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How Much Will a Medicare Supplement Insurance Plan Save Me?

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Summary: If you’re researching your Medicare coverage options, you may have heard about Medicare Supplement insurance. What is it, and can it save you money? This article gives you a quick overview.

What is a Medicare Supplement insurance plan?

Medicare Supplement (also known as Medigap) insurance plans are offered by private insurance companies. Whether they may save you money, and how much money they might save you, depends on a number of details.

Medicare Supplement insurance plans may help you pay for out-of-pocket costs for services covered under Medicare Part A and Part B. These costs can include deductibles, coinsurance, copayments, hospital costs after you run out of Medicare-covered days, skilled nursing facility costs, and more. Some Medicare Supplement insurance plans even include limited coverage for emergency medical services when you’re traveling abroad.

If you already have Medicare Part A (hospital insurance) and Part B (medical insurance), you might be eligible for a Medicare Supplement insurance plan.

To understand how much money you might save by having a Medicare Supplement insurance plan, you will want to consider factors such as:

  • How much do you generally pay, or expect to pay, for your Medicare Part A and Part B* copayments, coinsurance amounts, and deductibles?
  • Which Medicare Supplement insurance plans might help you fill these “gaps” in Part A and Part B coverage?
  • Is the cost of the Medicare Supplement insurance plan—that is, the monthly premium—lower than your average expected Medicare out-of-pocket costs per month?

Medicare Part A and Part B out-of-pocket costs

Medicare provides broad insurance coverage; however, it doesn’t pay all your health-care expenses. “Out-of-pocket costs” refer to the expenses you must pay because either Medicare does not cover the service or the service is subject to cost-sharing between Medicare and you. Your out-of-pocket costs that Medicare does not pay can include:

  • Deductibles. The Part A deductible for an inpatient hospital stay is $1,408 in 2020 for each benefit period. In 2020, the Part B deductible* is $198 per year. Before Medicare starts paying anything for covered hospital or medical services, you must pay the appropriate deductible amount.
  • Copayments and/or coinsurance. Part A copayment amounts vary based on the length and location of stay. Copayments for inpatient hospital stays in 2020 are $352 per day for days 61 – 90, and $704 per day for days 91 and beyond, up to a certain lifetime limit. The copayment for skilled nursing facility stays in 2020 is $176 per day for days 21- 100. Part B generally covers 80% of outpatient medical services, equipment and supplies, and you pay the balance, 20%.
  • The first three pints of blood. If you require a blood transfusion, usually you have to pay any expenses the hospital may have incurred for the first three pints of blood. Medicare pays for any additional blood transfusions needed.
  • Part B excess charges above the Medicare-approved amount for a covered service you receive from a provider if he or she is legally allowed to charge more.

*Medicare Supplement insurance plans that cover the Medicare Part B deductible (Plans C and F) won’t be available for people new to Medicare in 2020. If you’re not eligible for Medicare before January 1, 2020, you won’t be able to buy Plan C or Plan F. If you were eligible for Medicare before that date, you can keep Plan C or Plan F if you have it, or apply for one of them if you weren’t.

A new Medicare Supplement high-deductible Plan G might be available in 2020. It may cover everything Plan F covers, except the Medicare Part B deductible.

How to figure out how much money a Medicare Supplement insurance plan might save

Medicare Supplement insurance plans won’t cover the cost of your Medicare premium(s). However, you may be able to find a Medicare Supplement insurance plan in your area that may cover the particular out-of-pocket Medicare Part A and Part B costs that you face the most often.

Medicare Supplement insurance plans offer various standardized benefits. In most states, the Medicare Supplement insurance plan type is identified by alphabetical letter, such as Medicare Supplement insurance Plan G. Each standardized Medicare Supplement insurance plan – that is, each plan of the same name, like Plan G – must offer the same basic benefits, no matter which insurance company sells it. Learn what each standardized Medicare Supplement insurance plan covers.

Here are some examples. Each of the standardized plans available in most states covers:

  • Medicare Part A hospitalization costs, such as coinsurance amounts, for up to a year after your Part A benefits are used up.
  • At least a portion of Medicare Part B copayments or coinsurance amounts (for example, for covered doctor visits).

And here are a couple of examples of costs that some of these standardized plans may at least partly cover:

  • Coinsurance amounts for skilled nursing care
  • The Medicare Part A deductible

Two plans (Medicare Supplement insurance Plan K and Plan L) have out-of-pocket limits, to help prevent your medical costs from running above certain amounts. After you’ve paid your Medicare Part B deductible and you’ve reached the Medicare Supplement insurance plan’s out-of-pocket limit, the plan pays the rest of your covered medical services for the rest of that year. In 2020, Medicare Supplement insurance Plan K has an out-of-pocket limit of $5,880, and Medicare Supplement insurance Plan L’s out-of-pocket limit is $2,940.

How much money would a Medicare Supplement insurance plan save you?

  • You might want to sit down with your medical bills and/or Medicare Summary Notices (sent to you every three months) and add up all your out-of-pocket costs for last year.
  • If you have frequent doctor visits or hospitalizations, add up the amount you paid for Part A and Part B coverage (for example, your coinsurance amounts for doctor visits or medical services, and your daily hospital coinsurance during a hospital stay).
  • Then, start looking at Medicare Supplement insurance plans in your area that cover those costs. For every plan in your area that you’re considering, multiply the monthly premium by 12 to get the total for the year. To find plans in your area, just enter your zip code in the box on this page.
  • Compare these totals. Would a Medicare Supplement insurance plan save you money? Do you find you pay more in Medicare out-of-pocket costs in a typical year, than you might spend on a Medicare Supplement insurance plan that may cover those costs?
  • Are your Medicare-related expense totals higher than either the Medicare Supplement insurance Plan K or Plan L out-of-pocket maximum amounts? If so, one of these plans might save you money.

Keep in mind that insurance companies that offer Medicare Supplement insurance plans can set their own premiums, which means that the cost for a Medicare Supplement insurance plan can vary by insurer, even though the benefits are exactly the same for plans of the same lettered name.

Please note that the time period when you apply for a Medicare Supplement insurance plan may be important; usually the best time to apply is during your Medicare Supplement Open Enrollment Period, a six-month timespan that starts when you’re both at least age 65 and enrolled in Medicare Part B.

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.

This website and its contents are for informational purposes only. Nothing on the website should ever be used as a substitute for professional medical advice. You should always consult with your medical provider regarding diagnosis or treatment for a health condition, including decisions about the correct medication for your condition, as well as prior to undertaking any specific exercise or dietary routine.

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