But it doesn’t cover everything, by a long shot.
By itself, Medicare still leaves you with massive potential gaps in coverage that expose you to significant and unpredictable out-of-pocket costs that can put a big dent in your retirement savings and lifestyle.
That’s where Medigap comes in. Medigap – also called Medicare supplement insurance, is like an extra layer of protection that helps pay for things like:
- Deductibles – The amount you have to pay upfront before Medicare starts to cover your care.
- Copayments – A fixed amount you pay as your share of the cost after your deductible is paid.
- Coinsurance – A percentage of the bill you pay after Medicare pays its share.
Even though a Medigap plan can be helpful, it’s easy to accidentally pay too much.
One of the best things you can do to avoid common traps is to work with a Personal Benefits Manager. They will be able to answer your questions and help you compare Medigap plans with other money-saving options, such as MediShare 65+.
This article will share a few important tips to make sure you’re getting the best supplemental plan at the best price.
The Importance of Supplemental Coverage
First, let’s review why owning some supplemental coverage in addition to basic Medicare is so critical.
If you only have Original Medicare (Parts A & B), but no other insurance on top of it, you’ll be responsible for all the out-of-pocket costs Medicare doesn’t cover.
Here’s what those costs could look like in 2024:
- You’d pay a $1,632 deductible upfront for a hospital stay, then daily copayments if you stay for a long time.
- For a doctor visit, you’d pay a $240 deductible first, then 20% of the bill for each visit (coinsurance).
- On top of that, there’s no limit on how much you might have to pay out of pocket each year.
This is why some people choose to get a Medigap plan. A Medigap plan can help cover these costs so you don’t have to pay as much upfront or throughout the year.
Get a Free Medicare Supplement Quote
Choose the Right Medigap Plan
There are ten different Medigap plans available, each with different benefits.
They all follow certain government rules, so you’ll get some standard coverage no matter which plan you pick.
There are a few key things to remember while shopping:
- A higher price doesn’t always equal more benefits. Sometimes, a cheaper plan might cover more of your out-of-pocket costs than a more expensive one!
- Focus on what you need. Don’t get tricked into paying extra for features you won’t use.
We’ll explore some things to watch out for to help you avoid overpaying. But first, let’s take a closer look at what to expect from Medigap plans in general.
What Medigap Covers
Medigap policies are standardized and labeled with letters A, B, C, D, F, G, K, L, M, N, each offering a different set of benefits.
While coverage details can vary slightly from one state to another, here are the core benefits most Medigap plans typically cover:
- Part A coinsurance and hospital costs – Medigap covers the coinsurance for hospital stay and an additional 365 days of coverage after Medicare benefits are exhausted.
- Part B coinsurance or copayment – Most Medigap plans cover Part B coinsurance or copayments, which is generally 20% of the Medicare-approved amount for doctor services, outpatient therapy, and durable medical equipment.
- Blood (first 3 pints) – If you need blood in a medical procedure, Medigap plans typically cover the cost of the first three pints.
- Part A hospice care coinsurance or copayment – Medigap plans help cover the coinsurance for hospice care under Part A.
- Skilled nursing facility care coinsurance – Some Medigap plans offer coverage for the coinsurance charges in skilled nursing facilities.
- Part A deductible – Several Medigap plans cover the Medicare Part A deductible, which can be a significant cost.
- Part B deductible – Plans C and F cover the Part B deductible, but these plans are only available to people who were eligible for Medicare before January 1, 2020.
- Part B excess charges – If a doctor charges more than the Medicare-approved amount, Plans F and G cover these excess charges.
- Foreign travel emergency – Some Medigap plans include coverage for emergency medical services received outside the United States, up to plan limits.
- How often do you visit doctors or specialists
- Your plans for travel outside the U.S
- Your budget for monthly premiums and out-of-pocket costs
- Community-rated – The same monthly premium is charged to everyone, regardless of age.
- Issue-age-rated – Premiums are based on your age when you buy the policy. Younger buyers have lower premiums.
- Attained-age-rated – Premiums increase as you get older.
- Get quotes from different companies for both Plan A and Plan G (or whichever plans you’re considering) to see which one is truly the most affordable option for you.
- Choose the plan that gives you the coverage you need at the best price. Don’t get stuck paying more for a plan with less coverage than you might actually need.
- See how much the add-ons cost for the specific plan you’re considering. Don’t assume they’ll cost the same for every plan.
- Focus on what you need, and only add features that you’ll actually use. Don’t get talked into buying extras that won’t benefit you.
- Lower Monthly Costs – Members often find that their monthly share amounts are lower than the premiums required for some Medigap policies.
- No Network Restrictions – Medishare 65+ allows members to choose any provider that accepts Medicare.
- Discount Programs – Substantial discounts are offered for things like LASIK surgery and other elective procedures that are generally not covered under Medicare.
Before you start researching each plan, assess your health care needs and preferences. Consider factors such as:
Each plan offers a different combination of benefits, allowing you to choose coverage based on what’s most important to you.
Shop Around for the Best Rates
Medigap premiums can vary widely, even for the same plan and benefits.
Be aware that Medigap insurance companies use different pricing methods:
Factors such as your location, age, and your health history can affect the cost, especially if you’re applying outside of your Medigap open enrollment period.
Get quotes from multiple insurance companies and compare their rates for the plan you’ve chosen.
Be sure to ask how the rate might increase over time! Some insurance reps may show you the lowest current rates in an attempt to gain your business, but not discuss how your insurance premiums may go up over time.
But the plan with the lowest premium now may not be the best deal over time. Especially if you are currently in good health and expect to live a long time into retirement. Short-term thinking may cause you to pay too much in the long run.
When comparing rates, try to compare apples to apples: compare community-rated plans to community-rated plans, issue-age-rated plans to issue-age-rated plans, and attained-age-rated plans to attained-age-rated plans.
The best insurance agents will take the time to ask you about your health and overall situation, so they can make the best recommendation for a Medigap plan.
Don’t Assume the Highest Cost is the Best Plan
Some Medigap plans have more coverage (like Plan G) and some have less (like Plan A).
Normally, you’d expect the plan with less coverage (Plan A) to cost less, but that’s not always true!
Sometimes, the insurance company might charge more for a plan with less coverage. This might seem strange, but there can be a few reasons behind it.
The insurance company might have had more expensive claims in the past with people who choose plans like Plan A. So, to cover those costs, they might charge everyone with Plan A a higher premium, even though the plan itself covers less.
The takeaway? Don’t assume the plan with the least coverage will always be the cheapest.
Here’s what to do:
Don’t Pay Too Much for the Same Plan
Medigap plans are standardized: each Medigap plan has a letter name, and all plans with the same letter name have the exact same coverage!
This means you shouldn’t pay more for a Plan G at one company if another company offers Plan G for less.
Think of it like buying the same brand of car. You wouldn’t pay extra for a car from one dealership if the exact same car costs less at another dealership. Medigap plans work the same way.
That’s why it’s so important to shop around.
Get quotes from different insurance companies for the same Medigap plan to see who offers the best price. While companies might offer different customer service or other perks, the actual health care coverage for each letter plan will be the same.
Don’t Buy “Add-Ons” You Won’t Use
Some insurance companies offer extra features you can add on to your Medigap plan, like discounts on gym memberships or vision care.
These sound nice, but there’s a catch!
Adding these extras can make your entire plan more expensive, and you may not even use all those extra features.
Just because something is offered as an “extra” doesn’t mean it’s a good value. You might be paying more for features you don’t even want or need.
Here’s how to be smart about add-ons:
By comparing prices and focusing on your actual needs, you can avoid overpaying for fancy add-ons.
Consider The Health Sharing Alternative
MediShare 65+ is an innovative health sharing plan tailored to individuals over the age of 65.
Health sharing offers a more affordable alternative to traditional Medigap insurance and may be a better choice for many people.
How it Works
Medishare 65+ is built on the principle of members sharing each other’s eligible medical expenses.
Participants pay monthly share amounts, similar to premiums in traditional insurance. These contributions go directly toward helping members pay for their eligible healthcare costs.
This community-based approach can lead to significant cost savings for members, and there are some great benefits:
MediShare 65+ can offer a cost-effective alternative to traditional Medigap insurance for those looking for a different approach to managing their healthcare costs in retirement.
Learn More: MediShare 65+ Health Sharing Plan vs. Medigap Plan G
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Get Professional Help
Our team of experienced Personal Benefits Managers can help you ask the right questions and make it easy for you to get the answers at your fingertips.
As health insurance professionals with years of experience serving the senior market, our Personal Benefits Managers can help you understand the benefits, exclusions, and how rate increases are handled.
But finding the right plan can be challenging. A Personal Benefits Manager can offer personalized advice based on your healthcare needs and financial situation.
Whether it’s a Medigap plan, a health sharing plan, or something else, they are there to help you find the most affordable option.
For Further Reading: Medicare Basics: 14 Things You Must Know About Medicare [New for 2024] | Do People on Medicare need a Cancer Policy? | Medicare Plans: Choose Your Doctor for more Healthcare Freedom
Christine Corsini is one of your Personal Benefits Managers at MediGap Advisors. She loves working for Medigap Advisors especially helping clients choose the right Medicare plan.