Medicare has several gaps and doesn’t pay for all of the health care services you may need. If you are in the Original Medicare Plan, you may want to buy Medicare supplemental insurance, also called Medigap insurance. This is health insurance that helps pay for some of your costs in the Original Medicare program and for some care it doesn’t cover.
Medigap insurance is sold by private insurance companies. By law, companies can only offer standard Medigap insurance plans. There are 11 standard plans labeled A-N. Each plan, offers a different set of benefits, fills different “gaps” in Medicare coverage, and varies in price.
You will want to study all the Medigap plans before deciding which is best for you. No matter which insurance company offers a particular plan, all plans with the same letter cover the same benefits. For instance, all Plan C policies have the same benefits no matter which company sells the plan. However, the premiums can vary.
All 11 standard Medigap policies cover basic benefits, but each has additional benefits that vary according to the plan.
None of the standard Medigap plans cover:
• long-term care to help you bathe, dress, eat or use the bathroom
• vision or dental care
• hearing aids
• private-duty nursing
• prescription drugs
If you live in Massachusetts, Minnesota or Wisconsin, you have different standard Medigap plans.
In addition to the standard Medigap policies, Medicare SELECT is a type of Medigap policy that can cost less than standard Medigap plans. However, you can only go to certain doctors and hospitals for your care. Check with your state insurance department to find out if Medicare SELECT policies are available in your state.
Medigap Basic Benefits
All plans must offer these basic benefits. The basic benefits for plans K - L include similar services as plans A-G and M but the cost-sharing for the basic benefits is at different levels.
Medicare Part A
After you have paid your hospital deductible ($1,100 in 2010), the Original Medicare Plan pays all your hospital costs for up to 60 days in a benefit period*. If you stay in the hospital more then 60 days, you pay $275 (in 2010) a day for days 61 through 90. If you stay longer than 90 days in a benefit period, the cost for each day is $550 (in 2010) for up to 60 days over your lifetime.
All 11 Medigap plans cover (pay) your costs for days 61 through 150. In addition, once you use your 150 days of Medicare hospital benefits, all Medigap plans cover the cost of 365 more hospital days in your lifetime. If you have the high-deductible option of plan F, you must first pay $2,000 in health care expenses before your costs will be covered. If you have plans K, L or M you will have to pay a portion of the hospital deductible ($1,100 in 2010), before your costs will be covered (unless you have already met the annual out-or-pocket maximum for the year.
*A benefit period begins the day you go to the hospital and ends when you have been out of the hospital for 60 days in a row. If you go into the hospital again after 60 days have passed, you begin a new benefit period.
Medicare Part B
After you pay your yearly Part B deductible ($155 in 2010), Medicare generally pays 80 percent of doctor and other medical services. It pays 50 percent of mental health services and 100% of some preventive services.
Medigap plans cover all or part of your share of these services – 20 percent of the Medicare-approved amount for doctor services and 50 percent for mental health services. (The Medicare approved amount is the amount that Medicare decides is a reasonable payment for a medical service).
The Original Medicare Plan doesn't cover the first three pints of blood you need each year. Plans A-D, F-G, and M through N pay for these first three pints. Plans K pays 50% and L pays 75% part of the cost.
All 11 Medigap plans offer this benefit, which covers any coinsurance for Part B preventive services.
Medigap covers the 5 % coinsurance for palliative drugs and respite care under the Part A hospice benefit.
Medigap Additional Benefits
Medicare Part A Hospital Deductible
Medigap Plans B, C, D, F, G and N cover the hospital deductible ($1,100 in 2010) for each benefit period. Plans K, L, and M cover part of it. This benefit usually saves you money if you have to stay in the hospital.
Skilled Nursing Home Costs
The Original Medicare Plan pays all of your skilled nursing home costs for the first 20 days of each benefit period. If you are in a nursing home for more than 20 days, you pay part of each day’s bill.
Medigap Plans C, D, F, G and M through N pay your share of the bill ($137.50 a day in 2010) for days 21 through 100. Plans K and L pay part of it. Neither Medicare nor any Medigap plan pays for any skilled nursing home stay longer than 100 days in a benefit period.
Medicare Part B Deductible
You must pay a deductible each year for doctor and other medical services before Medicare pays.
Medigap Plans C and F pay this deductible. In 2010, the deductible is $155.
Medicare Part B Excess Charges
When you see a doctor who doesn’t “accept assignment,” he or she doesn’t accept Medicare’s approved amount as payment in full. The doctor can charge you up to 15 percent more than Medicare’s approved amount.
Medigap Plans F and G pay 100% of these excess charges. You might want this benefit if you don’t know whether the doctors you see accept assignment, such as when you are in the hospital.
Foreign Travel Emergency
Medicare does not cover any health care you receive outside of the United States. Medigap Plans C, D, F, G, M and N cover some emergency care outside the United States. After you meet the yearly $250 deductible, this benefit pays 80 percent of the cost of your emergency care during the first 60 days of your trip. There is a $50,000 lifetime maximum.
Plans K and L
Important: Plans K and L offer similar coverage as plans A - G, but the cost-sharing for the benefits are different levels and have annual limits on how much you pay for services. The out-of-pocket limits are different for plans K and L and will increase each year for inflation. In 2010, the out-of-pocket limit was $4,620 for plan K and $2,310 for Plan L.
Once you buy a Medigap plan, the insurance company must keep renewing it. The company can’t change what the policy covers and can’t cancel it unless you don’t pay the premium. The company can increase the premium, and should notify you in advance of any increases.