Medicare Supplement Plans and Out-of-Pocket Costs

Last Updated : 12/03/20197 min read

Medicare Supplement, or Medigap, insurance may help cover certain out-of-pocket costs that come with Original Medicare, Part A and Part B. Original Medicare covers a wide range of hospital and medical services, but it doesn’t cover all costs, and you’re still responsible for certain expenses such as deductibles, copayments, and coinsurance costs.

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In addition to cost-sharing, some Medicare Supplement plans may pay for services and items that Medicare doesn’t cover, such as the first three pints of blood or limited emergency medical care out of the country (80% up to plan limits). In these situations, you might normally pay the full cost out of pocket.

Medicare Supplement plans work alongside your Part A and Part B coverage to fill some of these “gaps” in coverage. However, this coverage comes with its own out-of-pocket costs. Depending on the type of Medicare Supplement plan you get, this may include premiums, deductibles, and more. Here’s a look at some of the out-of-pocket costs that may come with your Medicare Supplement coverage.

Medicare Supplement plans and premiums

Medicare Supplement insurance is available from private insurance companies. Most states offer up to 10 standardized plan types, and benefits are the same across each plan of the same letter. For example, a Medicare Supplement Plan D will be the same no matter where you live or which insurance company you get it from.

Your Medicare Supplement plan typically includes a monthly premium, which is the amount you pay for your Medicare Supplement coverage. In general, premiums for plans with more coverage will be higher, although premiums may vary among plans and geographic areas. So, for example, a Medicare Supplement Plan A, which is the most basic plan, will typically cost more than a Medicare Supplement Plan F, which is the policy with the broadest coverage. Some states have Medicare SELECT plans available, which is a type of Medicare Supplement plan that uses provider networks. If you enroll in a Medicare SELECT plan, your premiums will typically be lower (note that this plan type may not be available in every location).

Other facts may affect the amount you pay for your premium, including the timing of when you enroll in your plan and whether you do it outside of your Medicare Supplement Open Enrollment Period; whether you have guaranteed-issue rights; whether you have pre-existing health conditions; and how the insurance company prices its premiums. It’s important to ask the company how it sets its premiums, since this can affect how much you pay both when you enroll and later on.

Please note that you’re generally still responsible for any costs related to your Original Medicare coverage that aren’t covered by your Medicare Supplement plan, such as Medicare Part B premiums (and Part A, if you pay a premium for it). This coverage is separate from your Medicare Supplement insurance.

Medicare Supplement plans and deductibles

Most of the standardized Medicare Supplement plans available in most states don’t require a deductible (the amount you pay out of pocket before your coverage starts). However, Medicare Supplement Plan F has two versions – a standard plan and a high-deductible version. If you decide to get the high-deductible option for Plan F, you’ll need to reach a yearly deductible of $2,340 in 2020 before your Medicare Supplement plan benefits start. This means you’ll generally pay for all out-of-pocket costs for Medicare-covered services until you’ve hit the deductible for that year.

But Medicare Supplement Plan F is being phased out, along with Plan C. If you’re not eligible for Medicare until January 1, 2020 or later, you won’t be able to buy Plan F or Plan C.  If you’re eligible for Medicare before that date, you may be able to buy Plan F or Plan C. You can keep your existing Plan F or Plan C if you have one.

A new high-deductible Medicare Supplement Plan G might be available in 2020.

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Other Medicare Supplement out-of-pocket costs

As you’re comparing Medicare Supplement options, this Medicare Supplement plan comparison chart may come in handy, which lists out benefits for each plan side by side. Your overall costs under Medicare will be determined by the level of coverage of your Medicare Supplement plan. If you get a Medicare Supplement plan with more comprehensive coverage, most of your out-of-pocket costs in Original Medicare will be covered. However, on the flip side, these plans tend to have higher premiums for that broader coverage.

Typically, if a benefit is listed as covered, the plan may pay for 100% of the cost (for example, Medicare Supplement Plan A pays for the full cost for your Part B coinsurance or copayments). However, there are exceptions that could affect your out-of-pocket costs. For example:

  • Medicare Supplement Plan K and Plan L offer partial coverage for certain covered benefits. Some plan benefits are only covered at 50% or 75%, respectively. You’re responsible for paying the remaining amount.
  • Medicare Supplement Plan K and Plan L come with out-of-pocket limits. After you reach the yearly limit, your plan typically pays for all costs for covered services for the rest of the year. In 2020, the annual out-of-pocket limit for Plan K is $5,880; the limit for Plan L is $2,940.
  • Under Medicare Supplement Plan N, you may still a copayment of up to $20 for certain office visits and a copayment of up to $50 for emergency room care that doesn’t result in you being admitted as an inpatient.

Some plans in certain states may offer optional riders for vision or dental coverage; these benefits usually come with a separate cost. Keep in mind that these benefits may not be available in every location, as plan availability varies by state.

How to lower your Medicare Supplement out-of-pocket costs

Here are some ways you might be able to reduce your Medicare Supplement out-of-pocket costs:

  • If possible, enroll during your Medicare Supplement Open Enrollment Period (the six-month period that starts once you’re 65 or older and have Part B). You’ll typically have the most plan options during this time frame, since insurance companies can’t deny you coverage or charge you more because of health problems.
  • If you’re enrolling outside of your Medicare Supplement Open Enrollment Period, find out if you have a qualifying situation for guaranteed-issue rights, which let you get any plan sold in your location even if you have health problems.
  • Find out if the insurance company offers discounts. Some Medicare Supplement companies may offer reduced rates for non-smokers, women, or married couples. Other companies give discounts if you pay with electronic transfer or have more than one policy.
  • Consider getting a Medicare SELECT plan. If you don’t mind using doctors or hospitals from a provider network, your premiums could be less.
  • Take the time to research Medicare Supplement plan options. Because plan types are standardized, benefits are the same across plans of the same type, so the only real difference is the premium cost.

If you’d like help finding a Medicare Supplement plan that could help with your out-of-pocket costs, you may have a few options. Use the links below to set up a phone call with me to discuss your Medicare needs, or request an email with plan options that fit your budget. The Compare Plans or Find Plans buttons on this page will let you view plan options in your location right now at your own convenience.

The product and service descriptions, if any, provided on these eHealth Insurance 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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