Choosing the best Medicare Supplemental Insurance plan: A simple guide

We’re passionate about providing clear, simple information to help you select the right Medicare Supplement insurance plan. Everyone’s health needs are different, and wading through the vast amount of information on Medicare and Medicare Supplemental Insurance can at times seem overwhelming. That’s why we make it simple.

A Quick Primer on Medicare

Since 1965, Medicare has provided those in the U.S. who are age 65 and over, as well as certain other qualified individuals, with health insurance coverage for hospitalization and other types of health care related products and services.

The program is currently divided into four specific parts. These are:

  • Part A – Hospital Insurance – this covers any services that you might receive in an inpatient center, such as a hospital, nursing facility, hospice or home care
  • Part B – Medical Insurance – Part B covers your doctor’s visits, outpatient care and some preventative treatments
  • Part C – Medicare Advantage – this provides some private insurance companies for you to choose from if you don’t want Medicare
  • Part D – Prescription drug coverage

There are two ways to obtain Medicare coverage. One way is to choose Medicare Parts A and B, also known as Original Medicare. In this case, an enrollee can typically receive care from the doctors and other medical providers of their choosing.

The other option for obtaining Medicare is to choose Medicare Part C, or Medicare Advantage. This plan operates in a similar fashion to an HMO (Health Maintenance Organization) or a PPO (Preferred Provider Organization) in that enrollees must generally use the services of those providers who are part of the plan’s network.

Which Medicare Option is Best for You?

Which Medicare Plan 


Medicare Eligibility

Those who are eligible for Medicare coverage include:

  • People age 65 and over.
  • Individuals who are under age 65 and have been diagnosed with certain types of disabilities.
  • Those who are any age and who have End-Stage Renal Disease. (End Stage Renal Disease is defined as permanent kidney failure that requires dialysis or a kidney transplant).

What is Medicare Supplement and How Does It Work?

While many people are familiar with Original Medicare, some may not be aware that the program still requires enrollees to pay for a number of uncovered expenses such as deductibles, co-payments, and coinsurance.

Therefore, even though Medicare Parts A and B provide some coverage for your potential health care and hospitalization needs, this program also leaves a number of “gaps” in terms of out-of-pocket costs for enrollees. In fact, although the coverage provided by the government is extremely affordable and beneficial, it tends to cover only 80% of your medical expenses. In many cases these uncovered charges (e.g. deductibles, copays, prescriptions and other expenses) can really add up – potentially even making some services cost prohibitive or causing financial hardship.

This is where Medicare Supplement – oftentimes referred to as Medigap – coverage comes in. These plans are designed to fill in the “gaps” that are left by Medicare’s benefits, potentially saving policy holders thousands of dollars per year.

Comparing Medicare Supplement Plans

Today, there are 10 different standardized Medicare Supplement plans to choose from. Each plan is denoted by a letter of the alphabet – starting with Plan A. This Medicare Supplement plan provides the most basic set of core benefits. All of the other Medigap plans include the benefits that are offered in Plan A, along with additional coverage options.


2016 Medicare Supplement Insurance Plans

**Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to a $50 copayment for emergency room visits that don’t result in an inpatient admission.

Note: Medicare Supplement Plans D and G that were purchased on or after June 1, 2010, have different benefits than Plans D and G that were purchased prior to June 1, 2010.

Plans E, H, I, and J that were previously available for purchase are no longer offered. However, those who already have a Medigap Plan E, H, I, or J are able to retain these coverages.

Source: 2013 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare

Do You Qualify for Medicare Supplement Insurance?

In order to qualify for Medicare Supplement insurance, you must also be enrolled in Original Medicare (Medicare Parts A and B). Individuals who opt for Medicare Part C (Medicare Advantage) will not be eligible to also own a Medicare Supplement insurance policy.

How to Obtain a Medicare Supplement Insurance Quote

When you are ready to purchase a Medicare Supplement plan, there are a few steps that should be followed in order to ensure that you will be purchasing the coverage that is the best solution for your specific health insurance needs.

First, you should determine which of the Medicare Supplement insurance plans will be right for you. In doing so, review the comparison chart that outlines which benefits are offered in each of the available plans.

Next, you should obtain information on which insurance companies in your state offer Medicare Supplement coverage – as well as which plans are offered by each carrier. While all insurance carriers that offer Medigap are required to provide Medicare Supplement Plan A, different insurers may offer only some of the other plan options.

Finally, premium quotes should also be obtained. It is important to note that even though all Medicare Supplement plans of the same letter must offer identical benefits, the premiums can vary a great deal from one insurer to another. Therefore, it is a good idea to obtain quotes from more than one carrier prior to applying for your coverage.

How Much Will a Policy Cost?

Premiums for each of the plans are set by several different factors, including, but not limited to, the benefits one receives. The more benefits included in a plan, the more the premium will be. However, it should be stressed, that even though having all coverage creates the safest state of mind, you might not require all benefits, so why pay for something unnecessary? For this reason, plans A through N are all different and offer varying degrees of coverage – and it’s important to select the right plan for you before you being shopping for quotes.

In addition to the benefits offered, there are other factors that determine the cost of a policy. Because Medigap plans are issued and sold through private insurance companies, each insurer is allowed to set rates on these policies – so even though the benefits offered for each plan will be the same regardless of who you buy the policy from, the price that you pay for those same benefits can vary widely. As such, it’s crucial that you obtain multiple quotes before buying a Medicare Supplemental insurance policy.

There are three key methods for how Medicare Supplemental insurance premiums are determined. These include:

  • Community-rated (No-age rated) – Using the community-rated premium calculation method, also referred to as no-age rated, the same amount of monthly premium is charged to everyone who has a particular plan, regardless of the policy holders’ ages. Even though your premium on a community-rated plan will not increase due to your age, however, it may rise due to inflation or other factors.
  • Issue-age rated (Entry-age rated) – An insurer that prices Medigap coverage based upon issue-age, or entry-age, will determine your premium based upon the age that you are when you initially purchase your coverage. This is otherwise referred to as the time that the plan was issued. Using this pricing method, premiums will be lower for those who purchase a Medigap plan at a younger age. The premium may, however, go up based on inflation or other similar factors.
  • Attained-age rated – Using the attained-age premium calculation method, insurers will base your Medigap premium on your current age. This means that the premium will be based on the age that you have “attained.” In this case, the Medigap premium will start out low for younger policy holders, and it will rise as the individuals gets older.

In addition to these premium pricing methods, there are other factors that could also have an effect on your total premium due, such as your geographical location, marital status, possible discounts due to living conditions, deductibles and medical underwriting status. You may also be eligible for various premium discounts.


How and When to Apply for Medicare Supplement Coverage

The best time to purchase a Medicare Supplement insurance plan is during your Open Enrollment period. This time period starts on the first day of the month in which you turn age 65 and are also enrolled in Medicare Part B, and it lasts for the following 6 months.  

This is the best time to enroll because, during the “Guaranteed Issue Period,”

  • An insurance company can’t refuse to sell you any Medigap policy that it offers
  • No health exam is required
  • An insurance company can’t charge you more for a Medigap policy than someone with no health problems. This is especially important for individuals with adverse health conditions.
  • An insurance company can’t make you wait for coverage to start, or charge you a higher amount of premium if you have a pre-existing health condition. (This is not the case if you purchase a Medicare Supplement plan outside of your guaranteed issue or open enrollment period, however in many cases, a waiting period for coverage of pre-existing conditions is typically not an issue with Medicare Supplement coverage).
  • Once you have been accepted for a Medicare Supplement plan, as long as you keep making premium payments, your carrier is obligated to automatically renew your plan. This can also be especially beneficial for those who have adverse or pre-existing health conditions.

In addition, there are annual Open Enrollment periods where you can buy a new Medigap policy or change your existing one, with the same benefits as described above.

If you are not in your Initial Open Enrollment period (around your 65th birthday) or an Annual Open Enrollment period , you may still apply for Medigap coverage but, except for in the case of specific Guaranteed Issue Rights, your acceptance and premium rate cannot be guaranteed.  For example, if you are not applying during Open Enrollment, there is a possibility that, based on their underwriting requirements, an insurance company can refuse to sell you the Medigap policy.