Medicare Supplement Plans: The Basics

Image source

Medicare is a government health insurance program in the United States that subsidizes healthcare services. Eligibility is determined by a number of factors. But in general, anyone who has lived legally in the United States for at least five years and is 65 or older is eligible for Medicare coverage. 

After California and Florida, Medicare Texas has one of the highest enrollments in 2020. In 2020, the beneficiaries of Medicare in Texas were over four million. Also, 43% of the beneficiaries have the Medicare Advantage plans in Texas. 

Private companies that have received approval from Medicare to sell Medicare Advantage Plans in Texas or any state for that matter, must abide by the rules established by Medicare.

What is a Medicare Supplement Plan?

Image Source

Medicare Supplement plans and Medigap are used interchangeably. They are health insurance policies that limit the amount you will pay for medical services once you become a Medicare beneficiary.

Remember that Medicare Supplement insurance plans can only be used to pay for original Medicare costs; they cannot be used in conjunction with Medicare advantage plans.

When you use medical services while you have Medicare supplement insurance, Medicare pays first, followed by your Medicare supplement plan for any remaining covered costs.

To enroll for a Medicare Supplement Plan, you must be on the original Medicare plan. State insurance departments supervise Medicare supplement plans. Also, plans are standardized, but prices vary depending on where you live.

Difference Between Medicare Advantage and Medicare Supplement Plan

Although the Medicare advantage and Medicare supplement plans are alternatives to original Medicare, they are different.

Medicare has parts A, B, C, and D. While parts A, B, and D are offered by the government. Private companies provide Part C. Part C is also called Medicare advantage.

Medicare advantage plan is a way of getting Medicare part A and B coverage from private companies. It combines Medicare Parts A and B into a single plan to provide complete coverage. It frequently includes Part D Prescription Drug coverage as well. These are also known as Part C plans.

On the other hand, Medicare Supplement insurance policies, commonly known as Medigap policies, cover out-of-pocket expenses not covered by Original Medicare (Part A and B). It is not part of the government’s Medicare program, but it supplements it.

There are ten Medicare supplement plans. Each of the ten plans is identified by a letter, and the current plans are A, B, C, D, F, G, K, L, M, and N.  While plans G, F, and N are more popular, plans C and F are no longer accessible to new Medicare beneficiaries.

Hence, if you only have the original Medicare plan, you can’t access some benefits and will still need to pay for them. But with the Medical Supplement Plan, this gap can be filled. 

Note: Both Medicare Supplement and Medicare advantage plans cannot be bought at the same time. You can only have one .

Basic Medicare Supplement Plans

When selecting Medigap coverage, keep in mind that it is not a one-size-fits-all solution for coverage. Medicare has approved ten different Medicare Supplement plans, each with a different level of benefits.

The Medigap plans available are: A, B, C, D, F, G, K, L, M, and N. Although, some older Medigap plans are no longer available to new Medicare beneficiaries. Plans C, F, E, H, I, and J are among them. If you’ve already purchased one of these plans, you can keep it as long as the company continues to offer it.

Let’s see some of the most popular Medicare Supplement plans.

Plan G

If you are a new enrolled, Plan G is the most popular Medicare Supplement. Medicare Supplement Plan G is the best overall plan for seniors and Medicare enrollees, providing the most coverage.

Except for the Part B deductible, Plan G will cover almost everything. This means you’d be responsible for the entire Medicare Part B deductible before your insurance benefits begin to pay for your medical care.

Plan F

Plan F is the best Medigap plan if you qualify for Medicare before January 1, 2020. Plans will cover everything you’d normally have to pay for out of pocket, including deductibles and coinsurance.

Plan F is a good choice if you want a comprehensive policy that will give you peace of mind when it comes to day-to-day expenses like paying a copay for a doctor’s office visit.

Plan K

Plan K is a good option if you want the cheapest Medigap policy that still provides some coverage on top of Original Medicare.

Plan K differs from many other Medigap policies in that it only provides 50% coverage for Medicare Part B coinsurance.

This is critical to consider if you require skilled nursing care through your health insurance. In this case, if you obtained Plan K, you would only be covered for half of such costs.

Plan K, on the other hand, will have much lower monthly premiums. Policyholders can expect to pay around $77 per month for this plan, making it the best Medicare Supplement plan for low-income seniors.

Plan N

Plan N is a good choice for people who want coverage that is nearly as good as Plan G but at a lower cost.

The only distinction between the two plans is that Plan N does not cover Medicare Part B excess charges. If your doctor or medical provider does not accept the Medicare-approved amount of payment for health care services, you may be charged an additional fee. 

You can avoid this cost by purchasing Plan G or ensuring that your medical providers accept the Medicare-approved amount for services.

Advantages of Medicare Supplement Plan

The Medicare Supplement Plan, also known as Medigap, has numerous benefits. It helps improve your Medicare plan and reduces costs for you. Here are some of the advantages of the Medicare Supplement Plan.

• When traveling outside the United States, Medigap plans will cover up to 80% of your emergency healthcare costs.
• Medicare supplement insurance plans can assist with the payment of deductibles, coinsurance, and copayments.
• Some Medigap plans can virtually eliminate your out-of-pocket expenses.
• Insurance companies cannot refuse you coverage if you enroll in the open enrollment period after the age of 65.
• There are numerous plan options available to best meet your individual healthcare needs.

How Insurance Companies Price Medigap

Even though Medicare supplement plans are standard in terms of the benefits they provide, their prices can vary depending on the insurance company that sells them.

It’s similar to shopping on sale: the plan you want may cost less at one store and more at another, but it’s the same product.

Medigap policies are typically priced in one of three ways:

1. Community Rated

Regardless of age or gender, the majority of people pay the same. If a person’s insurance premium increases, the decision is based on the economy rather than the person’s health.

2. Issue Age Rated

This premium is proportional to the age of the purchaser at the time of purchase. In general, younger people pay less, while older people pay more. A person’s premium may rise due to inflation as they age, but not because they are getting older.

3. Attained Age-Related

This premium is lower for younger people and increases with age. It may be the cheapest when first purchased, but it may become the most expensive as the person ages.

Conclusion

Medicare supplement plans can only be used alongside the original Medicare. Medicare supplement plans fill common gaps in standard Medicare insurance plans. 

Individuals who are insured pay monthly premiums for Medigap policies directly to the insurance company. While Medicare Supplement and Medicare advantage are alternatives to original Medicare, you cannot have both simultaneously