How to Choose the Right Supplement Plan for You

Once you’ve enrolled in Medicare Part A and Part B, you may want to consider whether you’d benefit from additional coverage. Medicare Supplement Insurance, also known as Medigap, is a popular form of coverage that helps reduce your out-of-pocket costs for Medicare.

There are 10 different Medigap plans available, each with its own set of cost-sharing benefits. Here’s what you need to know about Medicare Supplement coverage and how to choose the right plan for you.

What are Medicare Supplement plans?

Medicare Supplement Insurance plans are offered by private insurance companies — not the federal government. These plans supplement or “fill gaps” in Original Medicare (Parts A and B) by paying a portion of your out-of-pocket costs for covered services. Your plan may pay for some or all of your Part A and Part B deductible, copayments and coinsurance. A Medigap plan may be beneficial if you want to reduce the risk of unpredictable out-of-pocket costs associated with Medicare.

When you purchase a Medigap policy, you’ll be responsible for paying a monthly premium to the insurance company. This is paid on top of your premium for Part B (and Part A, if applicable). Keep in mind that you can’t use a Medigap plan if you are enrolled in a Medicare Advantage plan (Part C) — you can only use it with Original Medicare.

When is the best time enroll in a Medicare Supplement plan?

Generally, the best time to enroll in a Medigap plan is immediately after you sign up for Medicare Part B. Here’s why: Once you enroll in Original Medicare, you’ll enter a six-month Medigap Open Enrollment Period. During this period, private insurance companies cannot use your medical history or health status to accept or deny coverage or to charge you higher rates. You will have access to any Medigap plan sold in your state. Enrolling at this time usually offers you the best prices and choices between plans.

You can wait to enroll in Medigap until later, but there is no guarantee that insurance companies will accept your application. If they do, they could charge you a higher premium.

Understanding the differences between Medigap plans

There are currently 10 Medigap plan types available across the United States. These are traditionally referred to by letters, ranging from Medigap Plan A to Medigap Plan N. Medigap plans are also standardized. That means all policies with by the same letter will have the same benefits, regardless of which company you buy from. (Please note that some states have different standards for Medigap plans or use different plan names. Be sure to check the specifics of each plan based on where you live.)

All Medigap policies provide some form of the same basic benefits:

• Coverage for hospital coinsurance and costs up to 365 additional days
• Full or partial coverage of your Part B coinsurance or copayment
• Full or partial coverage for your first three pints of blood per year
• Full or partial coverage for hospice care coinsurance or copayments

Outside of these basic benefits, Medigap plans may offer additional benefits, including coverage for your Part A deductible, Part B deductible, coinsurance for skilled nursing care, Part B excess charges and coverage during international travel. The differences between each plan type often come down to the level of cost-sharing, whether there is an out-of-pocket limit and the specific types of costs covered by the plan.

A few Medigap plans, in particular, are quite popular among seniors. Plans A, F, G and N are among the most commonly purchased plans for a few different reasons. Here’s a quick breakdown of the differences between these top-chosen plans:

• Medigap Plan A: Medigap Plan A is a common choice because it is the most basic — and often the least expensive — plan type available. It covers the Part A hospital costs for an additional 365 days after Original Medicare benefits end. Additionally, it covers Part B coinsurance and copayments, the cost of three pints of blood and coinsurance or copayments for Part A hospice care. However, Plan A does not cover other costs like Part A or Part B deductibles or Part B excess charges.
• Medigap Plan F: By contrast, Medigap Plan F is the most comprehensive plan available. This plan covers everything Plan A does, along with both the Part A and Part B deductibles, Part B excess charges and coinsurance for skilled nursing. It also covers costs for emergencies during foreign travel. Unfortunately, Plan F is no longer available for new Medicare enrollees — you can only purchase it if you were enrolled in Original Medicare before January 1, 2020.
• Medigap Plan G: For new Medicare enrollees unable to purchase Plan F, Plan G is the next best thing. There’s one major difference between Plans F and G — Plan G does not cover the Part B deductible. Even with that difference, Plan G is still one of the most comprehensive Medigap plans available.
• Medigap Plan N: Plan N is similar to Plan F and Plan G. However, its benefits lack coverage for the Part B deductible and Part B excess charges. Everything else covered in the above two plans is covered by Plan N.

These popular Medigap plans also vary from some of the other available plans, like Plans K and L. For example, Plan L only offers partial coverage for Part B coinsurance and copayments (75 percent as opposed to 100 percent). But Plan L also has a limit on how much you pay out of pocket. Once you reach this limit, the plan will pay for 100 percent of the cost for covered services.

Useful tips for choosing a Medigap plan

Some seniors may be able to choose from all 10 Medigap plan types. In this case, it might be difficult to know which is the right plan to purchase! If you’re considering a Medigap plan, follow these important steps as you compare your options:

• Consider current and future needs: Many people pass on Medigap because they don’t need the coverage right away. However, it’s important to remember that it might be more difficult to purchase a Medigap plan or switch to a different plan as you get older. Think about what your healthcare and financial needs might be years down the road. You may decide that investing in a Medigap plan now to meet those needs later is a smart choice.
• Compare similar plan types: Several of the Medigap plan types (A through N) might offer similar benefits, such as Plan F and Plan G. By carefully comparing what these similar plan types offer, you can determine which plan type best fits your needs.
• Compare plans from different companies: Some private insurance companies might sell the same Medigap plan (such as Plan A) at different price points. Comparing the potential premiums from multiple different companies across each plan type can help ensure you’re getting coverage for the best price.

Get ready to enroll in a Medicare Supplement plan

You don’t want to miss your opportunity to enroll in a Medigap plan that could reduce your out-of-pocket costs down the road. Whether you’re new to Medicare or looking to change your coverage, now is a great time to research, compare and purchase a Medigap plan. The Medigap plan you choose should come down to your individual health needs and budget.

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