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Medigap Supplemental Insurance Plans for 2023

Americans overwhelmingly approve of Medicare as a health insurance benefit. They feel like it’s good, solid coverage that comes with a reasonable price. It’s not perfect, though, and the out of pocket costs associated with Medicare are the chief problem for most people. Besides the out of pocket costs of Medicare, the lack of coverage outside the United States is another issue impacting Americans on Medicare. A private insurance option that can take Medicare coverage to a better, more comprehensive level is Medicare Supplement Insurance. Read this guide to find out more about Medigap Supplemental Insurance plans for 2022.

What Is The Purpose Of Medigap Supplemental Insurance?

Medicare Supplement Insurance (also called Medigap) is an insurance product issued by private insurance companies that is designed to integrate with Original Medicare. These plans step in and fill many of the spending gaps in Original Medicare, hence the nickname. Depending on which option you choose, Medicare Supplement Insurance can also cover some of the items not normally covered by Medicare, like coverage outside the U.S.

Out Of Pocket Spending Gaps Covered By Medicare Supplement Insurance

Medicare Supplement insurance will cover some or all of the amounts that you’re normally expected to pay out of pocket. These costs under Original Medicare can include:

  • Part A deductible
  • Part A co-insurance
  • Part B deductible
  • Part B co-insurance
  • Part B excess charges

The two biggest costs that you’re exposed to are the Part A deductible and Part B co-insurance. The Part A deductible is $1,556 for 2022.  Under the terms of Medicare, you’d have to pay this amount first before you’d get help paying for a hospital stay or other Part A-covered benefit. Once you pay this, Part A will cover you up to 60 days in the hospital and 20 days in a skilled nursing facility.

However, if you require a longer hospital or skilled nursing facility stay, you’ll then be expected to pay per-day co-insurance amounts.

When it comes to Part B expenses, you’ll pay a nominal annual deductible first. When you’ve met that, Medicare will pay for 80% of the cost of your Part B services and procedures. You’re responsible for paying the remaining 20%. In some cases, you might also have to pay as much as 15% in Excess Charges, which are amounts that some providers are allowed to charge. They are usually avoidable by only using providers who accept Medicare’s prices (most do).

The 20% co-insurance you’ll pay for Part B services is usually fairly small, but these amounts can really balloon if you need cancer treatments. Part B covered cancer treatments can include:

  • IV based chemotherapy
  • Chemotherapy injections received in a facility or doctor’s office
  • Radiation therapy

Since chemotherapy can be extremely expensive, your 20% of the cost can grow very quickly. The worst part about this is that Medicare doesn’t provide you with a cap on your spending the way most other health insurance does. Your costs are theoretically unlimited. The idea of unlimited out of pocket costs is disturbing for many people.This is especially worrisome for people on fixed incomes.

To alleviate much of this concern, insurance companies created Medicare Supplement Insurance products.

How Does Medicare Supplement Insurance Work?

These policies are designed to work with Original Medicare, picking up where Parts A and B leave off. As the name “supplemental” implies, these plans supplement Original Medicare. They don’t replace or enhance it. Medigap plans are also known as secondary coverage.

An important point to keep in mind is that they will only pay claims when a primary insurance coverage has already paid. Your primary coverage is Original Medicare.

When you see a provider like a doctor or facility, you’ll present both your Original Medicare card and your Medigap card. Your provider will then bill Medicare according to their payment schedule (generally 80% of Medicare approved cost for Part B services). They will also bill your Medigap plan for the amounts that they’re responsible for paying. In many cases, this means that the entire 20% that you’re normally supposed to pay will be covered.

Medicare Supplement Insurance plans are standardized rather than customized. This means that by law and regulation, there are a total of 12 Medigap plans available. All the benefits are also laid out by law and regulation. These rules and regulations are standardized throughout 47 of the United States; Minnesota, Wisconsin, and Massachusetts have their own laws for Medicare Supplement Insurance, although the Medigap plans from the 47 standardized states will work in those three, also.

The 12 standardized plans are identified by “Plan Letter.” The plans are: A, B, C, D, F, G, K, L, M, N, High Deductible F, and High Deductible G. Every one of these plans offers a slightly different mixture of coverage. Plan A is the least comprehensive; Plan F is the most comprehensive plan available. Every plan in between covers slightly more or less. We won’t review each one of them, but we will review the coverage for four of them: Plans F, G, L, and N.

Medigap Plan F

Plan F is the most comprehensive plan on the market. It literally covers 100% of all the spending gaps in the Medicare program. Specifically, Plan F provides:

  • 100% coverage of the Part A deductible
  • 100% coverage of Part A co-insurance after the deductible
  • 365 extra hospital stay days beyond what Original Medicare provides
  • Your first three pints of blood
  • 100% coverage of the Part B deductible
  • 100% coverage of Part B co-insurance
  • 100% coverage of Part B excess charges

Beyond these out of pocket costs, Plan F also provides emergency coverage when you’re outside of the United States.

One thing to keep in mind about Plan F is that it is subject to limited availability. You can only enroll in Plan F if you were eligible for Medicare prior to January 1, 2020. You can get Plan F even if you weren’t actually in Medicare by that date - you just had to be eligible for it before the cut-off. On the other hand, if your Part A start date is after December 31, 2019, you are no longer eligible for Plan F. Instead, Plan G is the most comprehensive plan available to you.

Medigap Plan G

Plan G is very similar to Plan F, but with only one difference. Plan G doesn't cover the Part B deductible. This means that you’ll have to pay the deductible ($233 for 2022 ) before Plan G will begin paying benefits. But, once you do, Plan G will pay 100% of your costs for the rest of the year. Plan G also covers you internationally.

Medigap Plan N

Plan N is also quite comprehensive. It covers almost all of the gaps in Medicare, but it does have a unique twist. Plan N will cover:

  • 100% of the Part A deductible
  • 100% of Part A co-insurance
  • 365 extra hospital stay days beyond Original Medicare
  • Your first three pints of blood
  • All of your Part B co-insurance except for $20 for office visits and $50 for emergency room visits

Medigap Plan N also gives you emergency coverage when you’re outside the United States. On the other hand, Plan N provides no coverage for:

  • Part B deductible
  • Part B excess charges

Since excess charges are pretty rare, Plan N turns out to be very similar to Plan G, except for the co-payments. You’ll have a small co-payment when you use Part B at the doctor’s office or in the ER. If you’re admitted to the hospital as a part of your visit to the ER, the co-payment is waived.

Medigap Plan L

Plan L is a middle-of-the-road option. The coverage is somewhat comprehensive. It also has some unique features that can make it an excellent value. Plan L provides:

  • 75% coverage of the Part A deductible
  • 100% coverage of Part A co-insurance after the deductible is met
  • 365 extra hospital stay days
  • 75% of the cost of your first three pints of blood
  • 75% of the cost of your Part B co-insurance

With Plan L, you’ll be shouldering about 25% of the cost for all of your services. One thing to keep in mind is that you’re only paying 25% of what Medicare doesn’t cover. So, for example, if you see the doctor, Medicare will cover 80% of the cost under Part B (after you’ve met the deductible); you’ll pay 25% of the remaining 20%. This comes out to 5%; you’ll pay only 5% of the Medicare-approved charges for your doctor’s visit (or other Part B service or procedure). Plan L will pay for the rest of what Medicare doesn’t cover.

Plan L does not provide any coverage for:

  • Part B deductible
  • Part B excess charges
  • Emergency coverage outside of the U.S.

As you would expect, the more comprehensive a plan is, the more expensive it will be in terms of premium cost. Of the four standardized plans we've discussed, Plan F is the most expensive and Plan L is the least expensive. Plan G is more expensive than Plan N.

How To Find The Most Affordable Medigap Plan

Since every standardized plan has a unique set of coverage and each plan therefore has a different cost, it’s easy to choose a plan that provides the right combination of coverage and value.

The first thing to decide is what level of coverage you’re looking for. You can process this decision using several different factors, but you should definitely consider:

  • Whether you need international coverage
  • Whether you want all of your Part A costs covered
  • The extent to which you want Part B excess charges covered by your plan

Once you have a feel for how much coverage you need, you might only have two or three Medigap plans to pick from. For instance, Plans D, G, M, and N all provide international emergency coverage.

Now that you know roughly how much coverage you want, you can focus on price. Remember the main rule: the lower the premium, the less comprehensive the coverage. When you choose a Medigap plan with less coverage, you’re exchanging a lower known cost (monthly premium) for the potential for unknown higher out of pocket costs (deductibles and co-insurance costs).

Returning to our example of Plans D, G, M, and N: they all give you international coverage. They also provide 100% coverage of your Part A costs. Where they differ is in Part B excess charges and the presence of small co-payments for Plan N. If you wanted the lowest possible monthly premium, you might choose Plan N. If you didn’t mind the potential for excess charges but you wanted to avoid paying the co-payments, you’d likely choose Plan D over Plan G.

What Are The Eligibility Rules For Medicare Supplemental Insurance Plans For 2022?

The eligibility rules for Medicare Supplement Insurance generally follow those for Original Medicare. To enroll in a Medigap plan you must be actively enrolled in both Parts A and B. Depending on the state in which you live, you might also have to be at least 65 years old. This is a state-by-state rule; some will allow you to get Medigap before age 65 if you enter Medicare early.

When Can You Enroll In Medigap Plans?

As a general rule, the enrollment process for a Medigap plan differs depending on the circumstances:

  • When you first enter Medicare
  • After your first six months in Medicare

The easiest time to get Medigap coverage is when you first enter Medicare. When this is the case, you’ll take advantage of your Medigap Open Enrollment Period. This enrollment window lasts a total of six months. It will only begin when both of these conditions are met:

  • You are actively enrolled in Part B
  • You are at least 65 years old

Since you can enter Part B before 65 or years after 65, this can be a bit confusing. Here are three examples for each of these scenarios.

Entering Medicare At Age 65

If you enter Medicare Part B during your Initial Election Period (IEP) when you turn 65, your Medigap Open Enrollment Window will start the month that you turn 65 and enter Part B. If that happens in October, your Open Enrollment Period will run from October to March.

Entering Medicare Early

If you enter Medicare before you turn 65 because of illness or disability, your Open Enrollment Period doesn’t happen until you actually turn 65. For example, let’s assume you enter Medicare Part A and B in August of 2021 because you’re been disabled for 24 consecutive months, and you’re 59 years old. Your birthday is in June.

Even though you’re now active in Part B, your Medigap Open Enrollment Period hasn’t yet occured. Instead, your Open Enrollment window will start in June of 2027, when you turn 65. Your window will close at the end of November of 2027.

Entering Medicare Late

If you delay taking Part B past your 65th birthday, your Open Enrollment Period won’t start until you actually enter Part B. For example, let’s say you turn 65 in July of 2022. You delay taking Part B because you’re still working. You retire in November of 2023 and your Part B begins on December 1st, 2023. Your Medigap Open Enrollment Period will begin in December of 2023 and will end on the last day of May in 2024.

Enrolling during your Open Enrollment Period is a good idea because your acceptance is guaranteed. You can’t be turned down or charged higher premiums because of your health. If you apply for Medigap outside of your Open Enrollment Period, this won’t be the case. Instead, you’ll have to go through medical underwriting. This means that you’ll answer health-history questions. In this case, you may be declined or charged higher premiums because of your health status.

For example, if you turn 65 in September of 2022 and enter Part B at the same time, your Open Enrollment Period will end in February. If you don’t enroll in Medigap at this time but decide you want to later in the year, say August of 2023, you’ll have to go through the underwriting process. If you have health difficulties, you may not be able to qualify for the Medigap plan.

Now that you know about Medigap supplemental insurance plans for 2022, you should be equipped to choose the plan that’s best for you. If Medicare Supplement isn’t a good fit, consider a Medicare Advantage plan instead.

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