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How to Choose the Best Medigap Plan for Your Needs

best medigap plan

Many folks do not realize that Medicare will not cover all of their medical expenses. Here's what you need to know to choose the best Medigap plan.

Ready to settle into your comfy chair and enjoy living on the golden nest egg you've worked so hard to build over the years?

Not so fast.

Before you embark on your golden years, make sure that your Medicare and Medigap arrangement is squared away.

Your health and life depend on it.

Although Medicare is certainly invaluable for addressing your health needs at age 65 and beyond, it's not enough. You also need a Medigap insurance policy through a private insurance company to fill in all gaps in your original Medicare coverage.

In other words, Medigap picks up the tab when Medicare won't cover it all, so you're doubly covered.

The problem is that a dizzying number of Medigap options are available. That means picking the right one can leave you feeling like you're in a tailspin.

We've compiled a guide to help you to choose the best Medigap plan and enjoy a safe landing as you enter retirement territory.

Let's get into it!

Medigap Options

Read aloud a list of all of today's Medigap options and you'll feel as though you're reciting the 1-800 number in an old Hooked on Phonics commercial.

There's A, B and C.

Then, D, F, and F+.

Followed by G, K, and L.

And finally, M and N.

Eleven different supplemental plans — no kidding.

Most of these plans do not cover benefits such as prescriptions, hearing aids and dental or vision care. But they are helpful in many other ways.

Fortunately, we've got the 411. We'll break down what each plan covers and which plan may be best for you based on your unique circumstances.

Hospital Costs and Coinsurance

If you'd like hospital expenses covered for up to an extra year after you've used up your Medicare benefits, all supplemental plans, fortunately, cover this benefit.

Each plan also covers Medicare Parts A and B coinsurance — the amount you usually pay after you have met your yearly deductible.

However, Medigap Plans K and L cover Part B coinsurance only at 50% and 75% respectively.

Also, note that even though Plan N covers Part B coinsurance at 100%, you might have a $20 copay for an office visit or a $50 copay for an ER visit in some cases.

Hospice Care and Other Benefits

If you're concerned about hospice care costs, you can find solace in the fact that all plans will also cover your Part A hospice coinsurance.

However, as with hospital costs, Plans K and L cover it at only 50% and 75% respectively.

This level of coverage is true for the following benefits as well:

  • Having three pints of blood drawn
  • Coinsurance for care in a skilled nursing facility
  • Part A deductible — what you have to pay before your insurance company will pay a claim

So, why exactly would you want Plans K and L, then?

Yes, Plans K and L offer only partial coverage compared with the other plans.

But what makes Plan K so appealing is that the monthly premium is low. Still, watch out for the deductible, which may be higher than you'd like.

Likewise, Plan L offers a low monthly premium, with other policyholders offsetting these costs. It's another economical option if your premium expenses are a major factor in your decision.

Part B Deductible and Excess Charge

Trying to meet your deductible for Part B can be annoying. Unfortunately, when it comes to receiving help with a Part B deductible, you're out of luck with most supplemental plans.

Plans C and F are the only supplemental plans that offer this coverage, so take advantage of them if the Part B deductible is a concern.

In addition, you may run into a Plan B excess charge in some cases.

You'll face this charge if the medical provider charges more than what Medicare wants to pay for a particular service. The amount that Medicare doesn't want to pay is the amount you'll end up owing.

The only supplemental plans that cover this excess charge are Plans F and G. If you don't want to bother with an excess charge, these plans should be at the top of your list.

Foreign Travel

If you enjoy traveling, it's best that you choose a Medigap plan that provides emergency coverage for those traveling abroad.

You can receive 80% coverage abroad with Plans N, M, G, F, D, and C.

These plans will cover you during your first 60 days of travel, which Medicare will not cover. And your lifetime limit is $50,000.

Note that before you can use this coverage, you must meet a $250 yearly deductible.

The Most Coverage Available

If this is what you're looking for, Plan F might be the right personal option.

And you're not alone.

A total of 66% of people choose this plan, as it provides complete coverage compared with the other supplemental plans.

With this plan, you receive 100/% coverage for all supplemental benefits besides foreign travel care, where your coverage amount is 80%.

You can also choose Plan F+, a Plan F option with a higher deductible. This plan is ideal if you care more about your monthly premium payment than your deductible costs.

Limits on Out-of-Pocket Payments

You may prefer to spend up to a certain amount in out-of-pocket costs and then let your insurance company handle the rest.

And that's okay.

If you like having out-of-pocket limits, the Plans K and L may be your best choices.

As of 2017, Plan K offers 100% coverage after you have spent a total of $5,120.

Meanwhile, the total is $2,560 for Plan L.

Still, be mindful that these plans provide the lowest amount of coverage prior to your reaching the out-of-pocket limits.

Out-of-Pocket and Premium Expenses

If you're interested in saving on both of these costs, then Plan G is an excellent choice.

Plan G provides coverage for every supplemental benefit except for your Part B deductible expenses. And the monthly premium is moderate.

How We Can Help

Retiring can be one of the most thrilling events of your life. But it can also be one of the most intimidating and confusing.

That's why we exist. We offer the guidance you need to choose the right plan.

Contact us to learn more about each Medigap plan and how it can add value to your life during what should be the best years of adult your life.