If you are new to Medicare, you may be wondering the same thing.

A Medicare Supplement, also known as Medigap Plan, is optional coverage you can buy in addition to Original Medicare to help minimize your out-of-pocket medical expenses. Medicare Supplements follow the same rules and laws that are standardized by the government, meaning the benefits from one company are the same as another. Medicare Supplements help pay for deductibles, copays, and coinsurance. There are 10 Supplements to choose from.

Being on Medicare, you’ll need to decide if a Medicare Supplement is a good fit for you and your situation.

Today we will talk about what Medicare Supplements are, how they work, and how to choose which one might be right for you.

What Is a Medicare Supplement?

Medicare Supplement Plans work with Medicare Part A and Part B, often referred to as Original Medicare.

In order to get a Medicare Supplement, you’ll need to make sure you have both Part A and Part B.

Medicare Part A is hospital insurance, and Part B is medical coverage.

Original Medicare Part A and Part B cover about 80% of your medical expenses.

Medicare Supplements help cover the other 20%.

Medicare Supplements cover deductibles, coinsurance, copays, and excess charges. We’ll talk about all of these below, so keep reading.

Medicare Supplements Have a Premium in Addition to Medicare

You’ll pay a monthly fee called a premium to have a Medicare Supplement.

Every Medicare Supplement is rated, based on the area that you live in and your age. You can read more about that here.

This fee varies depending on which plan you choose.

Many people also like that Medicare Supplements give them the freedom to see any healthcare provider as long as they accept Medicare.

Medicare does not require you to get a Supplement, but many people do because they can significantly minimize your out-of-pocket medical expenses.

Keep reading to find out more about which expenses Medicare Supplements cover.

Coinsurance

The term coinsurance refers to the 20% of your medical expenses that Original Medicare does not cover.

All Medicare Supplements cover the Part A coinsurance.

However, there are 2 plans that only cover a portion of the Part B coinsurance, while the rest pick it up in full.

Plan K only pays 50% and Plan L 75%. We usually tell people to avoid these, since the cost isn’t that different.

Every other plan pays 100%.

Deductibles

Medicare Part A and Part B have deductibles.

Deductibles are dollar amounts that you must pay in a given time before Medicare starts paying their portion of your medical expenses.

If you have only Part A and Part B without a Medicare Supplement, you are responsible for both of the deductibles.

We will talk about Part A and Part B deductibles here briefly to understand how Supplements work.

If you would like further detail about Medicare deductibles, we talked about them in another post that you can read here.

The Part A Deductible

The Part A deductible is per “benefit period.” A benefit period begins when you go to a hospital and ends 60 days after you leave. You can have more than 1 benefit period in any given calendar year.

For example, if you end up in the hospital 2x for unrelated incidents, that could be 2 separate benefits periods and you would pay the Part A deductible twice.

Most Medicare Supplement Plans cover the Part A deductible at 100%.

There are a few exceptions, including two Supplement Plans that only cover a percentage of the Part A deductible and one plan that does not cover it at all

  • Plan A – Does not pay any part of the Part A deductible
  • Plan K – Pays 50%
  • Plan L – Pays 75%

The Part A deductible changes every year. You can find what it is here.

The Part B Deductible

Unlike Part A, the Part B deductible is based on the calendar year and is nowhere near as much as the Part A deductible.

Most Medicare Supplement Plans do not cover the Part B deductible.

There are two plans that are an exception to this rule, but they are not available to people who were new to Medicare on or after January 1st, 2020 (Plan C and Plan F).

Also, if these plans are available to you, they typically have a much higher monthly fee.

The Part B deductible changes annually. See the most up-to-date figure here.

Copayments

A copay is a set dollar amount that you pay for services when you go see an outpatient provider, like a primary care doctor or specialist.

We talked about copays in a different post that you can read here.

For the most part, Medicare Part A does not require that you pay any copays.

Part B requires you to pay a copay if you do not have additional coverage like a Medicare Supplement.

Almost all of the different Medicare Supplement Plans do not require you to pay a copay with the exception of a few:

  • Plan N – You pay a 20% copay up to 20 at a doctor’s office and up to $50 in the ER
  • Plan K – You’ll pay a 50% copay for your visit (no max)
  • Plan L – You’ll pay 75% (no max)

Part B Excess Charges

A provider may charge excess charges if he or she does not accept “assignment.”

Accepting assignment means that a healthcare provider accepts Medicare’s payment as payment in full.

It is uncommon to see an excess charge because most providers in the country accept Medicare’s preapproved amounts.

Plan F and G cover ‘excess charges.’ Only one of these plans is available to you if you were new to Medicare on or after January 1st, 2020 (Plan G). See details of Plan F and G here.

If there is an excess charge, it will most likely be very minimal. Read more about them here.

Example of How a Supplement Works

Jim has Supplement Plan G in addition to Original Medicare and has a heart attack. He ends up in the hospital for three days.

Because he had Plan G and Medicare Part A and Part B, he paid nothing other than his Part B deductible of $233 (2022).

If Jim did not have any additional coverage like Plan G, he would have also had to pay some if not all of his Part A deductible of $1,556 (2022) and likely other charges.

Monthly Premiums for Supplements

We mentioned above that you’ll pay a monthly fee called a premium in exchange for having a Supplement.

Monthly premiums are relatively cost-effective compared to what you could pay in medical bills if you had only Medicare Part A and Part B.

Monthly premiums for Supplements vary depending on a variety of factors, including:

  • The plan you choose
  • Your age
  • Where you live
  • Your gender
  • Tobacco use

Let’s briefly talk about each of these below.

The Plan You Choose

There are several different Supplements available. You saw above that there are different levels of coverage.

Some plans are better suited for you than others, depending on your health needs and budget.

Typically plans that cover more have a higher monthly premium.

We will talk about each of the different Supplement Plans in further detail in another post. Click here to read.

Your Age

Your age can often play a factor in how much you pay in monthly premiums for a Medicare Supplement, but this is not always the case.

Whether your age plays a role in your monthly premium depends on the “rate type” of Supplemental Plans available in your area.

We will talk about “rate types” in more detail in another post. Click here to read.

Where You Live

It’s no secret that the general cost of living in certain parts of the country is higher than in others, which translates over into the world of Medicare Supplements.

Generally, if you live in an area with a higher cost of living, monthly premiums for Supplements are higher.

Make sure you’re working with an agent that shops your plans for you every single year. If you don’t have an agent, here’s how to pick one.

Gender

Typically speaking, the monthly premium for men is slightly higher than the monthly premium for women (some states excluded i.e. Califonia).

Tobacco Use

Sometimes, being a tobacco user is not a determining factor in your monthly premium for a Supplement.

For example, when you are new to Medicare, quite a few states do not allow insurance companies to ask about tobacco use. In most instances, though insurance companies will ask whether or not you do.

If the insurance company does ask, the monthly premiums are slightly higher.

Qualifying for Medicare Supplements

You must be eligible for Medicare Part A and Part B to qualify for a Medicare Supplement and the best time to get one is when you are new to Medicare.

It is possible to get a Medicare Supplement when you are not new to Medicare, but you’ll have to go through medical underwriting.

It is important to note that once you are approved for a Supplement you cannot lose your coverage unless, of course, you fail to pay your monthly premiums – unless the company goes out of business. Learn more here.

The coverage automatically renews from year to year and any changes to your health status will not affect your benefits.

W discuss when and how to qualify for a Supplement in a bit more detail below.

You Are New to Medicare

As we noted above, getting a Supplement when you are new to Part B is the ideal time to do so.

Medicare allows you to apply for a Supplement as early as six months before your intended Part B effective date. Although most companies do this, it does vary from company to company.

Most people do so to lock in their rates.

The earliest a Supplement Plan can begin is the day your Medicare starts.

When you are new to Medicare, companies do not ask you any health questions. In fact, your health status does not come into play at all – except in determining which plan will best fit your needs.

During this time, you can get any Supplement Plan you would like.

You can also make any changes you want to your coverage until you find the plan that works the best for you. Most companies give you a six-month window. Even at this point, there are still no health questions.

If You Are Not New to Medicare

It is also possible to get a Medicare Supplement even if you’ve been on Medicare for while.

If you have had Part B for more than six months, your application for a Supplement includes a health questionnaire.

The insurance company will review your answers and dig deeper into your medical and prescription history if the company feels it needs more details.

The company will either approve or decline your application based on its findings.

In less common cases, a company might approve you at a higher rate if you have a specific medical condition instead of declining your application outright.

Some states do not require medical underwriting to switch plans. Read about them here.

Let’s look at some examples:

Diane is new to Medicare Part B on June 1st. She applies for a Supplement in March. There are no health questions on her application. Her Supplement starts on June 1st, at the same time her Medicare starts.

In August, Diane decides to switch to another Supplement with a lower monthly premium because it covers more of her out-of-pocket expenses. It has been less than six months since Part B started on June 1st, so she still does not have to answer health questions and can make the switch.

Diane’s friend Jaime has had Medicare for two years with no additional coverage. She decides that while she is still relatively healthy, things can change at any time. She applies for a Supplement, and there are health questions on her application. In about a week, she hears that her application is approved, and it starts the first of the following month.

Jaime breaks her leg a couple of months after she gets her Supplement. She decides she wants a plan that covers more and is okay with paying a higher monthly premium. Jaime applies to switch plans but gets turned down because she is going through treatment. For now, she will keep her Original Supplement. Applying for new coverage will not affect her existing policy.

Summary

Medicare Supplement Plans are one way to minimize your out-of-pocket expenses on Original Medicare, Part A and Part B.

It is important to do your research and ask the right questions to determine which plan will best help your situation. These plans are not one size fits all and working with a knowledgeable agent can help you in your search.

If you have any questions, use the search tool at the top of this page or on the home page.

Or, if you would like further detail on any of the topics we discussed, please fill out a contact form and submit your question.

If you prefer to speak by phone, call us at 888-209-5049.