Medicare beneficiaries are familiar with many of the out-of-pocket costs associated with their Medicare coverage. They must pay their Medicare Part B premium each month, and then they also need to pay for deductibles, copayments, and coinsurance amounts when they receive services from a healthcare provider. Many people turn to a Medicare supplement insurance plan, or Medigap plan, to help cover some of these out-of-pocket expenses. As you might expect, there is a cost associated with these Medigap plans. So, how much do they cost? We’ll tell you everything you need to know about the cost of Medicare supplement insurance, plus we’ll provide some additional details about what they cover.
Medicare Supplemental Insurance Costs For 2023
The average cost of a Medicare supplement insurance plan in 2023 is $139 per month. The average Medigap plan in 2023 will cost you about $155 per month. You might be wondering why there is such a wide range in this cost. To fully understand the cost of Medicare supplement insurance, it helps to understand exactly how it works. First, Medigap policies are administered and sold by private insurance companies. While these are standardized plans in most states, these insurance companies are allowed to set their own prices for the plans. These prices can be based on your age, gender, location, medical history, and other factors. In addition, there are ten different types of Medigap plans available. Each provides different coverage details; therefore, they all have different costs. Here are more details about the different costs you can expect with Medigap.
The Medigap monthly premium is typically the highest plan cost associated with your Medigap policy. Your premium depends on many factors, like your current age, gender, location, medical history, and whether or not your plan has an annual deductible. Some Medigap plans provide more comprehensive coverage than others, and those plans also come with higher premiums. Here, we will take a look at average premium prices for each type of Medicare plan. It should be noted, however, that Plan F policies are no longer available to new Medicare enrollees as of January 2020.
- Plan A – $147
- Plan B – $189
- Plan C – $213
- Plan D – $168
- Plan F – $186
- Plan G – $152
- Plan K – $85
- Plan L – $136
- Plan M – $169
- Plan N – $118
Most Medigap plans do not have an annual deductible that you need to meet before the plan begins to pay for things. However, there are a couple of high-deductible plan options that do require an annual deductible to be met. In exchange, your plan premiums will be lower. The only two plans that offer a high-deductible option are Medicare Plan F and Plan G. Remember that Plan F is no longer available to new enrollees, so Medicare Plan G is the only plan that you can purchase new that includes a deductible. For 2023, the Plan G deductible is $2,700. The deductible for Plan F is the same amount. This means that you must pay this amount out of your pocket before your Medigap begins to pay for qualified medical expenses.
One of the great things about a Medigap plan is that there are no copayments associated with the plan. The plans even pay for your Medicare copayment that might otherwise be required. So, suppose you visit the doctor and have a Medicare Part B copayment of $20. Depending on the Medigap coverage that you have, your Medigap plan might pay that $20 copay for you. This helps to lower your out-of-pocket expenses associated with Medicare, and it means that your total health care expenses will generally be lower.
What Medicare Supplemental Plans Cover
Now that you know how much a Medicare supplement plan costs, you are likely wondering just what these plans cover. The coverage details vary based on the specific plan that you choose. Let’s start by looking at what is covered as it relates to your Medicare Part A coverage. Remember that Medicare Part A is hospital insurance that covers inpatient care and hospital stays. All Medigap plans cover your Part A coinsurance amount, and they also provide up to 365 additional days of hospital coverage once your Medicare benefits are used up. Most plans also cover the first three pints of blood as part of a transfusion since Medicare only covers the amount after the first three pints.
All Medigap plans provide coverage for Part A hospice care copayments or coinsurance amounts, and most of the plans pay 100% of this amount. There are a couple of plans that only provide 50% or 75% coverage. Several plans cover your coinsurance amount for care in a skilled nursing facility, and most all Medigap plans will cover your Part A deductible.
Now let’s explore what Medicare supplement plans cover when it comes to your Medicare Part B coverage. Remember that Medicare Part B is traditional health insurance. It covers things like doctor visits, lab tests, and preventive care services. New Medigap policies can no longer cover your Medicare Part B deductible. Medigap Plan C and Plan F can no longer be sold to new Medicare enrollees because both of these plans covered the Part B deductible. If you already have one of these plans, you can keep it. However, new plans can no longer be sold.
All Medigap policies do cover your Part B coinsurance amounts and copayments, and most of them cover these amounts at 100%. A couple of plans — Plan G and Plan F — even cover your Part B excess charges. Remember that Medicare Part B typically pays for 80% of the Medicare-approved amount for outpatient services. If your provider charges more than the Medicare-approved amount, then you might be stuck with the bill for the excess. However, these two Medigap plans will cover the excess amount so that you do not have to pay for it out of your own pocket.
Finally, about half of Medigap insurance plans pay for health care costs related to foreign travel emergencies. This means that if you need to receive emergency treatment while out of the country, some Medigap plans will cover it. Remember that Original Medicare typically only covers services received in the United States. So, without the proper Medigap plan, you might be stuck with a big bill if you need to receive treatment while out of the country.
Services Not Covered By Medicare Supplemental Plans
Even though Medigap plans do provide a wide range of covered services, there are a few things that they do not cover. One of the biggest items no longer covered by new Medigap plans is your Medicare Part B deductible. In fact, the law no longer allows new policies to cover this amount. So, since Plan C and Plan F do cover the Part B deductible, they can no longer be sold to new enrollees.
Another big item not provided by Medicare supplement insurance is prescription drug coverage. Your Medigap policy will not provide any payments for prescription drugs. If you need this coverage, then you should consider enrolling in a Medicare Part D prescription drug plan. Part D plans provide coverage for prescription drugs, and they typically require just a copay for most generic medications.
In addition, Medigap does not cover stays in assisted living facilities. Your Medicare health plan does not cover these expenses either, so you will be forced to pay out-of-pocket for those charges. Some charges related to skilled nursing facilities are covered, but the facility must strictly meet the definition of a skilled nursing facility. Assisted living homes are not covered under that definition.
Finally, Medigap does not provide coverage for dental or vision expenses. These expenses are also not covered by Original Medicare, as it does not provide any dental or vision coverage. Some Medicare Advantage plans provide both dental and vision benefits; however, you cannot be enrolled in both a Medicare Advantage plan and a Medigap policy. You are limited to selecting either one of the other.
Do You Really Need Medicare Supplemental Insurance?
The answer to this question really depends on your specific situation. If you typically visit the doctor often and are required to pay numerous copays throughout the year, then Medicare Supplemental insurance might be a good idea. Similarly, if you receive regular medical treatments that require out-of-pocket costs like coinsurance amounts, then a Medigap policy might be right for you. However, if you rarely visit the doctor, then the monthly premiums associated with a Medigap plan might cost you more than your normal medical expenses would cost.
You can always check with a licensed insurance agent in your local area who can help you explore plan options and determine whether this coverage is right for you. Remember that you might also decide to enroll in a Part C Medicare Advantage plan instead. Many of these plans have low or no premium and an out-of-pocket limit for your medical insurance. Advantage plans are also managed by private insurance companies, so they can set their own rules for costs and coverage, as long as they provide at least the same coverage as Original Medicare.
Eligibility & Enrollment For Medicare Supplemental Insurance Plans
So, who is eligible for a Medicare supplement plan, and how do you enroll? To be eligible for Medigap, you need to be enrolled in Original Medicare. You should be at least 65 years old, and your eligibility starts when you first enroll in Medicare Part B. Remember that younger individuals can also receive Medicare once they have been on Social Security disability benefits for 24 months or are diagnosed with ALS or ESRD. These younger individuals are also eligible for Medigap.
Signing up for a Medigap insurance policy is easy. First, not all Medigap policies are available everywhere. The ones available to you will depend on your ZIP code. You can use the Medicare plan locator tool at www.medicare.gov to find a plan in your area. If you decide to enroll in Medigap coverage, you should go ahead and sign up during the general enrollment period. This period begins when you turn 65 and first sign up for Medicare Part B. It runs for six months. During this time, your Medigap policy is a guaranteed issue policy. This means that you will be guaranteed coverage, and you will pay the same premium regardless of your medical history. However, if you wait and sign up after this period, then your policy will need to go through full medical underwriting. You might pay a higher premium based on your issue age and medical history. You could even be denied coverage completely.
Even if you don’t get signed up during general enrollment, you can still sign up during the annual Medicare open enrollment period. This period runs from January 1 through March 31 each year. Many people who already have a Medicare Advantage plan might wonder whether they can switch to a Medigap policy. The answer is yes. You can switch to Medigap during the Medicare Advantage selection period each year. To enroll, simply contact the insurance company that offers the plan in which you wish to enroll. They can get you signed up for coverage.
The Bottom Line
Medicare supplemental insurance plans are not officially part of the Medicare program. These plans are run by private insurance companies, although the plans are standardized in 47 states. The average Medigap plan in 2023 will cost you about $155 per month, although the costs can vary widely depending on the specific coverage plan that you select. Medigap plans help pay for out-of-pocket expenses like copays and deductibles, and they can end up saving you a lot of money in the long run in some cases.
Frequently Asked Questions
What is the least expensive Medicare supplement plan?
The least expensive supplement plan is the high-deductible Plan G. While Plan G provides some of the most comprehensive coverage of any Medigap plan, the high-deductible plan results in a lower monthly premium. The tradeoff is the fact that you will need to meet a deductible of $2,700 before your plan begins to pay for any of your expenses. Outside of the high-deductible plans, Plan K or Plan N will typically be the next least expensive plan.
What is the most expensive Medicare supplement plan?
Medicare supplement Plan F is usually the most expensive plan because it provides the most comprehensive coverage. Remember that Plan F can no longer be sold to new Medicare enrollees since Medigap can no longer provide coverage for your Part B deductible. Medigap Plan G is typically the most expensive new plan available. The coverage for Plan G is the same as Plan F, with the exception of the Part B deductible.
What is the difference between Medicare supplement insurance and Medicare Advantage?
Medicare Advantage rolls all your Medicare coverage into a single plan. These plans are managed by private insurance companies, and they often provide additional benefits, like vision and dental coverage plus prescription drug coverage. Medicare supplement insurance, on the other hand, is only available for enrollees of Original Medicare. These plans help pay for out-of-pocket expenses associated with your Medicare coverage, such as copays and coinsurance amounts.