overseas coverage — Some Medigap plans may cover emergency medical services if you are traveling overseas.
It’s important to note that Medigap plans work alongside Original Medicare, and you must have both Medicare Part A and Medicare Part B to be eligible for a Medigap plan.
Additionally, Medigap plans are sold by private insurance companies, so the benefits and costs can vary. It’s advisable to compare different plans to find the one that best fits your health care needs and budget.
Medicare plan types
Plan A: This is the most basic plan. It covers essential benefits, including Medicare Part A coinsurance and hospital costs, but does not cover the Part A deductible or Part B charges. There is no coverage overseas.
Plan B: This covers everything that Plan A does, as well as the Medicare Part A deductible.
Plan C: This is comprehensive coverage, including coverage for the Medicare Part A and Medicare B deductibles, coinsurance, copayments and 80% of foreign emergency medical services. This plan is not available to anyone who became Medicare-eligible on or after Jan. 1, 2020.
Plan D: This provides coverage for most Medicare-approved expenses, excluding the Part B deductible.
Plan F: This plan is the most comprehensive and popular plan. It covers all Medicare-approved expenses, including the Part A and B deductibles, coinsurance, copayments and excess charges. This plan is not available to anyone who became Medicare-eligible on or after Jan. 1, 2020.
In 2023, 42% of Medigap enrollees were enrolled in Plan F.
Plan G: This is the most similar to Plan F for new Medicare enrollees. The only difference is that it does not cover the Part B deductible. Since Plan F was discontinued for new Medicare beneficiaries, Plan G has gained popularity as an alternative and is now the second-most popular plan. It accounts for 32% of all Medigap enrollees.
Plan K: This provides coverage for a portion of Medicare-approved expenses, including 50% of Part A coinsurance and hospital costs, but with cost-sharing requirements.
Plan L: This offers coverage for a portion of Medicare-approved expenses, including the Part A coinsurance and hospital costs, but with different cost-sharing requirements compared to Plan K.
Plan M: This offers coverage for a portion of Medicare-approved expenses, including the Part A coinsurance and hospital costs, along with 50% coverage for the Part A deductible.
Plan N: This offers comprehensive coverage for most Medicare-approved expenses, with some cost-sharing in the form of copayments for certain services.
The takeaway
The key to Medigap plans is that if you enroll when you first become eligible for Medicare, the insurer cannot deny you for any reason.
If you wait until after your initial enrollment period for Medicare (the period of three months prior to the month you turn 65, the month you turn 65 and the three months after that), you may have to go through a strict underwriting process and they can reject you for any reason.
Finally, if you want to switch plans from one letter type to another, you may also have to go through medical underwriting and the insurer has the right to reject your application.
If you have questions about these plans, give us a call.
