Medicare Cost Plans versus Medicare Supplement Insurance Plans

Pamela Cannaday by Pamela Cannaday | Licensed since 2011
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This article was updated on: 10/06/2018

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There are many different ways to get your Medicare benefits. Depending on where you live, your choices could include Original Medicare, Medicare Supplement Insurance Plans, Medicare Advantage, and Medicare Cost Plans. This article will compare two plan types, Medicare Cost Plans and Medicare Supplement Insurance Plans, to help you decide which is right for you.

What are Medicare Supplement Insurance Plans?

As you’d guess from the name, Medicare Supplement Insurance Plans (also known as Medigap) supplement your coverage under Original Medicare. Depending on the plan you choose, it may cover some of your out-of-pocket expenses under Part A and Part B.

These are not stand-alone plans—you must be enrolled in Part A and Part B to purchase Medigap—and they can’t be combined with Medicare Advantage. Medicare Supplement Insurance Plans are standardized at the federal level, which means that Plan A in Alabama has the same basic benefits as Plan A in Wyoming, for example. Some states (Massachusetts, Minnesota, and Wisconsin), however, do have their own versions of certain plans.

You pay a separate monthly premium for your Medicare Supplement Insurance Plan. Some plans also have an annual deductible before benefits kick in.

What are Medicare Cost Plans?

If you’ve never heard of Medicare Cost Plans, you’re not alone. These plans are only available in certain parts of the country, and many of them will be phased out as of January 2019 and transition to Medicare Advantage.

In some ways, Medicare Cost Plans work like Medicare Advantage Plans. You have to use network providers to be covered by the Cost Plan, but if you go out of network, your covered expenses are paid by Original Medicare, after you meet your deductible and coinsurance amounts.

You can join a Medicare Cost Plan even if you only have Part B, and you can switch between Medicare Cost Plans and Original Medicare at any time. Premiums are determined by the plan itself, and you have to pay your Part B premium in addition to any premium charged by your plan.

Medicare Cost Plans vary significantly. For example, some cover only Part B services. Plans may or may not include Part D coverage for prescription drugs. You may or may not have an annual deductible and your cost-sharing structure is also determined by the plan. These plans are usually offered by unions or employers as part of their group health insurance coverage, and each plan has its own rules, restrictions, and exemptions, so it’s important to talk to get all the details about any plan you’re interested in before you make a decision.

You may be able to combine Medicare Cost Plans with a Medicare Supplement Insurance Plan depending on how claims are handled. If your plan processes claims through Original Medicare, you may be able to enroll in a Medicare Supplement Insurance Plan. If the plan processes claims through Medicare Advantage, however, you cannot enroll in a Medicare Supplement Insurance Plan. Be sure to ask your plan administrator how claims are managed if you are interested in a Medicare Supplement Insurance Plan.

Need more information about Medicare Cost Plans and Medicare Supplement Insurance Plans?

I am happy to help you find the information you need about Medicare Supplement Insurance Plans; you can schedule a phone call or request an email by clicking on the buttons below. You can also find out about Medicare plan options in your area by clicking the Compare Plans button.

The provider network may change at any time. You will receive notice when necessary.

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