How Much Money Could a Medicare Supplement Plan Save Me?

Steven Mott by Steven Mott | Licensed since 2012
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This article was updated on: 09/16/2018

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Figuring out how much money a Medicare Supplement plan might save you might take some work on your part, but in some cases you may find it makes economic sense for you to buy one.

What is a Medicare Supplement plan?

Medicare Supplement (also known as Medigap) plans are offered by private insurance companies and can help you pay for out-of-pocket costs for services covered under Medicare Part A and Part B. These out-of-pocket costs can include: deductibles, coinsurance, copayments, hospital costs after you have exceeded your Medicare-covered days, skilled nursing facility costs, and more.  Some Medicare Supplements offer additional benefits not covered by Medicare Part A and Part B, such as limited coverage for emergency medical services when traveling abroad.

If you already have Medicare Part A, which generally helps pay for hospital services, some skilled nursing facility services, and hospice care, and Medicare Part B, which generally helps pay for medical services such as doctor visits and outpatient diagnostic services, you are eligible to apply for a Medicare Supplement plan. (However, your acceptance into a plan is not always guaranteed – click here for details.)

You may have a number of Medicare Supplement plan options to choose from, depending on where you live. With the exception of Massachusetts, Minnesota and Wisconsin, which have their own standardized Medicare Supplement plans, Medicare Supplement plans come in 10 standardized benefit plans, identified by alphabetical letter. An insurance company does not have to offer all 10 standardized benefit plans, and not all plan types may be available where you live.   However, each standardized Medicare Supplement plan must offer the same standard benefits, no matter which insurance company sells it.

The cost of a Medicare Supplement plan—that is, the monthly premium—may vary, depending upon the insurance company offering the plan, where the plan is offered, and the standardized benefits offered.  Typically the more coverage the plan provides, the higher the premium it charges.

To learn what each Medicare Supplement plan covers, you may want to review the Medicare Supplement plan comparison chart. You can also find out which Medicare Supplement plans are offered where you live and their costs by clicking Compare Plans on this page and entering your zip code.

How do you figure out how much money you might save with a Medicare Supplement plan?

To estimate your savings with a Medicare Supplement plan, you will want to consider several factors based upon your health-care experience and what you can reasonably predict about your future health-care and coverage needs. You may want to gather your medical bills and your quarterly Medicare Summary Notices for the past year or so before you get started.

  1. How much do you pay for medical expenses not covered by Medicare? Add up your Medicare Part A and Part B deductible amounts, as well as your Part A and Part B coinsurance, and copayments.
  2. Has your health status changed recently? Are you more likely to need more medical care now than you did last year?
  3. Do you expect to have many doctor visits? To spend time in hospitals or skilled nursing facilities? To need durable medical equipment covered under Medicare Part B?
  4. Which Medicare Supplement plans (if any) would be most beneficial to you in filling the gaps in Part A and Part B coverage?
  5. Is the cost of the Medicare Supplement plan—that is the monthly premium—lower than what you would expect to pay out-of-pocket for care without a Medicare Supplement plan?

You may want to sort your expenses into categories such as:

  • Medicare Part A-related costs, such as hospital stays and skilled nursing care
  • Medicare Part B-related costs, such as physician care, diagnostic tests, outpatient therapies and durable medical equipment
  • Prescription medications that you take at home. These are generally excluded from Medicare Part A and Part B in most situations, and Medicare Supplement plans sold today don’t cover prescription drugs. Find out about signing up for prescription drug coverage under Medicare Part D.

Review what Medicare Part A and Part B coverage includes and what your potential out-of-pocket expenses may be. Medicare generally provides broad insurance coverage, including 100% coverage for certain preventive services such as annual wellness exams from your doctor and flu shots; however, it doesn’t pay all your health-care expenses. Your out-of-pocket costs that Medicare does not pay include (but may not be limited to):

Deductibles.  The Part A deductible for an inpatient hospital stay is $1,340 (for 2018) benefit period.  A benefit period begins the day you are admitted into a hospital or skilled nursing facility and ends 60 days after the last day you received hospital or skilled nursing care.

In 2018, the Part B deductible is $183 per year. Before Medicare starts paying for most covered hospital or medical services, you must pay the deductible.  Certain preventive care services are exempted from the annual deductible and covered by Medicare at 100%.

Copayments and/or coinsurance.  Part A copayment amounts vary based on the length and location of stay.  Copayments for inpatient hospital stays (in 2018) are $0 per day for days 1 – 60, $335 per day for days 61 – 90, and $670 per day for a limited time after that.  The copayment for skilled nursing facility stays (in 2018) is $0 per days 1 -20, $167.50 per day for days 21- 100. Medicare Part B generally covers 80% of outpatient medical services, durable medical equipment and supplies, and you pay the 20% balance.

The first three pints of blood. If you require a blood transfusion, unless the blood is donated, you may have to pay the expenses associated with the first three pints of blood. Medicare pays for any additional blood transfusions needed.

Part B excess charges above the Medicare-approved amount for a covered service you receive if the provider is allowed to charge more than the Medicare-approved amount.

Certain emergency medical services you receive outside the country.

Compare the Medicare Supplement plans that are available where you live.   Pay particular attention to Medicare Supplement plan standardized benefits that fill a coverage gap that you know exists or is likely to exist in the future.  This way you can focus on the standardized benefits that are most beneficial to your circumstances and concerns. Once you have identified the standardized benefit plan that is most suitable to your needs, compare the premiums of insurance companies that offer the standardized Medicare Supplement benefit plan. Remember, premiums can be significantly different among insurance companies even though they are offering identical coverage.

I would be happy to help you if you want to learn more about Medicare Supplement insurance.

  • You can use one of the links below to set up a phone call with me or request personalized information from me by email.
  • You can also do some research on your own to get familiar with Medicare plan options in your area by clicking on the “Compare Plans” button on this page.

The purpose of this communication is the solicitation of insurance.  Contact will be made by an insurance agent/producer or insurance company.

Medicare Supplement insurance plans are not connected with or endorsed by the U.S. government or the Federal Medicare program.

The product and service descriptions, if any, provided on these Medicare.com Web pages are not intended to constitute offers to sell or solicitations in connection with any product or service. All products are not available in all areas and are subject to applicable laws, rules, and regulations.

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