What is a Medicare Supplement plan?
If you’re concerned about the out of pocket costs associated with Medicare, a Medicare Supplement plan is a great way to protect yourself from that. A Medicare supplements entire job is to pay the “gap” in Medicare A&B, leaving you with no out of pocket expenses. This is why Medicare Supplements are often referred to as “Medigap.” A Medicare Supplement and Medigap are the same things.
Understanding Medicare Supplement Insurance
The Medicare Supplement policy you purchase must be clearly identified as “Medicare Supplement Insurance.” There are 10 different Medicare Supplement coverage options to choose from. Plans are labeled A, B, C, D, F, G, K, L, M, and N (Plans E, H, I, and J are no longer available). However, most people find either Plans F/G/N to be the most economical.
Tip- Every Insurance Company selling a Medicare supplement plan type in your area MUST offer the same coverage, but they vary wildly in price. So, you may want to shop for the best price.
Which Medicare Supplement plan is the best for me?
First, the reason why most people have either F/G/N is that the other lettered plans have insufficient enrollment numbers and what that causes, is for you to pay higher premiums for less coverage under those programs, merely because they aren’t balanced books of business. Now addressing F/G/N
-Plan F, pays 100% of everything Medicare A&B doesn’t pay, you never spend a penny.
Plan F is a convenience plan, it comes at a pretty hefty premium, along with the highest rate increases, and is not cost effective. It is pushed by a lot of agents, just because it pays the highest commission.
-Plan G, Plan G is what makes the most sense for most people. Plan G, you pay a once a year annual deductible (The Medicare Part B deductible) of $183, and you have 100% coverage after that. So whatever the first $183 of medical bills are in a years’ time, is your responsibility, after that, you have 100% coverage. The reason G is so economical is the premium savings between F&G always dramatically exceeds your deductible of $183; Also, G has much lower rate increases than F.
Plan N, Plan N introduces cost sharing. So you have to pay the $183 ( Medicare Part B deductible) e once a year, you have a co-pay for the doctor’s office, and the Emergency Room. The co-pay for the doctor’s office is 20% of the bill up to $20, and the Emergency room is 20% of the bill up to $50. One flaw with plan N is that it also does not cover “Medicare Part B Excess charges” as plan F and G do. The Excess charges are rare, but you can run into them if a specialty center does not accept Medicare assignment. So that can end up leaving you with extra bills.
When can I sign up or change a Medicare Supplement?
- You can sign up for a Medicare supplement when you first start Medicare, which most people do at age 65 or after they retire after age 65. When you sign up this way, a company cannot ask you health questions and must issue you a policy.
- You can change a Medicare Supplement plan at any time during the year. Even outside of Open Enrollment. The only contingency is you must be healthy enough to pass underwriting. Working with a competent and professional agent will ensure you have as many options as possible when trying to save money on your Medicare Supplement.
- Finally, some Guaranteed issue rights allow someone to purchase a select few Medicare supplement plans without passing underwriting. Most of these involve involuntarily losing your coverage and are something most people will never encounter.