Medicare Supplemental Insurance: 6 Steps To Finding the Right Coverage

Medicare Supplemental Insurance, also called Medigap, is designed to help cover the gaps in your original Medicare coverage. While Medicare provides essential healthcare benefits for seniors and certain individuals with disabilities, it doesn't cover all medical expenses. Medicare Supplemental Insurance can help fill those gaps and provide you with more comprehensive coverage.

This shopping guide is designed to help you navigate the process of choosing the right Medigap plan that suits your healthcare needs and financial circumstances.

Follow these six steps and see how much you can save in out-of-pocket expenses with Medicare coverage.

Key Takeaways Medigap is designed to eliminate or lighten the costs not covered by Medicare. The 2023 enrollment period to buy Medigap plans is October 15-December 7. You cannot buy Medigap if you opt for Medicare Advantage (Part C) over Original Medicare (Parts A + B). Some Medigap plans are no longer offered to new Medicare recipients.

1. Understand Medigap Insurance

Medigap is a type of private health insurance designed to complement Original Medicare (Part A and Part B) coverage, to pay for healthcare costs that Medicare doesn't cover. Medigap can cover copayments, coinsurance and deductibles, sometimes even health insurance emergencies while traveling abroad.

Each company sets a different price on their Medigap plans. However, Medigap policies are standardized by the federal government, ensuring that the basic benefits remain consistent across all plans.

2. Find Out if You’re Eligible for Medigap

Medigap policies are generally available to Medicare recipients. To be eligible for Medigap, you must already be enrolled in both Medicare Part A and Part B. If you’re enrolled in Part C, Medicare Advantage, you cannot buy a Medigap plan.

3. See How Medigap Works With Original Medicare

Medigap complements your Original Medicare coverage, to reduce your out-of-pocket costs that remain after Medicare picks up a tab. When you receive medical services, Medicare pays its share of the approved amount, and your Medigap policy covers the remaining portion, like co-insurance or a deductible. Each plan type has different coverage (see #4)

4. Know Your Medigap Plan Options

Medigap Plans are called Medicare A, B, C, D, F, G, K, L, M, or N. Every plan offered for each plan type offers the same coverage but will carry a different price. This is why it’s important to shop around.

Medicare Part A – Hospital Insurance:

Medicare Part A covers inpatient care in hospitals or skilled nursing facilities (following a hospital stay), home health care services and hospice care services. Part A is premium-free for those who paid Medicare taxes while working. There may be copayments, coinsurance, and deductibles for specific services.

Medicare Part B – Medical Insurance:

Medicare Part B takes care of doctors' services, outpatient care, home health services and various medical services, including preventive care. Unlike Part A, there is a monthly premium for Part B, which is often deducted from a social security income check. Your Medicare card can confirm whether you have Part B coverage.

As a combination, Part A and Part B are commonly referred to as "Original Medicare." Covered services include but are not limited to:

• Visits to a health care provider.
• Stitches, blood tests and X-rays.
• Ambulatory services
• Mental health services
• Durable medical equipment like CPAP machines, oxygen tanks, lift chairs and wheelchairs.

Medicare Part C – Medicare Advantage:

Medicare Part C is an alternative health coverage option administered by private insurance companies authorized and under contract with Medicare. Part C includes Part A and Part B, and often includes prescription drug coverage, vision, dental and hearing as well as health and wellness programs and discounts. There is a monthly premium for these combined services in addition to your Part B premium. Comparing rates based on coverage amounts is highly advised with these types of plans.

Medicare Part D – Medicare Prescription Drug Coverage:

Part D is prescription drug coverage provided by private companies under contract with Original Medicare. Part D is an option for all Medicare beneficiaries but is included in Part C (Medicare Advantage). There is usually a copay or co-insurance with prescription drug coverage.

Some medigap plans cover emergency healthcare while traveling abroad.

Medigap Plan K

Plan K covers:

• 100% of the Part A coinsurance and hospital costs.
• 50% of Medigap benefits related to Medicare Part A, Part B coinsurance/copayment, blood transfusion (first three pints) and skilled nursing facility care.

It does not cover the Part B deductible, Part B excess charges or foreign travel emergency costs.

Plan K pays 100% of Medicare-covered costs for the rest of the policy year after the Part B deductible is met and the plan’s annual maximum out-of-pocket limit is reached ($6,940 in 2023).

Medigap Part N

Plan N covers:

• Medicare Part A deductible,
• Part A coinsurance and hospital stays up to an additional 365 days after Medicare benefits are used up.
• Part A hospice care coinsurance or copayment.
• Skilled nursing facility care coinsurance.
• Blood transfusion (first three pints).
• Emergency health care service for the first 60 days when traveling outside the U.S. Deductible and limitations apply.
• Medicare Part N does not cover the Medicare Part B deductible and copays don't count toward the Part B deductible. Plan N does not have a separate deductible. Plan N covers your portion of the cost for hospice care and skilled nursing facilities.

There is a copay with Part N.

Medigap Part G

Plan G costs much more than Plan N but has much better coverage and no copay as Part N has. Plan G is a better choice for people who go to the doctor often. A high-deductible Part G is also an option, and the deductible is about $2,700.

• Part A coinsurance and hospital stays up to an additional 365 days after Medicare benefits are used up.
• Part A deductible.
• Part A hospice care coinsurance or copayment.
• Skilled nursing facility care coinsurance.
• Blood transfusion (first three pints).
• Emergency health care service for the first 60 days when traveling outside the U.S. Deductible and limitations apply.

Medigap Plan F

People who became eligible for Medicare after Dec. 31, 2019 are unable to buy Plan F, which is very comprehensive and fills coverage gaps in Medicare Parts A and B. Here’s all it covers:

• Medicare Part A coinsurance and hospital costs
• Medicare Part A deductible
• Medicare Part B coinsurance and copays
• Medicare Part B deductible
• Medicare Part B excess charges
• Blood (first three pints)
• Part A hospice care coinsurance and copay (including room and board)
• Skilled nursing facility coinsurance

Medigap Plan M

Part M covers:

• Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up.

• Part A deductible (50%).
• Part A hospice care coinsurance or copayment.
• Part B coinsurance or copayment.
• Skilled nursing facility care coinsurance.
• Blood transfusion (first three pints).
• Emergency health care services for the first 60 days when traveling outside the U.S (80% of foreign travel emergency costs.

Plan M does not cover the Part B deductible.

5. Choosing the Right Plan for Your Needs

Selecting the right Medigap plan depends on your healthcare requirements and budget. Consider factors such as anticipated medical expenses, preferred providers and your ability to pay monthly premiums and out-of-pocket costs.

Keep in mind that you may not be eligible for certain Medigap plans based on your Medicare eligibility date.

6. Shopping for Medigap Insurance

Enrollment Periods

There are specific periods during which you have the right to enroll in a Medigap plan without medical underwriting. The most common period is the Initial Enrollment Period (IEP), which lasts for six months and begins on the first day of the month in which you're both 65 or older and enrolled in Medicare Part B.

The 2023 enrollment period is October 15-December 7.

How to Compare Medigap Plans

Comparing Medigap plans can help you find the most suitable coverage. Enter your zip code on this page to compare several plans at once to find the most affordable plan that meets your needs.

Medigap Vs Medicare Advantage: Pros and Cons

Since you cannot buy both, it’s important to go over the pros and cons of both types of plans to see which will save you the most money based on your needs. Here are the pros and cons of each:

Medigap (Medicare Supplement) Plans:

Pros

• Freedom of Choice: Medigap plans offer more flexibility in choosing healthcare providers because they generally do not have restricted networks. You can see any doctor or specialist that accepts Medicare.
• Predictable Costs: With Medigap, your out-of-pocket costs are more predictable because most plans cover Medicare's cost-sharing, such as copayments and deductibles.
• No Referrals: Medigap plans do not require referrals to see specialists. You can directly access specialists without a primary care physician's approval.
• Portability: Medigap plans are generally portable, allowing you to use your coverage across state lines. This is useful if you travel frequently or split your time between different states.
• Simplicity: Medigap plans are straightforward and easy to understand. You pay your premium and use your Medicare card alongside your Medigap policy for coverage.

Cons

• Higher Premiums: Medigap plans typically have higher monthly premiums compared to Medicare Advantage plans. While they provide comprehensive coverage, you pay more upfront.
• Separate Drug Coverage: Medigap plans do not include prescription drug coverage (Part D). To get drug coverage, you need to purchase a standalone Part D plan, which is an additional cost.
• Limited Additional Benefits: Medigap plans focus on covering Medicare's cost-sharing, so they do not offer additional benefits like dental, vision, or fitness programs.
• No Portability for Part D: If you move to another state, your Medigap coverage remains portable, but your standalone Part D prescription drug plan might not be as flexible. You may need to switch to a different Part D plan.

Medicare Advantage Plans:

Pros

• Cost Savings: Medicare Advantage plans often have lower monthly premiums than Medigap plans, potentially resulting in cost savings.
• All-in-One Coverage: Medicare Advantage plans combine hospital (Part A) and medical (Part B) coverage, and many include prescription drug (Part D) coverage. Some also offer additional benefits like dental, vision, and fitness programs.
• Coordinated Care: Medicare Advantage plans often include coordinated care, which can be beneficial if you prefer having one primary care physician overseeing your healthcare.
• Drug Coverage: If prescription drug coverage is a priority, Medicare Advantage plans may be more cost-effective, as many include Part D coverage.
• Extra Benefits: Some Medicare Advantage plans offer extra benefits like transportation services, gym memberships, and wellness programs.

Cons

• Network Restrictions: Medicare Advantage plans often have provider networks. You may need to use healthcare providers and facilities within the plan's network, limiting your choice of doctors and specialists.
• Potential Cost-Sharing: While Medicare Advantage plans may have lower monthly premiums, you may face copayments and coinsurance for services. These out-of-pocket costs can add up, making it challenging to predict your healthcare expenses.
• Geographic Limitations: Some Medicare Advantage plans are geographically limited, which means they might not cover you if you're out of the service area, such as when traveling or spending time in a different state.
• Referrals and Prior Authorizations: You may need referrals from a primary care physician to see specialists or require prior authorizations for specific treatments. This can be cumbersome if you prefer direct access to specialists.
• Changing Plans: You're locked into your Medicare Advantage plan for a calendar year, and making changes outside of the annual enrollment period can be limited.

Cost of Medicare Plans

Medicare Plan Type	Cost
Medicare Supplement Plan A	$181 - $380
Medicare Supplement Plan B	$238 - $329
Medicare Supplement Plan C	$288 - $364
Medicare Supplement Plan D	$290 - $334
Medicare Supplement Plan F	$278 - $495
Medicare Supplement High-Deductible Plan F	$70 - $156
Medicare Supplement Plan G	$241 - $413
Medicare Supplement High-Deductible Plan G	$70 - $148
Medicare Supplement Plan K	$82 - $189
Medicare Supplement Plan L	$172 - $279
Medicare Supplement Plan M	$268 - $314
Medicare Supplement Plan N	$196 - $320

^{Source: Medicare.gov Medicare plan finder}

4 More Ways To Save Money on Medigap

1. Compare rates. Use SmartFinancial to see which insurance company has the best rates available.
2. Choose a company that uses issue-age-rating to set your premiums so your cost stays the same each year.
3. Get a discount if you and a spouse are both enrolled in Medicare.
4. Choose a Medicare Select policy if your state offers them. Medicare Select policies are available for all letter-plan types and generally cost less than regular Medigap plans but you’ll have to receive in-network care within a smaller network.