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Understanding Medicare Supplement Plans

Welcome to Medicare! If you have already turned 65 or have a 65th birthday coming up, you’ve probably noticed a sudden increase in your mail telling you about your Medicare options and describing things like Medicare Supplement plans and Medicare Part D plans. For many, the whole topic can seem a little overwhelming, but understanding how Medicare works and what your benefits are is important to make sure that you end up with the best Medicare Supplement plan for you.

Medicare Supplement Plans – Medicare Basics

So what are the basics of Medicare? Medicare is a federal health-care program for people age 65 and older. There are several parts to Medicare, including Part A, Part B, Medicare Supplement plans, MA plans and Part D plans. Part A covers hospital stays, inpatient procedures and care in a skilled-nursing facility. Hospice care and some in-home health care are also covered by Part A. Part B is medical insurance that covers care from health-care providers, outpatient procedures, and some other things. Many preventative services such as mammogram and colonoscopy are covered by Part B.

Medicare Part A and Part B cover most but not all of the medical expenses you might incur. For that reason, there are Medicare Supplemental plans that are sold by private insurance companies. These policies are sometimes called Medigap plans because they fill in the “gaps” in Medicare coverage. There are also Part D plans that cover prescription drugs. More recently, plans called MA have been made available that offer an alternative to Original Medicare. With an MA plan, a private insurance company provides the benefits you would receive from Part A and Part B, along with additional benefits such as prescription drug coverage.

Choosing a Medicare Supplement Plan

Part A and Part B will not cover 100% of your health expenses, and you will pay something for any care you receive in the form of deductibles, co-pays, and co-insurances. For example, if have Part A and Part B only and you are admitted to the hospital, Medicare will cover most of your costs, but you will pay a deductible of $1,316 in 2017. More importantly, that deductible applies to a 60 day benefit period, so you could pay it more than once in a year if you had multiple hospital stays.

Medicare Supplement plans to cover costs such as the Part A deductible, as well as co-pays and co-insurances related to Part B services. There are ten Medicare Supplemental plans currently available — A, B, C, D, F, G, K, L, M, N, and a high-deductible version of Medigap Plan F — each offering a different combination of benefits. The Medigap plans are sold by private insurance companies and are standardized, meaning the benefits of each type of Medicare plan do not vary from company to company, regardless of the cost.

Medicare Supplement Plans Comparison Chart

The flexibility and transportability of Medicare Supplement plans are one of the things that make them attractive to many seniors. For retirees hoping to spend their hard-earned retirement traveling the country – or even venturing abroad – Medicare supplemental plans provide the ideal solution to insurance coverage concerns. These Medigap plans are accepted by any doctor or hospital anywhere in the country that accepts Medicare, and there is no referral required. For snowbirds who summer in the north but head south or west in the winter, there are no worries about being “out of network,” because Medigap plans have no networks to worry about.

There are two other ways in which Medicare Supplement plans offer seniors peace of mind. The plans renew automatically, and the companies are prevented from canceling your policy as long as you pay your premiums. So, as long as you are happy with your Medigap plan, you can forget about your insurance and move onto things you’d rather be doing. And, if you’re not happy, there is a 30-day money-back guarantee in most states, which allows you to get a quote on and choose a different Medicare Supplemental plan.

Medicare Supplement insurance is extremely popular and customer satisfaction is very high. According to the America’s Health Insurance Plans (AHIP) 2014 Medicare Enrollee Survey, 94% of Medicare beneficiaries across all plans and providers are satisfied with the coverage provided by their Medicare Supplement plan and 91% would recommend Medigap plans to a friend or relative turning 65. Doctors and hospitals like the ease of working with supplemental plans and appreciate the fact that they have been very stable, with very few, if any, changes to coverage from year to year.

The Most Popular Medicare Suppl­ement Plans

There are 11 Medicare Suppl­emental plans available, each offering a different combination of benefits. Three of these plans, described below, offer compelling combinations of benefits that have made them the favorites of many seniors.

Medicare Supplement Plan F

Medicare Suppl­ement plan F is by far the most popular of the Medicare Supplemental plans, perhaps because it is the most comprehensive. According to a 2015 report by AHIP, 57% of the Medigap policies purchased are F plans. With a Medicare plan F, you have virtually complete coverage, with no co-pays, no deductibles and no coinsurance costs associated with any medical service whatsoever. From a visit to the doctor for a flu shot to a stay in the hospital, you will likely have no bills coming in if you have a Medicare Supplement plan F. In each state in the country, Medicare Supplement plan F is offered by multiple providers. The rates vary from one company to another, but the benefits of the plan are standardized. So, once you pay your monthly premium, you can relax, knowing that, no matter what happens, you are covered. If you are looking for a plan with soup to nuts coverage that will require little attention, a Medicare plan F plan is worth a look.

Medicare Suppl­ement Plan G

Medicare Supplement plan G is a newer plan than Medicare plan F, but compares very favorably, offering similar benefits. In fact, the only difference in these two Medicare Supplement plans is that Medicare plan G does not cover the Part B deductible ($183 in 2017.) Other than that, however, the benefits are identical, meaning that there are no co-pays or co-insurances associated with doctor visits and no deductible for hospitalization. According to CSG Actuarial, Medicare Supplement plan G has grown in popularity over the past few years and is expected to continue gaining ground. The primary reason for this growth is that the rates for some Medicare plan G plans are low enough that the savings over a Medicare plan F plan will cover the cost of the Part B deductible.

Medicare Supplement Plan N

Introduced in 2008, Medicare Suppl­ement plan N offers another interesting alternative to Medicare plan F. In exchange for lower rates, Medicare plan N has increased cost-sharing for some of the benefits. A key feature of plan N is that you pay up to a $20 copay for office visits and up to $50 for emergency room visits. Aside from that, the plan pays 100% of your Part B costs. For many people who are just aging into Medicare, this type of plan is similar to employer plans that often have co-pays associated with services.

Another difference from Plan F is that Medicare Supplement plan N does not cover excess charges. That means that, if a health-care provider you see does not accept Medicare assignment, they could charge you up to 15% more than what Medicare will reimburse them for. Excess charges are not permitted in some states, but if they are allowed where you live, you can avoid extra costs by selecting doctors who accept Medicare assignment.

Where to Purchase Medicare Supplement Plans

In every state, there are a number of insurance companies that sell Medicare Supplement policies, but not all companies are created equal. When you are making a decision about something as important as your health-care, you want to think carefully about the company you choose to do business with. Working with a well-known, national company such as the ones below provides some important benefits.

These insurers are household names, have been around long enough to establish stellar reputations around the country. They offer all of the Medigap plans, and their size allows them to offer very competitive rates. Another benefit of working with a large, well-established insurance company is the resources that they bring to the table, including state of the art technology, online resources, fast quotes and high-quality customer service. If you want the best Medicare Supplement plans you can get, it makes sense to work with a top company. Working with a licensed insurance agent, you can review the offerings and compare the rates from these companies to get a clear picture of your choices.

Paying for a Medicare Supplement Plan

Getting Medicare supplement insurance with good coverage is important, but the cost is also a consideration. When you start shopping for a Medigap policy, one thing that you will notice is that, while the policies are standardized, the prices are not. The costs of Medigap Plan F, for example, vary widely, so it is important to remember that the policies themselves are identical. You do not get anything more for paying more.

Let’s take a look at what Martha, a 65-year-old retiree living in Dallas, Texas would pay each month for Medigap plan F and Medigap Plan G from three top Medicare Supplement plan insurance providers:

Martha’s Costs

Plan F                              Plan G

Company A $126          $102

Company B $142          $112

Company C $158          $114

As the chart shows, there are big differences in cost from one company to the next. In Texas, Martha’s husband, Harry, who is the same age, could be charged higher rates by these same companies, for the same policies. Because Martha and Harry are non-smokers, they are getting lower rates than smokers would pay.

Harry’s Costs

Plan F                              Plan G

Company A $143           $116

Company B  $164          $129

Company C  $177           $128

*quotes are not endorsed or sponsored by any insurance company; we provide information based on our professional opinion

Locating the Best Medicare Supplement Plans

When you are reviewing plans with a company representative or an agent, be sure to ask about ways in which you can save on your policy. Some companies offer discounts for couples and first-time customers while others provide free or discounted gym memberships. Inquiring about the plan’s history of rate increases will also provide insight into potential cost increases in the future.

Finding the best Medicare Supplement plan isn’t a matter of luck, it requires some effort on your part. But instead of spending your valuable time getting quotes from a lengthy list of insurance companies and spending hours online trying to compare prices, why not work with an experienced, licensed insurance agent? An agent has all of the online resources necessary to compare quotes, obtain reviews and find the best Medicare Supplement plan for you.