Medicare Supplement Plans

Medicare Supplement plans (aka Medigap) are used to help pay for some of the healthcare services covered/allowed by Medicare but not fully paid for. In other words, it helps fill some of the gaps of Original Medicare coverage.

Here’s an easy way to think of a Medicare Supplement. Picture it as a card that sits on top of your Original Medicare. It serves to pay for the costs that normally Medicare would pass on to you. Medicare has gaps, like coinsurance, copayments, and deductibles. You must pay for these when accessing medically-approved services.  You will still show your original Medicare card when accessing services.

You will pay your Part B premium ($164.90* for 2023 to Medicare), and then pay for your Supplement Plan on top of that.  If you have a Supplement policy, Medicare will first pay its share of your medical expenses, then your policy will step in and pay its share. This is usually the remainder of your bill, however, it depends on which policy you choose from the standard offered plans.

*Most beneficiaries pay the base premium of $164.90.  An IRMAA  (Income-Related Monthly Adjustment Amount) applies to high-income earners, and they will pay a higher premium.

Part D (Prescription Drug) Coverage

When selecting a Supplement Plan, it’s important to note whether it includes creditable Prescription Drug Coverage.  Medicare considers “creditable” coverage to include plans that have similar or better coverage than Part D coverage.  This is important to note when selecting a plan because if you wait to enroll in a Prescription Drug Plan at a later date, you will pay a penalty for not having creditable Prescription Drug coverage, which will be calculated from the time of your initial (or special) enrollment period. An exception to the penalty comes into play if your previous plan included creditable drug coverage, for example through an employer plan, and we can help you take the steps to prove this to Medicare.

Many of the most popular Supplement plans, such as Plan G, do not include creditable drug coverage, so we would encourage clients to enroll in Plan D to avoid a surprise penalty added on to their creditable coverage later.  Even if they enroll in a Medicare Advantage plan at a later date, they will most likely pay the penalty for not having creditable drug coverage added to their monthly premium.