What Is the Best Medicare Supplement Plan?

Medicare Supplement (Medigap) plans offer crucial financial protection for individuals enrolled in Original Medicare. These plans help cover some of the out-of-pocket costs that Original Medicare Parts A and B do not fully pay, such as deductibles, copayments, and coinsurance. Medigap policies are sold by private insurance companies and work in conjunction with your existing Medicare coverage. Their primary purpose is to reduce unpredictable healthcare expenses for beneficiaries.

Understanding Medigap Plans

Medigap plans function as supplemental insurance, providing coverage after Original Medicare (Part A and Part B) has paid its share of approved healthcare costs. These plans are standardized across most states, meaning a Plan G, for instance, offers the exact same set of basic benefits regardless of the private insurance company selling it, though premiums can vary significantly. Medigap policies work with Original Medicare and cannot be used with a Medicare Advantage Plan (Medicare Part C).

Medigap policies do not cover all healthcare expenses, such as prescription drugs, long-term care, vision services, dental care, or hearing aids. Beneficiaries typically need to enroll in a separate Medicare Part D plan for prescription drug coverage.

All Medigap plans offer a set of “basic benefits.” These core benefits include Medicare Part A coinsurance and hospital costs for an additional 365 days after Medicare benefits are exhausted. They also cover Part B coinsurance or copayment, the first three pints of blood annually, and Part A hospice care coinsurance or copayment. There are ten standardized Medigap plan types, each identified by a letter (A, B, C, D, F, G, K, L, M, N), representing a distinct package of benefits.

Key Differences Among Medigap Plans

Medigap plans are distinguished by the specific benefits they cover beyond basic requirements.

Plan A offers the foundational basic benefits. It does not cover the Part A deductible, skilled nursing facility coinsurance, the Part B deductible, Part B excess charges, or foreign travel emergency care.

Plan B includes basic benefits and the Medicare Part A deductible. It does not cover skilled nursing facility coinsurance, the Part B deductible, Part B excess charges, or foreign travel emergency services.

Plans C and F are generally only available to individuals who became eligible for Medicare before January 1, 2020.

Plan C provides comprehensive coverage, including basic benefits, the Part A and Part B deductibles, skilled nursing facility care coinsurance, and foreign travel emergency care. It does not cover Medicare Part B excess charges.

Plan D offers similar benefits to Plan C, covering basic benefits, the Part A deductible, skilled nursing facility coinsurance, and foreign travel emergency care. It does not cover the Medicare Part B deductible or Part B excess charges.

Plan F has historically been the most comprehensive option, covering basic benefits, the Part A and Part B deductibles, skilled nursing facility coinsurance, Medicare Part B excess charges, and foreign travel emergency care. A high-deductible version is available, requiring a significant deductible before coverage begins.

For new Medicare enrollees, Plan G is the most comprehensive option available. It covers all benefits of Plan F except the Medicare Part B deductible. Beneficiaries are responsible for this annual deductible before Plan G coverage begins for Part B services. A high-deductible option is also available.

Plans K and L operate on a cost-sharing model, covering a percentage of costs up to an annual out-of-pocket limit, after which they pay 100% of covered services. Plan K covers 100% of Part A coinsurance and hospital costs (up to 365 additional days), and 50% of the Part A deductible, Part A hospice care coinsurance, skilled nursing facility care coinsurance, Part B coinsurance or copayment, and the first three pints of blood. Plan L provides similar coverage at a higher percentage, covering 100% of Part A coinsurance and hospital costs (up to 365 additional days), and 75% of the Part A deductible, Part A hospice care coinsurance, skilled nursing facility care coinsurance, Part B coinsurance or copayment, and the first three pints of blood. Neither Plan K nor Plan L covers the Part B deductible, Part B excess charges, or foreign travel emergency care.

Plan M shares similarities with Plan D, covering basic benefits, 50% of the Part A deductible, skilled nursing facility care coinsurance, and 80% of foreign travel emergency costs. It does not cover the Part B deductible or Part B excess charges.

Plan N offers a balance between comprehensive coverage and lower premiums. It covers basic benefits, the Part A deductible, skilled nursing facility coinsurance, and 80% of foreign travel emergency costs. Beneficiaries are responsible for copayments of up to $20 for some doctor visits and up to $50 for emergency room visits (waived if admitted as an inpatient). Plan N does not cover Medicare Part B excess charges.

Factors When Choosing a Medigap Plan

Choosing a Medigap plan involves considering individual healthcare needs and financial circumstances. If you expect frequent doctor visits or potential hospital stays, a plan with more comprehensive coverage, like Plan G, might offer greater financial predictability and lower out-of-pocket costs, even with higher premiums.

Budget and premium costs play a significant role. Plans with lower monthly premiums, such as Plan N, K, or L, typically involve more out-of-pocket expenses. Conversely, plans with higher premiums generally cover more costs not paid by Original Medicare. Premiums vary by insurance company, geographic location, and age.

All Medigap plans allow you to see any doctor or visit any hospital in the United States that accepts Medicare, providing flexibility without network restrictions. This is a notable advantage over other Medicare options with network limitations.

For frequent international travelers, foreign travel emergency coverage can be important. Several Medigap plans (C, D, F, G, M, N) offer coverage for 80% of medically necessary emergency care outside the U.S., after a deductible, up to a lifetime limit of $50,000.

When evaluating options, some compare Medigap with Medicare Advantage plans. Medigap, combined with Original Medicare, offers predictable costs and the freedom to choose any Medicare-accepting provider. Medicare Advantage plans, as an alternative, often have lower premiums but may involve network restrictions and different cost-sharing structures.

Enrollment Considerations

The most advantageous time to purchase a Medigap policy is during your Medigap Open Enrollment Period. This six-month period begins the first month you are 65 or older and are enrolled in Medicare Part B. During this timeframe, insurance companies are prohibited from denying you coverage or charging higher premiums due to pre-existing health conditions.

If you miss your Medigap Open Enrollment Period, you may still have opportunities to buy a policy through Guaranteed Issue Rights. These rights apply in specific situations, such as losing certain types of health coverage. During these guaranteed issue periods, insurers cannot deny you coverage for health reasons. Outside of these protected periods, an insurance company may use medical underwriting, which allows them to consider your health status and potentially deny coverage or charge higher premiums.

To apply for a Medigap plan, you typically contact private insurance companies directly. It is advisable to compare premiums from different insurers for the same standardized plan, as prices can vary widely. Coverage usually begins on the first day of the month after you apply, though you can often coordinate the start date to align with your Medicare Part B effective date. Some states may have additional regulations regarding Medigap enrollment, which can include rules for individuals under 65 or specific continuous open enrollment periods.