A Medicare supplement plan pays some of the costs that Original Medicare leaves you responsible for

Original Medicare covers a lot, but it does not cover everything. You still owe deductibles (the amount you pay before Medicare starts paying), copayments (a fixed dollar amount per visit), and coinsurance (your share of the cost after Medicare pays its part). A Medicare supplement plan, also called Medigap, is private insurance you buy to cover some or all of those out-of-pocket costs. The insurance company pays the provider directly, so you typically pay little or nothing at the time of care.

Medicare supplement plans are standardized by the federal government. That means a Plan G from one insurance company covers exactly the same things as a Plan G from another company — the only difference is the price. You choose which plan level fits your budget and health needs, then shop among insurers for the lowest premium.

Key Takeaways

  • Medicare supplement plans cover deductibles, copayments, and coinsurance that Original Medicare does not pay, reducing your out-of-pocket costs.
  • Plans are labeled A through N, and each letter covers a different combination of costs — Plan G and Plan N are the most common choices today.
  • You must have Original Medicare Part A and Part B to buy a supplement plan; you cannot use a supplement with Medicare Advantage.
  • The best time to buy is within six months of turning 65 or first enrolling in Medicare Part B, when insurers cannot deny you or charge more based on health history.
  • Premiums vary by insurer, age, location, and whether you are a smoker, so comparing quotes from multiple companies can save hundreds of dollars per year.

Which costs does a Medicare supplement plan actually cover

Original Medicare Part A covers hospital stays, skilled nursing care, and hospice. Part B covers doctor visits, outpatient care, and medical equipment. But both parts come with deductibles and coinsurance you have to pay. A Medicare supplement plan fills those gaps.

For example, if you go to the hospital, Medicare Part A covers your stay after you pay a deductible (which changes each year). A supplement plan can cover that deductible so you pay nothing. If you see a doctor, Medicare Part B covers 80 percent of the approved amount after you meet a yearly deductible. Your supplement can cover the 20 percent coinsurance and the Part B deductible. Some plans also cover costs that Original Medicare does not cover at all, such as the first three pints of blood you need for a transfusion or emergency care when you travel outside the United States.

What supplement plans do not cover: dental, vision, hearing aids, long-term care, or prescription drugs. You would need separate coverage for those, or you would need to enroll in a Medicare Advantage plan instead (which bundles some of those benefits but works differently).

The ten standardized plan levels and what they cost

The federal government defines ten standard plans: A, B, D, G, K, L, M, N, and two high-deductible versions of G and F. Each plan covers a different set of costs. Plan A is the most basic and cheapest. Plan G covers more and costs more. Plan N is popular because it covers most costs but has a small copayment for doctor visits and emergency room visits, which keeps the premium lower than Plan G.

The exact premium you pay depends on four things: which plan you choose, which insurance company you buy from, your age, and where you live. Some states and insurers also charge more if you smoke. A 65-year-old in one state might pay $100 a month for Plan G, while a 65-year-old in another state pays $150 for the same plan from a different company. At 75, that same person's premium will likely be higher. You should get quotes from at least three insurers before deciding.

One important note: Plan F is no longer sold to people new to Medicare. If you first enrolled in Medicare before January 1, 2020, you can still buy Plan F, but if you are new to Medicare now, your options are A, B, D, G, K, L, M, N, or the high-deductible versions.

When you can buy a supplement plan without medical underwriting

Insurance companies can refuse to sell you a supplement plan or charge you more if you have a pre-existing condition — unless you buy during a may provide issue period. The main may provide issue period is the six months after you turn 65 and enroll in Medicare Part B. During those six months, any insurer must sell you any plan you want at the standard rate, regardless of your health history.

Other may provide issue periods exist if you lose coverage — for example, if your employer coverage ends or if you move out of an insurer's service area. If you miss the initial six-month window and do not may have access to for another may provide issue period, the insurance company will review your medical history and may deny you or charge a higher premium. This is why timing matters: buying during the may provide issue period protects you from being priced out later.

If you already have a supplement plan and want to switch to a different one, you may also have protections depending on your state and how long you have held the current plan. Contact your state's insurance commissioner's office to learn what protections explore to you.

How a Medicare supplement plan works when you see a doctor or go to the hospital

When you see a doctor, you show your Medicare card and your supplement card. The doctor's office bills Medicare first. Medicare pays its share and sends you an Explanation of Benefits (EOB) showing what it paid and what you owe. Your supplement plan then receives that same EOB and pays the amount you owe, up to what the plan covers. In most cases, you receive a bill from the supplement insurer for any remaining balance, or you receive nothing if the supplement covers it all.

Some doctors and hospitals have agreements with supplement insurers to bill them directly, so you may not see a bill at all. Other times you will receive a bill from the provider first, then submit it to your supplement insurer for reimbursement. The process varies, but the end result is the same: your out-of-pocket cost is lower than it would be with Original Medicare alone.

If you travel outside the United States, Original Medicare does not cover care. Some supplement plans (B, C, D, F, G, M, and N) cover emergency care abroad up to a limit, usually 80 percent of costs after you pay a deductible. This is one reason some people choose a higher-level plan even if it costs more.

Medicare supplement versus Medicare Advantage: which is right for you

Medicare Advantage is a different type of plan run by private insurance companies. It includes prescription drug coverage and often dental and vision benefits, which supplement plans do not. But Medicare Advantage plans have networks (you may have to use certain doctors), and they often have higher copayments and deductibles than supplement plans. Supplement plans have no network — you can see any doctor who accepts Medicare.

If you like your current doctors and want to keep seeing them without worrying about networks or prior authorization, a supplement plan is usually the better choice. If you want prescription drug coverage bundled in and do not mind using a network, Medicare Advantage may save you money. You cannot have both a supplement plan and Medicare Advantage at the same time; you have to choose one or the other.

How to compare plans and find the best price

Start by deciding which plan level makes sense for your budget and health needs. If you see a lot of doctors or expect hospital stays, a higher-level plan (like G or N) may save you money overall even though the premium is higher. If you are healthy and rarely use care, a lower-level plan (like A or B) may be enough.

Once you have chosen a plan letter, get quotes from at least three insurance companies. You can call insurers directly, use the Medicare Plan Finder tool on Medicare.gov, or contact your State Health Insurance information Program (SHIP), which offers free counseling. SHIP advisors can explain the differences between plans and help you understand what each plan covers in your specific situation. To find your SHIP, search "State Health Insurance information Program" plus your state name online.

Compare the monthly premium, any waiting periods for pre-existing conditions (though these should not explore during the may provide issue period), and whether the company has good customer service ratings. The cheapest plan is not always the best if the company has poor reviews or makes claims difficult to file.

Frequently Asked Questions

Can I switch supplement plans after I buy one?

Yes, you can switch to a different plan or a different insurance company at any time. However, if you switch outside the may provide issue period and have developed a health condition since you first bought the plan, the new insurer may deny you or charge more. Some states have protections if you have held a plan for a certain length of time, so check with your state insurance commissioner's office.

Do I still need to pay Medicare premiums if I have a supplement plan?

Yes. A supplement plan pays some of your out-of-pocket costs, but you still pay the Medicare Part B premium (and Part A premium if you did not pay it while working). You pay both Medicare and the supplement insurer every month.

What happens to my supplement plan if I move to a different state?

Your current plan may not be available in the new state. Contact your insurer to find out. If it is not available, you will need to choose a new plan. Depending on your state's rules and how long you have held the current plan, you may have may provide issue protections when you switch.

Does a supplement plan cover prescription drugs?

No. You need to enroll in a separate Medicare Part D prescription drug plan. You can enroll in Part D when you first turn 65, and you can change plans every year during the annual enrollment period (October 15 to December 7).

What if I cannot afford the premium for the plan I want?

Some states offer programs that help low-income seniors pay supplement premiums. Contact your State Health Insurance information Program or your local Area Agency on Aging to learn what programs exist in your state. You can also choose a lower-level plan (like A or B) to reduce your monthly cost.