How do I choose a Medicare Supplemental plan?

A Medicare Supplemental Plan covers most or all of the costs not covered under Parts A (hospital) and B (outpatient and doctor), hence it’s supplemental insurance to Parts A and B.

Supplemental plans are provided by private insurance companies, meaning that you’ll have to enroll with an agent that works with the company of your choice.

In 47 out of 50 states, Supplemental Plans are standardized by plans A through N (the 3 exception states are Minnesota, Wisconsin, and Massachusetts where they have different plans).

As long as the letters match up, the benefits are the same.  This means that Plan A from company 1 has the same benefits as Plan A from company 2.  The only difference is in your monthly premium.

Why should I choose a Supplemental Plan?

Low out of pocket costs – most plans have little or no co-pays or deductibles for hospital/outpatient services.

Choice of providers – you can go to any doctor or hospital in the country that takes Medicare, meaning you’re not limited to who you can see.  Certain “Select” plans limit your hospital choices in exchange for a lower monthly premium.

What are some popular plans?

Plan F is the most popular plan.  It also tends to be the most expensive because it covers all costs not covered by Part A and Part B. 

Plan G is becoming more and more popular as well due to aggressive pricing in some states.  The only difference between a Plan F and Plan G is that Plan G requires you pay for the Part B deductible at the beginning of the year.  If you save more than $147 in premiums by choosing Plan G versus Plan F, it becomes a no brainer.

Plan N is also popular because it much less expensive (can be upwards of 30-40% less than Plan F from the same company).  However, you’ll be responsible for the Part B deductible at the beginning of the year ($147 for 2014), a $20 co-pay at the doctor, $50 co-pay at the emergency room, and no coverage for excess charges (please see below for explanation). 

What are excess charges?

In some states, doctors who do not agree to Medicare reimbursements and charge higher rates can accept Medicare patients and bill the patient for the difference.  Plan F and G are the only two plans that protect against excess charges. 

Can I be denied?

When you’re first sign up for Part B, you have a guaranteed issue period, meaning that you cannot be denied nor can you have higher rates for any reason when signing up for a Supplemental Plan. 

In states where medical underwriting is allowed, you may be asked questions about your health if you do not sign up within 6 months of getting Part B. 

Can my premiums go up?

Absolutely.  Some plans increase their premiums based both inflation and age – meaning the older you get, the more you’ll pay.  Some plans average out over a population so you’ll pay the same rates regardless of age. 

When signing up, it’s important to check for not only the lowest price today, but also look at the amount your premiums are likely to go up in the future.

To summarize, when choosing a supplemental plan, figure out what benefits you’d like based on your current condition.  If you visit the doctor a few times a month, it may be worth it to get full coverage with a Plan F or Plan G.  However, if you’d like a lower monthly premium, full coverage for hospital expenses, and do not frequent the doctor, then Plan N may be a better option.

Once you figure out which plan fits your needs, then choosing between companies is based on price.