This post provides an overview of low cost Medicare Supplement plans (Medigap plans), as well as other alternatives, like Medicare MSA plans.
Medigap Plans provide protection against future (catastrophic) losses for Original Medicare out-of-pocket expenses such as:
- Copayments/ coinsurances
- Excess charges
Original Medicare does not cover the allowable Medicare expenses fully, leaving a lot of them as your responsibility. These include Part A deductibles and coinsurances, as well as Part B coinsurance – 20% of the Medicare approved amount. Other Medicare products, such as Medicare Advantage (MA) plans, may reduce your Original Medicare expenses by having out-of-pocket maximum ($6,700/year) and by using copayments rather than Original Medicare coinsurance (20%). However, most of the Original Medicare gaps are still there, and most MA plans limit you with the plan’s hospital and doctor network.
Medicare Supplement plans seem to be the only real way to cover those gaps. The problem with Medigap is their premium. They are expensive, and many people can’t afford them.
The Medigap premium depends on your age, the county where you live, the plan you select, and the insurance company from which you choose to buy the Medigap policy. All Medigap plans are standardized, i.e. Medigap plans of a particular type (let’s say Plan F) provide the same benefits independent of the carrier you choose, but the premium for the same plan may be quite different for different carriers.
Contact us if you need help selecting your Medicare Supplement plan and its carrier.
Low Cost Medicare Supplement Plans: Benefits and Cost
Based on benefits and affordability, Medicare Supplement plans can be divided into 3 categories:
- Comprehensive plans
- Copayment based plans
- High-deductible plans
Comprehensive plans include such plans as Medigap Plan F, Plan G, Plan C, and Plan D. Plan F covers all gaps in the Original Medicare. Other plans differ from Plan F in that they will not cover either Part B deductible ($147 in 2013) or Part B Excess Charges, or both. They provide the most coverage, and are therefore the most expensive.
Medigap Plan N is a copayment-based plan. It covers neither the Part B deductible nor the Part B Excess Charges. In addition, the plan provides cost-sharing features through the use of copayments: up to $20 for each office visit to a doctor, and up to $50 for each emergency visit. Other than that, everything is covered (as in Plan F). The Plan N’s premium is 25-30% less than the corresponding Plan F.
If you are ready to enroll in a Medicare Supplement from the Original Medicare, or you are trying to change your Medigap plan in order to save money, Plan N may be a good proposition as long as you don’t visit your doctor too often. The lessons learned from Medigap Plan N should not diminish its value.
Finally, there is the high-deductible Plan F. It works like Plan F, but only after you pay the deductible amount ($2,070 in 2012). Its premium is about 40% of the corresponding Plan F, but it makes sense only for healthy people who have spent a small portion of their deductible. Otherwise, the standard (not high-deductible) Plan F is a better choice.
Other alternatives – MSA plan
The last alternative to cover the Original Medicare gaps is to use a special type of Medicare Advantage plans known as Medicare Medical Savings Account (MSA) plans. There are no network limitations here, and your yearly expenses for plans like Geisinger Gold MSA may be as low as $1,500. There is no monthly premium, but rather yearly deductible that you should pay before the MSA plan takes effect. After that, there are no more out-of-pocket expenses. In that sense, the plan is equivalent to the Medigap Plan F with a lower premium.
Another advantage of MSA plans is that they do not require medical underwriting, therefore they are available even for people with medical problems who would normally not be accepted by Medigap plans.
Also read When Will Medicare MSAs Take Off? for a potential future role of the MSA plan as a Medigap alternative.
Should you get a Medicare Supplement Policy?
You should enroll in a Medigap plan if you are looking for peace of mind from the financial exposure of Original Medicare out-of-pocket costs. This is particularly important for people with serious health problems and/or those whose medical expenses may be significant. Don’t forget to enroll during Medigap Open Enrollment Period when there is no medical underwriting, and you’ll be accepted into the plan of your choice.
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For help finding the best Medicare or Individual Health Plan for you, please contact Liberty Medicare or call us at 877-657-7477.