Do I Really Need Supplemental Insurance With Medicare?
Medicare Supplement Insurance, or Medigap, isn’t required — but we recommend considering it if you have Medicare Part A and Part B.
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Medicare Supplement coverage is optional, but it’s a good idea if you can afford it. It can cover most out-of-pocket costs associated with Original Medicare (Part A and Part B).
About 42% of people with Original Medicare have Medicare Supplement Insurance. Among those members, 93% are satisfied with their plan and 83% say it’s a good value, according to AHIP, a national health insurance trade association.
But Medicare Supplement plans can be pricey, and they don’t cover everything. Your income and tolerance for risk might determine whether it’s a good fit for you.
What is Medicare Supplement Insurance?
Medicare Supplement Insurance, or Medigap, is optional coverage sold by private insurance companies. It helps cover the out-of-pocket costs you owe with Part A and Part B.
Here are examples of what Medigap plans can cover:
Key Medicare Supplement benefits
Plans might also cover some other benefits such as blood products or emergency care during overseas travel.
Most states have standardized Medicare Supplement plan types with letter names. Costs and benefits vary by plan type. Plan G and Plan N are most popular with new Medicare members.
What does Medicare Supplement Insurance not cover?
It’s important to know that a Medicare Supplement plan can’t cover everything. All Medigap plans sold to new Medicare members don’t cover the following:
Part B deductible (since 2020, new Medicare members can’t buy any plan that covers the Part B deductible, although existing members may own older plans that do).
Prescription drugs (that's Medicare Part D).
Long-term care (like non-skilled care you get in a nursing home).
Private-duty nursing.
Medicare Supplement Insurance only works with Original Medicare. If you have Medicare Advantage, you can’t buy or use a Medicare Supplement plan. (If you’re switching to Original Medicare, you can shop for a Medigap plan to go with it.) » MORE: Original Medicare vs. Medicare Advantage
Compare Medigap plans
How much does Medicare Supplement Insurance cost?
Costs for Medicare Supplement Insurance can vary by plan type, insurance company and your age, sex, location and health.
Here are example prices for the two most popular plan types for a 65-year-old female nonsmoker in Atlanta, a city with roughly average Medigap premiums:
Plan G: Starting at $131.
Plan N: Starting at $93.
A $400 Medigap Plan G policy has the same standardized Medicare coverage as one that costs $131. Companies may add on extra perks like discounted gym memberships, but the core Medicare benefits are the same, so go ahead and compare based on price.
Medicare Supplement Insurance pros and cons
Coverage: Plan G covers almost all out-of-pocket costs for Part A and Part B.
Flexibility: You can choose a plan type to fit your budget and desired level of coverage.
No networks: You can see any provider who accepts Medicare.
Cost: Premiums for Medicare Supplement Insurance can get pricey, especially for popular high-coverage plan types.
Enrollment period: You generally only get one chance to sign up without medical underwriting, so it can be expensive or even impossible to change your coverage later in life.
Is Medicare Supplement Insurance worth it?
You could pay $100 to $150 per month or more for Medicare Supplement Insurance when you sign up at age 65. And the cost will go up over time.
Is it worth it? That might depend on your finances, your health and your tolerance for risk.
Some people would rather consistently spend $150 per month to know their out-of-pocket costs are largely taken care of. The cost might be worth the peace of mind.
Others might prefer to spend less on premiums and deal with some out-of-pocket costs as they come. That doesn’t necessarily mean going without Medicare Supplement Insurance entirely. Options like Plan K or high-deductible Plan G have lower premiums while still offering some protection against unexpectedly high costs.
Nerdy Perspective
Do you need supplemental insurance with Medicare?
Unlike certain parts of Medicare, there’s no penalty if you don’t sign up for Medicare Supplement Insurance. But if you have Original Medicare and can afford Medigap, I strongly recommend buying a Medigap policy. It’s probably the best way to protect against unexpectedly high out-of-pocket costs.
If Medigap isn’t affordable, you might want to look into programs that can help with Medicare costs, such as Medicare Savings Programs and Extra Help subsidies.
» MORE: What if I can’t afford Medicare?
Shopping for Medigap plans? We have you covered.
MEDICARE SUPPLEMENT, or Medigap, is private health insurance that covers “gaps” in traditional Medicare coverage. Compare options from our Medigap roundup. | |
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When is the best time to buy a Medigap plan?
The best and easiest time to buy a Medicare Supplement plan is your Medigap open enrollment period.
This period happens only once. It starts once you’re 65 and enrolled in Medicare Part B, and lasts for six months. (If you're still working after 65 and covered by a group employer plan that is deemed creditable coverage, your six-month period starts after you’ve ended active employment or no longer have that insurance.)
Medigap policies are cheapest and easiest to get during this open enrollment period because insurance companies aren’t allowed to factor your health or medical history into your price. After the period ends, the prices may go up or you may be denied coverage due to your health status or medical history.
In some states, insurance companies sell Medigap plans to those under 65 who are living with a disability and are eligible for Medicare. You can find more information through your State Health Insurance Assistance Program, or SHIP.