Choosing a Medicare Supplement Plan

Medicare Supplements, also known as “Medigap Plans,” are a type of health insurance sold by private insurance companies to cover the gaps in Medicare coverage that would otherwise be your responsibility. These include deductibles, coinsurance and copayments; once Medicare pays its share, these costs are passed on to you.

When you have a Medicare Supplement policy, Medicare is billed first when you access healthcare, and pays its share of approved costs; In general, that amounts to 80%. Medicare then sends the bill for the remainder to the carrier of your supplemental policy. The supplemental carrier then pays the remaining 20%, depending on which of the standard plans you have chosen.

What are the main features of Medicare
Supplement Plans?

     First, the good points:

Choice of care; there are no networks, and you can receive care from any doctor or hospital that accepts Medicare. That includes specialists; referrals are not necessary.

Predictable Costs; there are no unexpected expenses, and the policy is “Guaranteed Renewable.” That means you cannot be dropped if you develop a health condition, as long as you continue to pay the premiums.

     The Limitations:

The only services covered are those approved by Medicare; Since Medicare insurance does not cover routine dental, vision, or hearing services, including routine exams. Supplement Plans don’t, either. There is no coverage for eyeglasses, contact lenses, or hearing aids. There is also no coverage for long term or custodial care. Separate coverage may be purchased for these needs.

Perhaps most noteworthy is the lack of coverage for retail prescription drugs. A separate policy, known as a PDP (Prescription Drug Plan) should be put in place as soon as you are eligible, to avoid late penalties.

What are the Standard plans?

First off, it is important to avoid confusing the parts of Medicare with supplemental plans. Medicare is referred to as Parts, such as “Part B.” Plans are referred to as “Plans, such as “Plan G.”

In 1990, Medicare issued guidelines to be followed by all insurance companies offering Medicare Supplement policies. Within each state, all Medicare Supplement policies have standardized benefits, which are the same from each company. They are identified by the letters, A to N. Below is a chart of standard benefits listed by the official Medicare website.


 

Why Plan F, G, or N?

Plan  F
As shown in the chart above, Medicare Supplement Plan F pays 100% of the costs that would normally be your responsibility. There are no deductibles and no copays. It’s no surprise that this is one of the most popular Plans. It should be noted that it also has a higher cost (premium) than other Plans. Plan F is only offered to beneficiaries who became eligible for Medicare before January 1, 2020.

PLAN  G
This is another very popular Plan; the only difference from Plan F is your responsibility for the Medicare Part B deductible ($203 in 2021).
Plan G Is popular, since the premiums are lower than Plan F. Most beneficiaries find that their savings are greater than $203.

Plan  N

Plan N is popular due to lower premiums. However, there are higher costs to be considered. There are $20 copays for doctor visits and $50 copays for E.R. visits not resulting in admission. However, you are also responsible for any excess charges.

How to Choose a Supplement Plan

With all Medicare Supplement plans being standard, you can know in advance what benefits you will receive with any plan, and can select the one that best fits your needs. The differences between policies from the various companies are:

  1. Premiums charged: Each company charges its own rates for the same coverage, making it fairly easy to compare.
  2. Financial rating: Ratings companies, like A.M. Best, rate insurance companies on their financial strength and claims paying history. These ratings are readily available, and should be part of any comparison.
  3.  Rate increase history: Inflationary pressures cause premiums to increase over time, There are differences among carriers, as to how gradual those increases are. Knowing how reasonable the increases have been over the last few years will help comparisons.

Click here to download a PDF of this Guide.

Please contact me for a free comparison of plans in your area. (434) 373-0051