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Medicare Supplements (Medigap)

Nurse chatting with a senior woman sitting in a wheelchair.Original Medicare does not cover all hospitalization and outpatient medical treatment costs, such as doctor visits or outpatient procedures. The basic Medicare plan has two main gaps in coverage: the initial deductible in the hospital part of the coverage, called Part A, which is set at $1,600 for the first 60 days of hospitalization in 2023, and the initial deductible in the medical part of the coverage, called Part B, which is $233 this year, along with an unlimited 20% coinsurance.

If you only have the basic Medicare plan, you may be exposed to high copayments, which can amount to hundreds or even thousands of dollars, especially for more serious outpatient procedures or because of hospitalization. One way to reduce or even eliminate these costs is to purchase a Medicare supplement plan, commonly known as Medigap. These plans provide secondary coverage of treatment costs to basic Medicare insurance. To purchase such a plan, you must have both Part A and Part B of the basic Medicare plan, and you cannot be a member of a Medicare Advantage plan at the time of activating the supplemental plan.

Supplemental insurance is offered by private insurance companies. Currently, ten standardized plans of this type are offered within the Medicare supplement plans, each designated by a letter (A, B, C, D, F, G, K, L, M and N). Each letter denotes a plan offering a different range of coverage gaps in the basic Medicare plan. These types of plans are available in most US states; only Wisconsin, Massachusetts, and Minnesota have slightly different versions. The scope of coverage for each of these plans is standardized, which means that, for example, plan G, purchased from any insurance company, will provide us with an identical range of coverage. However, monthly premiums will vary from company to company, as each insurance company has its own method of calculating premiums for such a plan.

Some companies offer low premiums when we join their insurance, but then make significant increases after a few years. In contrast, other companies offer higher initial premium costs, but their increases over many years are more evenly distributed, and you will not be surprised by sharp price increases. According to data published on the American Association of Medicare Supplement Insurance, most Medicare supplement plans do not require referrals to specialist doctors from primary care physicians, and they provide unlimited access (no network) to most hospitals and medical facilities, assuming they accept patients with Medicare. However, the rather high premium costs of these plans can vary depending on the selected plan, the method of premium valuation used by a particular insurance company, the age, or sometimes the health status of the insured person.