Learn the Pros and Cons of Medicare Supplement Plans

You might believe signing up for Medicare means you won’t have to worry about reviewing healthcare plan options every year. We wish it were so easy – but unfortunately, original Medicare doesn’t cover everything. Even more confusing: You can’t purchase any Medigap plan until after you enroll in Medicare Parts A and B. We’ll break down the pros and cons of Medigap and Medicare Advantage plans available to purchase from private insurers below.

Medicare Supplement Plans C and F Phased Out for New Enrollees

If you have one of these existing Medicare supplement plans, great! However, federal law says new people signing up after January 1, 2020 cannot purchase those existing Medicare supplement plans. So, we’re going to leave these two plans out of our pros vs. cons comparison list. (If you’re wondering, Medicare Advantage is the same thing as Medicare Supplement Plan C. You can purchase that plan from a licensed private insurer in your state.)

Medicare Advantage

This popular Medicare supplement plan currently provides coverage for more than 1 in 3 enrollees (34%). Formerly known as Medicare Part C, it combines Parts A (hospital coverage), B (medical expenses) and D (prescription drug coverage).

Medicare Advantage Pros:

• Usually cheaper than buying piecemeal coverage through various Medigap plans
• You have a 12-month grace period to decide if you’re happy or want to switch back to original Medicare coverage
• If you do switch back, you can choose any Medigap policy with Medicare supplement coverage that fits your specific needs
• Includes maximum cap for out-of-pocket expenses not included in original Medicare coverage
• Often includes routine vision, dental and hearing care benefits (i.e., hearing aids, annual eye exams)

Medicare Advantage Cons:

• Mix of HMO and PPO plans sold under Medicare Advantage may make you choose an in-network primary care physician (PCP)
• Unlike original Medicare, Medicare Advantage plans may not cover out-of-network expenses or apply those costs to your out-of-pocket maximum
• Need your PCP’s referral to see a specialist; otherwise, you must pay out of your own pocket for treatment/visits
• Prior authorization sometimes required for hospital stays, home health care, medical equipment, and some complicated surgical procedures

Important: You cannot enroll in Medicare Advantage and any Medigap plan policies at the same time. So, you must choose only one of these options for Medicare supplement coverage during your annual enrollment period.

Medicare Supplement A (Medigap Plan A)

This is not the same thing as Medicare Part A, by the way. It’s possible to have both Medicare Part A and Medicare supplement A coverage for the same beneficiary. In fact, Medigap Plan A coverage is what you receive after 24 months on Social Security disability benefits. 

Medigap Plan A Pros:

• Covers the 20% of outpatient costs not covered under original Medicare
• Pays for your original Medicare Part A and/or Part B hospice care, coinsurance costs, and copayments
• Includes first three pints of blood if you need a blood transfusion or during surgery

Medigap Plan A Cons:

• Offers the fewest benefits compared to other Medigap plans
• Doesn’t cover deductible costs for Medicare Parts A & B
• You’ll have to pay for any skilled nursing facility expenses yourself

Medicare Supplement B (Medigap Plan B)

Again, this is not the same thing as original Medicare Part B coverage. Medigap B just slightly expands the basic coverage a Medigap A plan offers you.

Medigap Plan B Pros:

• Covers everything that’s included in Medigap A
• Also pays for your original Medicare Part A deductible (that’s $1,484 per hospitalization incident in 2021)

Medigap Plan B Cons:

No other benefits included in this plan beyond Medicare Part A deductible for hospitalization. Even then, it only kicks in if your hospital visits are at least 60 days apart within the same coverage year.

Medigap Plan D

Yep, you guessed it – Medigap plan D is not the same thing as original Medicare Part D, which covers prescription drugs.

Medigap Plan D Pros:

• Includes everything listed under the Medigap B supplement plan
• Also covers 80% of foreign travel emergency medical expenses

Medigap Plan D Cons:

Unless you regularly travel abroad, there’s no real benefit to purchasing Medigap D over Medigap B.

Medigap Plan G

Medigap G supplement plans offer the most comprehensive benefits for new Medicare enrollees.

Medigap Plan G Pros:

• Includes everything covered under the Medigap D supplement plan
• Also covers 100% of your Medicare Part B excess charges, including all hospital expenses, ambulance, x-rays, surgery, medical equipment, etc.
• Can choose a high-deductible option ($2,370 in 2021) and pay cheaper monthly premiums

Medigap Plan G Cons:

• Charges the highest monthly premium of all Medicare supplement plans on the market
• You must pay your annual Medicare Part B deductible before Medigap G benefits begin
• Does not include routine dental, vision, and hearing care or retail prescription medications

Medigap Plan K

Medigap plan K is the cheapest Medicare supplement policy you can purchase that covers some original plan costs.  

Medigap Plan K Pros:

• Includes 100% of your Medicare Part A coinsurance and hospital-related expenses
• Out-of-pocket limit for 2021 is no more than $6,220 per enrollee
• Once you pay your out-of-pocket limit and Part B deductible, 100% of costs for approved services are covered
• Cheapest monthly premiums for any Medicare supplement plan on the market

Medigap Plan K Cons:

• Only covers 50% of Medicare Part B copays/coinsurance, hospice care, skilled nursing facility and Part A deductible costs
• You must pay your annual Medicare Part B deductible before Medigap K benefits begin
• Does not include routine dental, vision, and hearing check-ups, long-term or private nursing care, hearing aids or retail prescription medications

Medigap Plan L

Basically, take everything listed above for Medigap plan K, but with 50% more coverage and half the out-of-pocket expense limit. 

Medigap Plan L Pros:

• Includes 100% of your Medicare Part A coinsurance and hospital-related expenses
• Out-of-pocket limit for 2021 is no more than $3,110 per enrollee
• Once you pay your out-of-pocket limit and Part B deductible, it covers 100% of costs for approved services

Medigap Plan L Cons:

• Only covers 75% of Medicare Part B copays/coinsurance, hospice care, skilled nursing facility and Part A deductible costs
• You must pay your annual Medicare Part B deductible share (25%) before Medigap L benefits can begin
• Does not include routine dental, vision, and hearing check-ups, long-term or private nursing care, hearing aids or retail prescription medications

Medigap Plan M

Don’t think you’ll go to the hospital anytime soon and want close to comprehensive coverage with cheaper monthly premiums? Then Medigap plan M may be your best Medicare supplement option.

Medigap Plan M Pros:

• Includes nearly all the same benefits as Medigap Plan G at a cheaper monthly price point
• Once you pay your half of the Medicare Part A deductible, it pays 100% of costs for approved services
• Includes a full year of free Medicare Part A hospital coinsurance and copayment costs once original Medicare benefits run out

Medigap Plan M Cons:

• Doesn’t cover any of your annual Medicare Part B deductible
• You get no protection from Medicare Part B excess charges in any given year
• Does not include routine dental, vision, and hearing check-ups, long-term or private nursing care, hearing aids or retail prescription medications

Medigap Plan N

If you’re looking for Medigap Plan G-level coverage and aren’t worried about excess medical charges, consider Medigap Plan N.

Medigap Plan N Pros:

• Includes all the same benefits as Medigap Plan G, minus Part B excess charge protections
• Cheaper monthly premium than Medigap Plans A-G
• You’ll pay a $20 copay for doctor’s office visits, and $50 copay for any trips to the ER

Medigap Plan N Cons:

• Doesn’t cover any of your annual Medicare Part B deductible
• You get no protection from Medicare Part B excess charges in any given year
• Does not include routine dental, vision, and hearing check-ups, long-term or private nursing care, hearing aids or retail prescription medications
• No out-of-pocket maximum cap, so if your health takes a bad turn, it may prove quite costly