Medicare Supplement (Medigap) Plans

Medicare Supplement plans (also known as Medigap plans) are generally thought of as the most comprehensive and flexible plans. One of the key benefits of a Medicare Supplement Plan is that there is no “provider network.” You can use any doctor or hospital that accepts Medicare, anywhere in the U.S. And, in most cases, you don’t need a referral to see a specialist. Private insurance companies sell Medicare Supplement Plans.

A Medicare Supplement Insurance plan pays some of the health care costs that Medicare Part A (Hospital) & Medicare Part B (Medical) don’t cover, like coinsurance, copayments, and deductibles.

Medicare Part A

Medicare Part A covers inpatient hospital care and skilled nursing facility care (up to 100 days). Medicare Part A will pay for skilled nursing care if you are coming from a three-day hospital stay as an inpatient and are released into a skilled nursing facility.

Medicare Part A does not pay for custodial or long-term care. Medicare Part A will cover hospice care and some home healthcare. Medicare Part A has a $1,632 deductible per benefit period in 2023. A benefit period begins when you enter the hospital and ends when you have been out of the hospital for 60 days.

Medicare Part A is free for 99% of Medicare beneficiaries. It is free if you or your spouse paid Medicare taxes for 40 quarters or 10 years.

Medicare Part B

Medicare Part B covers outpatient medical care and services. This includes services from doctors and other health care providers, durable medical equipment (like wheelchairs, walkers, hospital beds, and other equipment and supplies), physical therapy, and many preventative services. Medicare Part B generally covers 80% of outpatient charges.

Medicare Part B Premiums

Medicare Part B is not free. In 2024, the Medicare Part B monthly base premium is $174.70. Medicare Part B has an annual deductible of $240 for 2024.

Your Medicare Part B premium will come out of your Social Security check unless you are not drawing Social Security. In that case, you will be direct billed and will have the option to pay by paper bill, credit card, or automatic bank deduction. If your modified adjusted gross income was over certain limits, you will owe an Income Related Monthly Adjustment Amount (IRMAA). Here is the IRMAA chart for 2024:

Based on Modified Adjusted Gross Income as reported on your IRS tax return from two years ago (2022).

Income Levels Monthly Premiums
File individual tax return File joint tax return Income-Related
Monthly Adjustment Amount
Total Monthly
103,000 or less $206,000 or less $0.00 $174.70
$103,001 to
$206,001 to
$69.90 $244.60
$129,001 to
$258,001 to
$174.70 $349.40
$161,001 to
$322,001 to
$279.50 $454.20
$193,001 to
$386,001 to
$384.30 $594.00
$500,000 or above $750,000 or above $419.30 $594.00

If you pay an IRMAA, you can appeal your IRMAA if you have had a life changing event that has decreased your Modified Adjusted Gross Income (MAGI). Social Security asks the IRS how you filed your taxes (individually or jointly) from two years ago. Then Social Security uses the Modified Adjusted Gross Income from that year to determine your Medicare Part B IRMAA. If you stopped working, reduced your work hours, sold property, or had a marital status change; you may be able to appeal your IRMAA and have Social Security look at a more recent MAGI or even an estimated MAGI for you for this year.

Medicare Supplement Plans

A Medicare Supplement Insurance plan pays some of the health care costs that Medicare Part A (Hospital) & Medicare Part B (Medical) don’t cover, like coinsurance, copayments, and deductibles. Your medical claims are sent to Medicare and generally if Medicare approves the service, your Medicare Supplement will also approve the service. This is a contractual obligation.

There are ten different Medicare Supplement Plans: A, B, C, D, F, G, K, L, M, N. The plans are standardized by Medicare, meaning that if one insurance company sells Medicare Supplement Plan G, it must be identical to another insurance company’s Plan G. For many people, Medicare Supplement Plan G now provides the best value for full, flexible coverage. Plan N is also popular as it is slightly less expensive with just a few less benefits.

Medicare Supplement Guaranteed Issue Coverage

One of the most important things to know about Medicare Supplements is that you must apply for your Medicare Supplement within six-months of your Medicare Part B effective date in order to be guaranteed issue for coverage. This six-month window is called your Medigap Open Enrollment Period. During this period, you can sign up for any Medicare Supplement Plan. You do not have to go through underwriting or answer health questions to get the coverage. You are guaranteed the coverage.

If you miss your Medigap Open Enrollment Period, you will have to be underwritten for a Medicare Supplement plan in most cases. This means the insurance company can deny you coverage. For example, they may deny you if you have certain previous or ongoing health conditions, like joint replacement, surgery for cancer, congestive heart failure, coronary artery disease, diabetes with circulation problems, TIA, stroke, heart attack, and heart disease.

The are ten different Medicare Supplement plans: A – N, with a few letters missing. The Medicare Supplement Plans are standardized by Medicare, the government agency. This means if one insurance company sells Medicare Supplement Plan G, it will look identical to another insurance company’s Medicare Supplement Plan G. Plan G and N are the most popular plans. Plan F used to be the most popular but it is no longer sold to Medicare Beneficiaries born in 1955 or later. Here is an overview of the Medicare Supplement Plan G and Medicare Supplement Plan N Benefits:

This chart shows basic information about the different benefits that Medigap plans cover. If a percentage appears, the Medigap plan covers that percentage of the benefit, and you must pay the rest. If a box is blank, the plan doesn’t cover that benefit.

Medicare Supplement Insurance (Medigap) Plans
Benefits G N
Medicare Part A
coinsurance and hospital
costs (up to an additional
365 days after Medicare
benefits are used)
100% 100%
Medicare Part B
coinsurance or copayment
100% 100%
Blood (first 3 pints) 100% 100%
Part A hospice care
coinsurance or copayment
100% 100%
Skulled nursing facility care
100% 100%
Part A deductible 100% 100%
Part B deductible
Part B excess charge 100%
Foreign travel emergency
(up to plan limits)
80% 80%

Here is the Outline of Coverage for Medicare Supplement Plan G:

Medicare Supplement Plan G

Medicare (Part A) – Hospital Services – Per Benefit Period
Services Medicare Pays Plan Pays You Pay
Semiprivate room and board, general nursing and miscellaneous services and supplies
First 60 days All but $1,632 $1,632
(Part A deductible)
61st thru 90th day All but $408 a day $408 a day $0
91st day and after:
  • While using 60 lifetime
    reserve days
All but $816 a day $816 a day $0
  • Once liftime reserve
    days are used:
     365 days
    -Beyond the additional
     365 days
$0 100% of Medicare
eligible expense
$0 $0 All costs
Skilled Nursing Facility Care
You must meet Medicare’s requirements, including having been in a hospital for at least 3 days and
entered a Medicare-approved facility within 30 days after leaving the hospital
First 20 days All approved amounts $0 $0
21st thru 100th day All but $204.00 a day Up to $204.00 a day $0
101st day and after $0 $0 All costs
First 3 pints $0 3 pints $0
Additional amounts 100% $0 $0
Hospice Care
You must meet Medicare’s requirements, including a doctor’s certification of terminal illness All by very limited copayment/ coinsurance for outpatient drugs and inpatient respite care Medicare copayment/
Medicare (Part B) – Medical Services – Per Calendar Year
Services Medicare Pays Plan Pays You Pay
Medical Expenses – In or Out of the Hospital and Outpatient Hospital Treatment, such as
physician’s services, inpatient and outpatient medical and surgical services and supplies, physical and
speech therapy, diagnostic tests, durable medical equipment
First $240 of Medicare
Approved Amounts
$0 $0 $240
(Part B deductible)
Remainder of Medicare
Approved Ammounts
Generally 80% Generally 20% $0
Part B Excess Charges
Above Medicare Approved Ammounts $0 100% $0
First 3 pints $0 All costs $0
Next $240 of Medicare
Approved Amounts
$0 $0 $240
Remainder of Medicare
Approved Amounts
80% 20% $0
Clinical Laboratory Services
Tests for Diagnostic Services 100% $0 $0
Parts A & B Services
Services Medicare Pays Plan Pays You Pay
Home Health Care – Medicare Approved Services
  • Medically necessary skilled
    care services and medical
100% $0 $0
  • Durable medical equipment:
    -First $240 of Medicare
    Approved Amounts
    -Remainder of Medicare
     Approved Amounts
$0 $0 $240
(Part B deductible)
80% 20% $0
Other Benefits – Not Covered by Medicare
Services Medicare Pays Plan Pays You Pay
Foreign Travel – Not Covered by Medicare
Medically necessary emergency care services beginnng during the first 60 days of each trip
outside the USA
First $250 each calendar year $0 $0 $250
Remainder of Charges $0 80% to a lifetime maximum benefit of $50,000 20% and amounts over the $50,000 lifetime maximum

Medicare Supplement Plans do not provide outpatient prescription drug coverage for medicines you get from your pharmacy like Walgreen or CVS. Outpatient Prescription drug coverage is provided by Medicare Part D plans.

Medicare Part D Prescription Drug Plans

Medicare Part D is the Medicare outpatient prescription drug program. Medicare Part D plans help cover the cost of outpatient prescription drugs (including many recommended shots and vaccines, like the Shingles shots). Medicare Part D plans are administered by private insurance companies that follow the rules set by Medicare.

To select a Medicare Part D plan, you will want to make sure that your drugs will be covered. Additionally, you will want to check the tiers and cost sharing levels of each of your drugs. Also, you need to check to see if there are restrictions on your drugs, like Prior Authorization, Step Therapy, or Quantity Limits. Finally, you must determine if your preferred pharmacy has competitive pricing for the Medicare Part D plan that is best for you.

There are four phases to Medicare Part D and all Medicare Part D plans follow them.

Deductible Phase – You are responsible for all costs of the negotiated medication price. This can be as high as $505.

Initial Coverage Phase – You pay a co-pay or co-insurance until the retail costs of your medications reach $4,660.

Coverage Gap (Donut Hole) Phase – You pay 25% of the cost of covered brand name medications and a maximum of 25% of the cost of covered generic medications until your total out-of-pocket costs reach $7,400. 95% of the cost of the brand name medication counts towards the $7,400 out-of-pocket.

Catastrophic Coverage Phase – You pay the greater of $4.15 for generics and $10.35 for brand name drugs or 5% of retail cost.

Review Your Medicare Part D Plan Annually

Medicare Part D plans can and do change each year. So, you must review your plan options each year during the Annual Enrollment Period from October 15th through December 7th. Your current plan may not be the best plan for you again next year. If you do not select a new Medicare Part D plan, you will be re-enrolled automatically in your current plan. Most geographic areas have more than 20 Medicare Part D plans to choose from.

Medicare Part D Medication Restrictions

There are three types of restrictions that can be placed on medications in the Medicare Part D program:

Prior Authorization requires you and/or your doctor or other prescriber to complete and submit a prior authorization form to the insurance company.

Quantity Limits limit the quantity of a drug that the insurance company will only cover during a certain time period. Quantity Limits are generally used as a safety precaution to prevent certain prescription drugs from being used excessively.

Step Therapy requires you to first try another, similar drug to treat your medical condition before the insurance company will cover your drug for that same condition. For example, if your doctor prescribes Drug X and Drug Y can also be used to treat your medical condition, the insurance company may require your doctor or other prescriber to prescribe Drug Y first. If Drug Y does not work for you, or your doctor or other prescriber indicates why you cannot use Drug Y, then the company will cover Drug X.

Medicare Part D Premium Payment Options

You have several options for paying your Medicare Part D premiums. Medicare Part D premiums can be taken out of your Social Security payments. This is the safest option because your Medicare Part D plan can be terminated by the insurance company if you miss premium payments.

You can also pay your Part D premiums by check or by automatic bank draft, and in some cases credit card.

Late Enrollment Penalties

If you don’t sign up for a Medicare Part D plan when you are supposed to, you will be subject to a late enrollment penalty when you do sign up. The late enrollment penalty is not a one-time thing; it is applied to your Medicare Part D premium each year going forward.

If you are over 65 and don’t have a Medicare Part D plan, you must start Part D coverage:

  • Within two months after you lose your prescription drug credible coverage from your employer

  • During the Annual Enrollment Period from October 15th through December 7th for a January 1st start date.

Based on your Modified Adjusted Gross Income as reported on your IRS tax return from two years ago (2021).

Income Levels Monthly
Individual Tax Return Joint Tax Return You Pay
$97,000 or less $194,000 or less Your Plan Premium
$97,001 up to $123,000 $194,001 up to $246,000 $12.20 +
Your Plan Premium
$123,001 up to $153,000 $246,001 up to $306,000 $31.50 +
Your Plan Premium
$153,001 up to $183,000 $306,001 up to $366,000 $50.70 +
Your Plan Premium
$183,001 to $499,999 $366,001 to $749,999 $70.00 +
Your Plan Premium
$500,000 or above $750,000 or above $76.40 +
Your Plan Premium

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