Medicare Supplemental Insurance

Medicare Supplemental Insurance

They say you know you’re getting old when your conversations with friends turn from stories of your children to stories of your health problems. For my parents, this started around age 50. They knew they were reaching a certain point in their life where they needed to start planning for retirement. And this didn’t just mean considering different investments and deciding what to do with their extra free time: it also meant researching health insurance plans. Often, this can be confusing terrain. There are so many options available in the market place today, how do you know the right plan for you? While many expect to be on Medicare once they retire, it might not be enough. Depending upon your health, you may also want to consider Medicare supplemental insurance coverage. According to AARP, over 90 percent of those on Medicare also have some sort of added coverage. There are several categories to choose from, each of which is discussed below.

Supplemental Health Coverage

Retiree Coverage

Retiree Coverage, or a group health plan, is health insurance through your former employer. According to, there are five things to know when understanding how to use your health plan in coordination with Medicare.

  1. Not everyone will have health care coverage after they retire. Speak with your employer (or union) to find out whether or not you will have an insurance plan. Remember: just because you have a health plan now, doesn’t mean you will have one in the future. Your former employer may decide to change the benefits or premiums, or even cancel the coverage entirely.
  2. Speak with your employer or union about how much they cover before you need to start spending out of pocket to cover your health care costs. The employer may have limitations and rules on what is or isn’t included in payments. In addition, be aware if they only provide “stop loss” coverage, which means they only pay once you’ve reached your “out of pocket” maximum for the year.
  3. Be aware of how your retiree coverage will coordinate with Medicare, once you become eligible. It may be that you only become eligible for your employer’s insurance once you enroll in Medicare Part A and Part B (explained in another article more fully).
  4. Speak with your employer’s benefits coordinator to understand how the retiree plan pays for coverage if you also have Medicare.
  5. If your employer goes out of business, you may be able to get continuation coverage through COBRA, a federally mandated program.

Retiree coverage serves a similar purpose as Medigap plans. It fills in holes in your Medicare coverage, such as deductibles and coinsurance. In addition, your retiree insurance may include added benefits, like longer hospital stays after surgery.

Medigap: A Medicare Supplement Plan

Medicare Supplement Plans

Not all of us are lucky enough to have retiree insurance. In a New York Times article on the subject, journalist Ann Carrns highlights the story of Jeff Strack. A 61-year-old sales manager from Charlotte, North Carolina, he does not have retiree health coverage from his employer. At the time the article was written, he paid out-of-pocket for health insurance for him and his wife, Penny. However, as he and his wife get older and he retires from his job, he doesn’t know what they will do.

“Within health care,” he said, “there’s all kinds of uncertainties.”

And he’s not the only one worrying about these looming costs in his future. With the aging Baby Boom generation, a large segment of the population will begin to utilize health and medical resources in greater quantities. This will mean more costs for insurers, and therefore more costs for retirees to bear.

Author Carrns asks us to consider the following: “Fidelity Investments estimates that the average married couple retiring this year at age 65 need $220,000 to cover health costs throughout retirement.”

This is a scary number, especially since “the estimate assumes the couple have traditional coverage under Medicare, the federal health plan for those over 65, which means they are sharing in the cost of their medical care through premiums, deductibles and coinsurance (your share of the cost after you meet your deductible). Most people don’t pay a premium for Part A, which covers hospital care; but almost everyone pays a premium for Part B, which covers doctor’s visits and other care. The estimate also factors in premiums and co-payments for prescription drug coverage, known as Medicare Part D.”

If you have a health concern, most likely you will run across certain instances in which your Medicare, retiree, or other insurance plan fails to cover your medical visits and procedures completely. Medigap can be a helpful supplement. It is a plan offered by private insurance companies to help pay for these extra costs. And you don’t need to cancel your original Medicare plan to have Medigap.

A variety of costs may be covered through a Medigap policy, including:

  • Additional days in the hospital
  • Medical care while traveling internationally
  • Deductibles
  • Co-payments

Since the federal government has standardized Medigap, different insurance companies that sell the plans offer the same exact benefits. According to Katie Banks from, the most popular Medigap Plan is Plan F. The reason for its popularity is the fact that it is the most comprehensive of the ten Medigap plans available. It leaves the beneficiary with no out-of-pocket hospital and doctor expenses. However, this also means it’s the most expensive. You may want to consider this plan if you are facing high medical bills due to regular doctor and hospital visits. It also may be your best bet if you are worried about future health-related problems. Under Plan F, the following are covered:

  • Part A deductible
  • Part B deductible
  • Part B excess charges
  • Preventative care Part B coinsurance
  • Part A hospital and coinsurance costs up to an additional 356 days after Medicare benefits are exhausted
  • Part B coinsurance or copayment
  • First three pints of blood used in an approved medical procedure (annually)
  • Part A hospice care copayment or coinsurance
  • Skilled Nursing Facility (SNF) coinsurance
  • Foreign travel emergency

The costs for this plan depend upon the insurance carrier. In addition, it still doesn’t cover everything. Beneficiaries still need to pay their Medicare Part B premium on a monthly basis.

If you prefer, there is also a high-deductible Plan F option. The beneficiary is required to pay $2,070 out-of-pocket expenses first before Plan F will cover the rest.

With ten different Medigap plan options, it can be difficult to know which one to choose. The following table from MediCoverage best summarizes the differences. Keep in mind that this is based on the June 1, 2010 date on which insurance companies were allowed to begin selling the plans. So, this may change in the future.

Medigap Plan Benefits

Within the table above, a checkmark symbol means that the Medigap plan with cover 100 percent of that particular benefit. A different percentage indicates the amount of that benefit that is covered through Medigap. An empty column means that this is not covered.

For Plans K and L, you need to meet your out-of-pocket expenses ($4,620 for K and $2,310 for L respectively) and the annual Part B deductible before the Medigap plan will pay for anything.

Note: All Medigap plans require that you pay a deductible before the coinsurance is paid.

Know your priorities. Using the table, determine which benefits you value the most. This will help you decide which plan is right for you.

Medigap Exclusions

Like most insurance policies, Medigap plans don’t cover everything. This includes:

  • Long-term care
  • Vision
  • Dental
  • Hearing aids
  • Eyeglasses
  • Private nursing care

Be sure you know the differences between Medigap and other insurance plans. The following are not Medicap plans:

  • Medicare Advantage Plans
  • Medicare Prescription Drug Plans
  • Medicaid
  • Employer or Union (Retiree) Plans
  • TRICARE (a plan for active and retired service members and their families)
  • Veteran’s Benefit Plans
  • Long-term care insurance policies
  • Native American health service plans

Purchasing Medigap

Important: Before you purchase a Medigap plan, there are eight things you need to know:

  1. You must already have Medicare Part A and Part B.
  2. If you already have a Medicare Advantage Plan, be sure to cancel it before your Medigap policy begins.
  3. After you purchase a Medigap policy, you will have two monthly premiums: one for Medigap which is paid to your private insurer and one for Medicare Part B.
  4. Each Medigap policy is for one person only. If both you and your spouse would like to be covered, you will need two Medigap policies.
  5. Only buy a Medigap coverage from an insurance companies licensed by your state to sell such plans.
  6. As long as you continue to pay your monthly premium, your Medigap policy cannot be canceled, even if your health changes.
  7. All Medigap plans purchased after January 1, 2006 do not include prescription drug coverage. If you’d like coverage for this, purchase a Medicare Part D plan.
  8. You may not purchase a Medigap plan if you already have a Medicare Medical Savings Account (MSA) Plan.

If you’re 65 or older and have just enrolled in Medicare Part B, you need to wait one month before you can enroll in Medigap. Once the enrollment period opens, you have exactly six months in which to purchase a policy through a private insurance company in your state. Even in you have health problems, you can still enroll at the same price as people without currently health issues.

Beware! Once you have passed the open-enrollment period, an insurance company may or may not sell you a Medigap plan. So, if you have a pre-existing condition or health problems, you may not be accepted.

Dropping Medigap

Are you reconsidering your current Medigap Plan? Maybe you’d like to switch plans, or drop Medigap altogether. Be careful with the timing of adding or dropping a plan so that you can avoid penalties. Speak with you the private insurance company that handles your Medigap plan to find out more.

Medicare Advantage

A Medicare Advantage plan is similar to Medigap in that you purchase the policy through a private insurer. However, it differs on the types of benefits provided. There are several types of Advantage plans, which will be summarized below:

  • Health Maintenance Organization (HMO) Plans: You can only go to doctors on the provided list except in an emergency. Usually prescription drugs are covered.
  • Preferred Provider Organization (PPO) Plans: You pay less to use doctors on the provided list and pay more for those out-of-network. Usually prescription drugs are covered.
  • Private Fee-For-Service (PFFS) Plans: The plan determines how much it will pay for doctors and how much you will pay out-of-pocket.
  • Special Needs (SNP) Plans: This is limited to only those with certain diseases or characteristics. The plan is tailored to fit their specific needs.
  • HMO Point of Service (HMOPOS) Plans: An HMO plan that may allow you pay get some out-of-network services.
  • Medical Savings Account (MSA) Plans: This combines a high-deductible health plan with your bank account. Medicare deposits money into the account which you can then use to pay for health care services.

Medicare Supplement versus Medicare Advantage

It is important to know the differences between Medicare Supplement and Advantage plans. They each have their own benefits- and their own costs.

The differences between Medicare Supplement and Advantage plans

Speak with an Expert

Talk to your local insurance agent or go online to find out more about whether or not you need a supplemental health insurance policy. Remember, just because it’s called “gap” insurance, doesn’t mean that it fills in all the gaps left by your retiree and Medicare plans. Often this includes Medicare deductibles but only 20 percent of your co-insurance payment. So, keep this in mind when considering your coverage options.


If you’re interested in finding out more about medical supplement insurance plans, consult the following resources below:

  •  800-MEDICARE (800-633-4227)
  • State contacts:
  • State Health Insurance Assistance Program (SHIP

Other Enhanced Insurance articles related to Medicare Insurance:


Original Medicare

Medicare Part D

Medicare Advantage

Medicare Part C

Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.

While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.