- May 8, 2020
When you enroll in Medicare, you’ll enroll in what we call original Medicare A and B. In addition to Medicare A and B, most people will get additional coverage as well. Your 2 options are to either get a Supplemental or an Advantage plan.
We’re going to focus on Supplemental plans today and answer the question, “Which Supplemental plan is best?” Our goal is to help you understand Supplemental plans so you can better decide which plan is best for you.
Medicare A & B Coverage Gaps
First, let's address a common question we hear when we bring up this topic of additional coverage. Often people ask us, “Why can’t I just stick with my Medicare A and B coverage and call it good?” Although Medicare A and B provides good coverage, they don’t cover all expenses. This means you will be responsible for covering the out-of-pocket costs that A and B doesn't cover.
Most people choose additional coverage so they aren't left paying large unexpected medical bills due to the coverage limits (or "gaps") that traditional Medicare A and B has.
Medicare A and B have three gaps in their coverage, let's briefly review the financial liabilities you have with Medicare A and B plans.
Medicare A Coverage Gaps
Medicare A benefits cover your inpatient (hospital) medical needs.
Your first financial liability under Medicare A is your yearly deductible of $1,408. You have to pay this amount out of pocket before your Medicare A coverage begins. Now the $1,408 amount is all you’ll have to pay for up to a 60-day stay in the hospital, so if it’s a short stay, that’s not bad news for you.
While this typically covers most hospital stays, you may end up staying in the hospital longer than the 60 day period. If this happens you will then be charged a daily copay of $352.
If you stay in the hospital days 31-60 your daily copays will add up to $10,560. If your stay stretches into a fourth or fifth month your daily copay doubles to $704 a day. That adds up to a little over $21,000 for each additional month.
Although hospital copays are not extremely common, it does happen. And as you can see, if all you have is Medicare A and B coverage, an extended hospital stay can get expensive quickly.
The last gasp in Medicare A coverage is for a skilled nursing facility stay. A skilled nursing facility is for someone that's had a stroke or maybe a hip replacement and they need fairly intensive rehab. Medicare says as long as you're in the hospital for a minimum of three days, then the doctor can put you in a skilled nursing facility and they will cover all the expenses for the first 20 days, so it won’t cost you a penny.
However, if you're in a skilled nursing facility beyond the 20 day period, you are now responsible for a daily copy of $176. This copay period will cover the next 80 days of your skilled nursing facility stay.
Medicare B Coverage Gaps
Now, let's talk about the gaps in Medicare’s outpatient coverage, which is called Medicare Part B. Similar to Medicare A, you’ll start off with a yearly deductible of somewhere around $230 (this amount increases a small amount each year). The deductible is set for the calendar year (not for a period of 12 months), so if you start Medicare on July 1st, your deductible will reset on January 1st.
This means you’ll be responsible for the first $230 of any outpatient care you receive during the calendar year. Once you’ve paid this deductible, Medicare part B kicks in with 80/20 coverage for the rest of the year.
With 80/20 coverage (also called coinsurance), Medicare B will pay 80% of your outpatient costs and you’ll be left to take care of the remaining 20%. This means you will be billed 20% for any outpatient procedures or test you have done (MRI, CT scan, lab work, office procedures, etc...). Although 20% may not sound so bad these costs can add up.
The third and final gap in Medicare B coverage
Not all doctors will do this, but some will. The most they can add to the Medicare bill is 15 percent, but you will be responsible for paying that 15 percent out of your own pocket.
Which Supplemental Plan is Best?
Now that we’ve looked at all the gaps you are financially responsible for in Medicare A and B coverage, it’s easy to see why most people decide to transfer those coverage gaps to an insurance company instead of running the risk of paying them out of their own pocket. To transfer those financial liabilities to an insurance company, you have to buy a Supplemental plan.
There are 10 different Supplemental plans available, but we’re not going to bore you with a long explanation of each one of them. We’re simply going to tell you about the three most popular Supplemental plans available so you can better decide which one might be best for you.
Supplemental Plan F
Plan F is a true full-coverage plan, meaning as long as Medicare pays first, plan F coverage will come along and cover all those other financial liabilities and gaps we discussed earlier. Now, this is the costliest plan to purchase, but if you don’t want to ever worry about being responsible for your medical expenses or bills, then plan F is a great option.
There is one important caveat with plan F, however. Anyone who is born after January 1st, 1955, cannot purchase the plan. But if you were born before January 1st, 1955, then you’re grandfathered in, and eligible to purchase plan F.
Supplemental Plan G
Plan G is very similar to Plan F, with three exceptions. First, if you get Plan G, you will still be responsible for the $230 deductible for outpatient procedures. So once a year, you’ll be responsible for the Medicare B deductible. But once you’ve paid the $230 deductible, Plan G will kick in and cover the rest of the costs.
Second, Plan G has a lower monthly premium cost (about $40 less each month) than Plan F, making it a more appealing option for many people.
Third, unlike Plan F, if you were born after January 1st, 1955, you are still eligible to purchase Supplemental Plan G.
Supplemental Plan N
The last plan we’ll look at today is the N plan. This one is a popular choice for many people. Plan N will take care of all the Medicare part A gaps, so any hospital or skilled nursing facility coverage gaps in Medicare A will be covered by Plan N. However, two of the three coverage gaps in Medicare B are not taken care of by Plan N.
First, you’ll be responsible for your Part B $230 deductible, as well as the possible 15 percent MAA add-ons. In addition, you will pay several copays on Plan N. Let’s say you go to a doctor, specialist, or your primary care doctor. You’ll owe a $20 copay for that visit. If you go to the emergency room, you’ll be responsible for a $50 copay. These are relatively cheap copays, and considering that the Plan N monthly premiums are about $60 to $65 less than the full cost (or Plan F) premiums, Plan N is a good option for many people.
We hope this helped you better understand the different Supplemental plans available so you can decide which Supplemental plan is best for you. You’ll have to consider things like how much premium you want to budget into your health care expenses and how many copays you’re comfortable covering. In the end, however, each of these plans provides good coverage, so it’s really up to you to decide which plan is best for your specific needs.
We understand that choosing the right Supplemental plan can be a nerve racking process. Our Medicare Guides help people weigh their options and choose the right plan every day. If you would like free personalized assistance our Guides would love to help. To speak with a Guide over the phone please click here to find a time that works for you. If you would like help today you can always reach us at (800) 864-8890.
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