Medigap or Supplemental Plans – Completing Coverage at Home and Abroad
Medigap or Medicare Supplement plans fill the gaps in coverage in Parts A & B Medicare. Medigap Plans are an important addition for people looking to limit the absolute out-of-pocket exposure and looking for additional benefits like indemnity style coverage while traveling abroad. Here are the 4 key things to know about these important benefits.
One: Medigap plans deliver flexibility in site of care
They are applicable everywhere in the US and provide a generous benefit for emergency care while traveling. Supplements maximize the coverage benefit of original Medicare – and allow tremendous selection for specialist care in the US. If travel and specialized care are important, supplemental plans are a great choice.
Two: All Medigap Plans have standard benefits
There are ten standardized Medigap plans, and they are offered by private insurers to meet the minimum specifications specified by Medicare for each plan type (summarized in the table below). Two of the plans (C and F) are not available to people who became Medicare eligible after January 1, 2020, and I will not include them in this review. The single most important thing to remember about Medigap benefits is: All Medigap benefits are the same, only the price differs.
- Additional Plans C and F are not available to people who were newly eligible for Medicare on or after January 1, 2020 and are therefore not included here.
- Plan G also offers a high deductible plan in some states.
- For Plans K and L, after you meet your out-of-pocket yearly limit and your yearly Part B deductible, the Medigap plan pays 100% of covered services for the rest of the calendar year.
- Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to a $50 copayment for emergency room visits that don’t result in inpatient admission.
Three: The pricing and availability of Medigap plans differ enormously state-by-state
Shown below are comparative pricing and availability based on my profile – a 66-year-old, non-smoking male, with the locales including Nashville, where I currently live, and two venues in the Northeast – Hampden, Maine and Pelham, NY – where I lived in the past. Differences in pricing are based on many factors including:
- Age based rating including
- Community rated (also called “no-age-rated) where the same rate is charged to everyone regardless of age
- Issue-age-rated pricing – where price is determined when you sign up, and only goes up by inflation cost-related increases in the future, and
- Attained-age-rated policies – where price is based on your age annually. This pricing produces the lowest costs for younger beneficiaries.
- Competition in the market and the market pricing and underwriting determination of the individual companies.
In the examples shown below the lowest prices generally correspond to greater availability of competitive products in the market. As an example, I have a Plan G policy which I purchased for $107 per month, where I have a choice of 65 Plan G policies. By contrast, in Hampden Maine I would have only 14 potential policies, with a minimum pricing of $199 per month, 86% above my current levels. In Pelham New York I would have a choice of only 5 policies, with a minimum price of $268 per month, 155% above my current rate. Clearly, location is very important for cost and choice.
Four: Medigap policies are guaranteed issue if purchased within six months of Part B enrollment, and are guaranteed renewal (with policy-wide annual increases).
If you are a new Medicare beneficiary and anticipate the need for supplemental coverage, don’t wait. Get the coverage that you anticipate needing – it may not be available later on.
