How to Compare Medicare Supplement Insurance Policies

The average Medicare beneficiary must deal with a combination of increasing healthcare costs and possibly a growing number of medical needs. As of 2019, a typical couple might spend a total of almost $300,000 in medical expenses over the course of their retirement. 80% of those costs can be traced back to Medicare premiums, medical copayments and pharmacy costs and deductibles. These figures make it clear: enrolling in only Original Medicare (Parts A and B) can leave beneficiaries with significant out-of-pocket medical expenses.

This is where Medicare Supplement insurance policies, also known as Medigap plans, can help.

What Is a Medigap Plan?

No matter what plan(s) you select to provide your Medicare benefits, you can count on having out-of-pocket expenses such as copays, deductibles or coinsurance. Generally speaking, Medicare Part A provides hospital insurance benefits that cover four specific services: inpatient hospital care, skilled nursing/rehab, hospice and home care. Medicare Part B covers everything else, including outpatient medical services, doctor visits, preventative care, labs/x-rays/diagnostics and much more. Lastly, Medicare Part D provides benefits for self-administered prescription drugs, as well as some vaccinations such as shingles shots. Failure to enroll in the proper plans for your specific needs can leave you with higher out-of-pocket costs than you prefer.

Medigap policies are purchased from private insurance companies and provide coverage for the gaps in Original Medicare. To enroll in a Medigap plan, you must have active Medicare Part A and B plans. Medigap or Medicare Supplement insurance plans will assist in providing insurance coverage for out-of-pocket expenses in Medicare. These include all deductibles, copayments and coinsurance costs in Parts A and B. It’s important to note that, “Every Medigap policy must follow federal and state laws designed to protect you, and it must be clearly identified as ‘Medicare Supplement Insurance,'” according to

What Do Medigap Plans Cover?

Since 2010, all Medigap plans were standardized which allowed the offering companies to provide the same coverage for all plans (A-N). Those basic benefits include:

  • Part A: Medicare Supplement plans will provide coverage for the deductibles and copays found in Part A. For example, if hospitalized, your responsibility in 2021 would be a $1,484 deductible for days 1-60 of your hospital stay. Depending on your plan, this may or may not be covered.
  • Part B: Medicare Supplement plans will help cover the gaps in Part B, specifically, the copayments, deductibles and coinsurance associated with your benefits. Your selected plan will determine exactly how much is covered.
  • Additional Benefits: With Medicare Supplement insurance, you can receive up to three pints of blood free of charge, as well as $50,000 of travel insurance if you need care outside the USA.

There are dozens of companies that offer Medicare Supplement plans. While the plan benefits are standardized, it is important that you pay attention to other aspects such as premiums, rate history and other no-cost benefits, such as gym memberships and 24-hour help lines. While these extra benefits shouldn’t be the reason to enroll, adding them can improve your health and perhaps help reduce future medical expenses. Talk to a local Medicare insurance agent about your needs and the specifics of the Medicare Supplement insurance plans you’re interested in.

How to Evaluate Medicare Supplement Plan Options

Medicare Supplement plans that are currently available include Plans A, B, D, G, K, L, M, and N, which we’ll explore later. Note that as of January 1, 2020, Medicare beneficiaries can no longer purchase Medigap Plans C and F as they provided coverage for Part B deductible costs, which is no longer allowed for new Medicare enrollees. Anyone who enrolled in the Plan C and Plan F type plans (which cover the Part B deductible) prior to Jan. 1, 2020, are grandfathered in and may keep them.

Plans A, B, D, G, K, L, M and N cover the same medical benefits, but how you pay for them will vary by plan letter. When choosing a plan, enrollees should carefully consider their anticipated medical needs. It is important to identify the plan that meets your medical and financial needs. Since Medigap plans will increase in costs over time and may require medical underwriting for future changes, it is important to account for not only current medical and financial needs, but future needs as well. Under-insuring or selecting the wrong plan could result in more exposure to medical costs later.

What Will the Cost of My Medigap Plan Be?

The cost of your plan depends on your Medigap plan, Medigap insurance provider and their premium-pricing methods, which can increase over time due to inflation. The premium-pricing methods are: attained-age rated, community-rated and issue-age rated. For example, your plan may be priced via the issue-age rated method. If that is the case, your premium will be determined by your age when you enroll in the Medigap plan, and won’t increase as you age. Attained-age plans base your premium on your current age and are susceptible to change every year. Community-rated plans offer the same premium for all members, and age does not factor into it.

Choosing the Medigap plan that best suits your financial and medical needs is paramount. Understanding the various types of plan benefits and cost structures are a great way to get started with comparing potential Medicare Supplement insurance policies. Review the information above, and talk to Medicare supplement insurance agents about any questions you may have. Contact Medicare Portal today for assistance!

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