Center for a Secure Retirement
How to Compare Medigap Plans to Find the Right One for You

How to Compare Medigap Plans to Find the Right One for You

If you're enrolled in Medicare but worried about high out-of-pocket costs from health care, a Medicare Supplement insurance plan, also called a Medigap plan, can help keep those costs under control. There's a wide selection of Medigap plans available, and each comes with different costs and benefits. Here's how to compare Medigap plans so you can find the right one for your needs.

Medigap Plan Basics

Medigap plans are private health insurance plans designed to supplement Original Medicare (Medicare parts A and B). In exchange for a monthly premium, a private health insurance company agrees to cover your out-of-pocket Medicare expenses, such as the deductibles, copayments and coinsurance costs. (Note: Medicare Supplement insurance does not work with Medicare Advantage plans, which are a comprehensive alternative to Original Medicare.)

There are 10 types of Medigap policies — A, B, C, D, F, G, K, L, M and N — and each offers a different mix of benefits at varying premiums. Plans A through G are the most comprehensive, though coverage varies depending on the type of plan. Plan F, for example, covers the Medicare Part A deductible, the Part B deductible, excess Part B charges from providers and 80% of your medical expenses if you need emergency care when traveling abroad. Plan A doesn't cover those expenses, but it will likely come at a lower premium.

Plans K through N typically charge lower premiums because these plans don't cover as much of your health care bills, though you'd still pay less than if you just had Original Medicare. With Original Medicare alone, you'd cover 20% of doctor expenses under Part B, and there's no limit to how much you might owe per year. But with a Medigap Plan K, you'd pay 50% of the Part B copayments and a maximum of $5,880 per year in 2020.

Availability in Your Location

Even though there are 10 types of Medigap plans, what will actually be available depends on your local insurance market. Every state and local county has a different selection of insurance companies, and it's up to them what they sell. (In fact, Massachusetts, Minnesota and Wisconsin standardize their Medigap policies entirely differently.)

For example, you might find that no insurer in your area offers the Plan M coverage you want. In this case, an insurer could guide you to similar coverage through another low-premium Medigap plan, like a Plan K or a Plan L.

Finding the Right Fit

So, how do you navigate this alphabet soup to find the right plan for you? It depends on your health situation and financial needs.

Someone who regularly needs medical care might benefit from Plan C or Plan F, which cover nearly all out-of-pocket Medicare costs. On the other hand, someone in good health might be better served by an option with a lower premium, like Plan K or Plan L, if they won't need care as often and won't accrue higher out-of-pocket fees.

When you first join Medicare at age 65, you're able to enroll in any Medigap plan. You can switch to another option if your needs change, but insurance companies could check your health status and reject your application because of preexisting conditions. Even if you're in very good health now, it might be worth enrolling in a more comprehensive Medigap plan while you still can instead of hoping that you can qualify later.

Choosing an Insurance Company

As you compare Medigap plans, you'll also need to decide which insurance company you'll work with. The federal government standardized the Medigap program, so every company will offer the same coverage — in other words, Plan F will have the same benefits no matter where you buy it.

Still, there are some crucial differences. First, different insurance companies offer different Medigap plans. One might sell Medigap Plan F but not Plan G, and could sell Plan G but not Plan F. Different companies also charge different premiums for the same plans. And your level of service will vary from company to company.

A trained agent can help you compare Medigap plans and guide you through the enrollment process more quickly than if you just called customer service. For more information, consider scheduling a free consultation to learn more about your options.

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