Part C isn’t for everyone — some enjoy expanded coverage through Medigap

Ready to make your Medicare choices for 2021? You may already know your “ABCs” —but, should you opt for Medicare Supplement Insurance (aka Medigap)?

Most of us know that healthcare costs under Medicare are divided into four parts: A, B, C, and D. Parts A and B comprise basic coverage, with A covering hospitalization and inpatient care, and B covering preventive services and medically necessary outpatient services. Part D covers prescription drugs.

What about Medicare Part C? Because while Parts A, B, and D are known as "Original Medicare," Part C is what's been marketed as "Medicare Advantage": plans offered by Medicare-approved private companies that included Part A and Part B coverage, plus (in most cases) Part D.

If you've opted for Original Medicare, you may want to look into aptly-named Medigap.

This is private Medicare supplement insurance that helps to fill "gaps" in Original Medicare coverage, including copayments, coinsurance and deductibles, as well as other out-of-pocket costs.

You must have Medicare Parts A and B in order to purchase a Medigap policy, but you cannot have a Medigap and Medicare Advantage plan simultaneously.

... More Letters?

There are 10 lettered Medigap plans: A, B, C, D, F, G, K, L, M and N. Most need only read up on the two most comprehensive and popular Medigap plans: F and G. As well as Original Medicare coverage, Plans F and G both include coverage of Part A hospice care coinsurance or copayment; skilled nursing facility care coinsurance; Part A deductible; and 80% of emergency care expenses incurred while traveling abroad (up to plan limits).

Medigap Plan F

Medigap Plan F is widely popular, as it's affordable (average cost of $169 per month in 2018). It includes Part B deductible coverage. However, Plan F is no longer available to Medicare first-timers. If you already have a Plan F, you can keep it. Or if you were eligible for Medicare before January 1, 2020 but didn't previously opt for a Medigap plan, you can still get Plan F coverage.

Medigap Plan G will likely replace Plan F as the most popular choice. It offers almost identical coverage, except for reimbursement of the Plan B deductible - due to changes, no Medigap plan is allowed to cover the Part B deductible. The upside is that the average Plan G should be around $180 per year cheaper than equivalent Plan Fs.

Other Medigap Plans

Predictably, Medicare Supplement plans carry premiums that roughly correlate with the benefits offered by each. So Medigap Plan A, which includes the most basic coverage of the 10, is usually the most affordable. Likewise, Plans K and L usually have lower premiums than most other Medigap plans, but both of these require higher out-of-pocket costs. Plan N is more comprehensive than K or L, but still requires a copay for some office and emergency room visits.

California's "Birthday Rule"

While Medicare is a federal program, California has a state-specific law so people can change plans with no medical underwriting, as long as this is done within the two months around their birthday. This only applies to those already enrolled in a Medigap plan, and allows a beneficiary to either keep their existing plan (but switch companies) or to choose one with fewer benefits. (You can still apply for a Medigap plan outside of this "birthday window", but it wilI be subject to medical underwriting).

Varying Costs

While any Medigap plan with the same letter designation will offer standardized benefits, premium costs may vary widely depending on where you live, your gender, age, and tobacco use. A Kaiser Family Foundation report released in 2013 found that smokers typically pay 12% more for their Medicare supplement plan premiums than equivalent non-smokers, and that price gap will usually grow as a tobacco-user ages, so if you need an additional reason to give up the habit, this is the perfect time.

—Paul Rogers, Custom Publishing Writer