Medicare is a federal health insurance for people 65 or older, certain people under 65 with disabilities and people of any age with End-Stage Renal Disease (ESRD).
There are different parts of the federal Medicare program that are designed to help you cover various medical services. These include:
Part A covers the care and treatment of patients in hospitals and other medical facilities. For example, hospice care and skilled nursing facility care.
Part B covers outpatient care and services. This includes bills for specialist consultations, vaccines and durable medical equipment such as wheelchairs and walkers.
Part D covers the cost of prescription drugs and is run by private insurance companies, instead of the government.
To learn more about how Medicare works, the benefits, costs and terminology, be sure to read our 2021 guide to Medicare.
Deductible: This refers to the set amount you pay for health care services before your insurance begins to pay. For example, if you have a $1,700 deductible you have to pay $1,700 before your insurance kicks in.
Coinsurance: The percentage of costs you pay after your deductible has been met.
Copayment: A set rate you must pay for doctor visits, hospital stays and prescriptions.
Out-of-pocket costs: This term refers to expenses that are not covered by Medicare and that you must pay for yourself. For example, a consultation fee for an appointment at the optometrist.
A Medicare Supplement Plan (also known as Medigap) is health insurance that you can buy from private companies.
These plans help pay for the remaining out-of-pocket costs that Medicare Parts A and B don’t cover. Some of these expenses include:
Hearing aids and appointments for fitting them
Eye tests and glasses
The government requires insurance companies to standardize the 10 Supplement Plans that you can choose from. However, if you live in Wisconsin, Massachusetts or Minnesota, the policies work differently.
Each Medicare Supplement Plan can be identified by a letter A, B, C, D, F, G, K, L, M and N. It’s important not to confuse plans with Medicare parts, which cover basic medical needs.
Depending on the Medicare Supplement Plan you choose, it could pay for:
Part of the expense that Original Medicare doesn’t cover. This is called the deductible.
20% of the amount you’re responsible for paying, also known as the copayment.
Any other additional medical costs.
To learn more about these policies and take an in-depth look at the 10 different Medicare Supplement Insurance Plans, take a look at this article.
Due to the phasing out of Medicare Plan F in 2020, Plan G (also known as Medigap Plan G) has become a popular choice among seniors to lower Medicare’s out-of-pocket expenses.
As the table below shows, this is because Medicare Supplement Plan G offers comprehensive coverage over most of the basic benefits.
Where you see a percentage, Medicare Plan G covers that percentage of the benefit and you must pay the rest.
|Medicare Part A: Coinsurance and hospital costs up to an additional 365 days after Medicare Benefits are used||100%|
|Medicare Part B: Coinsurance or copayment||100%|
|Blood (the first 3 pints)||100%|
|Part A Hospice Care: Coinsurance or copayment||100%|
|Skilled Nursing Facility Care||100%|
|Part A Deductible||100%|
|Part B Deductible|
|Part B Excess Charges||100%|
|Foreign Travel Emergency (up to plan limits)||80%|
The only benefit that Medicare Supplement Insurance Plan G doesn’t cover is the Part B deductible.
A deductible is a set amount you cover for health care before your insurance begins to pay.
Remember, Medicare Part B covers outpatient services like specialist consultations, vaccines and walkers.
This benefit has a standard annual deductible of $203 and a minimum monthly premium of $148.50. The Medicare Part B monthly premium varies because it’s based on income.
Due to the fact that Plan G doesn’t cover the Medicare Part B deductible, you would have to pay for the outpatient care until you have paid or reached the $233 amount.
Once you have paid this fee, you will not have to pay for any of the outpatient services or treatments because Medicare will cover these costs for you.
In some states, there is a high-deductible version of Medicare Supplement Plan G. As of 2021, this amount was set at $2,370.
Similar to the annual deductible amount above, you will have to pay or reach the amount of $2,370 before the plan begins to cover your medical expenses.
One of the other benefits of Medicare Supplement Plan G is that it offers up to $50,000 in foreign travel emergency benefits.
All of these amounts can be slightly confusing. Here is a breakdown to show you how much you could potentially pay for Medicare Plan G:
$203 for the Medicare Part B Deductible
$148.50 as a minimum monthly Part B premium
The Medicare Plan G monthly premium set by the insurance company you buy the policy from
$2,370 if you choose the high-deductible option
The cost of Medicare Plan G monthly premiums can vary significantly. This is because insurance businesses can charge different premiums for exactly the same benefits and plan.
In general, there are three ways that insurance businesses set their premiums. These include:
Community-rated: This premium is not based on your age. This means that the same monthly premium is charged to everyone. However, the price will vary according to inflation.
Issue-age rated: This premium will be based on the age you are when you buy the policy. Therefore, the premium is lower for people who buy it at a younger age and won’t change as you get older.
Attained-age rated: This premium is based on your current age and will go up as you get older. Although these premiums might be the least expensive at first, they will eventually become the most expensive and are also affected by inflation.
In addition to these factors, insurance businesses will also consider where you live and what your lifestyle habits are to set your premium.
Make sure that you compare the price of Medicare Supplement Plan G from a few different insurance companies.
This is one of the best ways to ensure that you find a premium that works for your budget.
If you decide to choose the Plan G high-deductible option, the advantage is that you will likely have a lower premium.
However, you will have to pay or reach the amount of $2,370 before the policy begins covering any of your medical expenses.
To qualify for Medicare Plan G, you must first have Medicare Parts A and B.
One of the best times for new Medicare enrollees to join a plan is during the Medicare Supplement Open Enrollment Period. There are a few reasons for this:
You will likely get better prices
There will be more options for you to choose from
You won’t have to answer any health questions
Enrolling outside of the Open Enrollment Period could put you at risk of paying higher premiums and you could be denied coverage based on pre-existing conditions.
The Open Enrollment window only happens once in your life (unless you collect Social Security Disability Income) and lasts for six months.
The six-month window starts on the first day of the month that your Medicare Part B (Medical Insurance) is effective.
You also have to be 65 or older for the Open Enrollment Period to begin.
We know that making sense of all the different Medicare Supplement Insurance Plans and benefits can be challenging.
You want to find a plan that works for your health care needs, but you also don’t want to break the bank.
PolicyScout’s expert advisors are always available to help you learn more about Medicare and advise on the different plans you can choose from.
You can contact us by phone at 1-888-912-2132 or email us at Help@PolicyScout.com