Medicare Supplement Plans Explained

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    In this article I will cover the pros and cons of Medicare supplement Plans. The intent of Medicare Supplement Plans Explained is to help you understand how Medicare supplement plans work with your Medicare. In addition we will discuss what Medicare supplement plans cover and how they compare to Medicare Advantage Plans.

    Maximum Out-Of-Pocket (MOOP)

    Before we get started in the meat of this article there is an important Medicare insurance term you should understand.  That term is your annual Maximum Out-of-Pocket expense, fondly referred to as your MOOP.  Your MOOP is the most money you will be liable for in medical bills for in-patient or outpatient services during any calendar year. Once you have reached your plan’s MOOP, you have 100% insurance coverage for the remainder of the calendar year.  It’s a great way to measure the coverage of one health insurance plan versus another.  The plan with your lowest MOOP has the most insurance coverage because your out-of-pocket financial risk is the lowest.

    It’s important to know that your MOOP, as it applies to Medicare, never includes the cost of prescriptions drugs. Prescription drugs are separate. Also, your MOOP resets every January 01.  It’s an annual MOOP, based on a calendar year.

    Your Medicare Choices

    As you know from my Medicare Explained video, before you make any other decisions with Medicare you must first be enrolled in both Medicare Part A (inpatient services) and Medicare Part B (outpatient services).  This is referred to as Original Medicare. From there you can make one of three Medicare choices.

    Your first choice is to do nothing

    Just keep Medicare Part A and Medicare Part B (aka Original Medicare) as your insurance coverage and add Medicare Part D prescription coverage.  Of course, with just Medicare Part A and Medicare Part B and no other coverage, a person still has unlimited financial risk should you get sick or injured.  Your portion of the medical cost could still result in financial hardship.  You have no MOOP limit.  That is because Original Medicare was never intended to be full stand-alone medical coverage.  It was intended to be a part of your health insurance program.

    Most people are justifiably uncomfortable with having unlimited financial risk in the case of a medical event.

    So, your first choice leaves you open to unlimited your financial risk.  Your other two choices exist to limit your MOOP so you have a defined and manageable risk.

    Medicare Supplement Plans Explained

    Your Second Option

    You may choose to trade in your Medicare Part A and Medicare Part B for a Medicare Advantage Plan. To be clear, a Medicare Advantage Plan is not a Medicare supplement.  It does not supplement your Original Medicare, it replaces it.  You still must pay your Medicare Part B monthly premium to Medicare, but you are no longer using Original Medicare.  You don’t use your red, white and blue Medicare card.  The insurance company you choose for a Medicare Advantage plan will issue you their own insurance card for the plan you enrolled in.  I have a separate video called Medicare Advantage Plans Explained if want to learn more and see if they’re right for you.

    Your Third Option

    Lastly, you can choose is to increase your insurance coverage by purchasing additional insurance designed to complement your Original Medicare.  You do that by enrolling in a Medicare supplement plan and use that coverage in addition to Medicare Parts A and B.  When you have a Medicare supplement plan, Medicare pays first then your supplement pays all or some of what’s left.

    What Are Medicare Supplement Plans?

    Medicare Supplement plans are private insurance polices that work with your Original Medicare Part A & B.  They increase your insurance coverage so that your out-of-pocket maximum risk can be as low as just a few hundred dollars per year.

    Unlike Medicare Advantage Plans, the Medicare supplement has no say in your insurance coverage.  All decisions are made by Medicare, which relies on your doctor to help determine medical necessity.   It is Medicare’s intent to cover everything that is medically necessary.

    A great feature of Medicare supplement plans is that the benefits are standardized so that they are the same from one insurance company to another.  That means all Plan G’s are the same, all Plan N’s are the so and so on.  The only difference is the price, both today’s price and tomorrows.

    Medicare Advantage vs Supplement

    According to the Kaiser Family Foundation research, more than seven out of ten people enrolling in Medicare choose either option one (keeping just Medicare Parts A & B) or option two; adding a Medicare supplement as secondary insurance with Medicare Parts A & B being their primary insurance.

    The first question you might have is Why?  Why choose to add a Medicare supplement plan to your Medicare Part A and Medicare Part B?

    The reason is simple; With a Medicare supplement plan you, the Medicare beneficiary, get to keep all the benefits of Original Medicare while limiting your financial risk in the case of a medical event.

    With a Medicare Advantage Plan, you give up the benefits of Original Medicare and place a private for-profit insurance company in charge of your healthcare.

    What Does a Medicare Supplement Plan Cover?

    The next obvious questions you may be asking then is “What are the benefits of Original Medicare that we get to keep when we enroll in a Medicare supplement plan?” and “By how much can I limit my financial risk?”.

    Good questions

    There are two major benefits of Original Medicare that you keep when you get a Medicare supplement.

    Medical Necessity

    It is Medicare’s intent to cover everything that is Medically Necessary.  This may be everything from physical therapy to surgery and all in-between.  It’s not like other insurance products where they list what is covered and leave you guessing what isn’t on the list. With few exceptions, if it is Medically necessary Medicare’s intent is to cover it.  How does Medicare determine Medical Necessity? They ask your doctor.  This too is unlike other insurance products.  With most any other insurance you may have had in your lifetime, it’s the insurance company that makes a final judgement over what is or is not covered.  In fact, your doctor has to ask permission before proceeding with your treatment.   This is huge.  With Original Medicare, you and your doctor control your healthcare. Not an insurance company. That’s the first benefit.

    Freedom of Choice

    The second benefit of Original Medicare you get keep with a Medicare supplement is that you can see any doctor or go to any hospital in the United States or its territories.  You have national coverage.  As long as the medical provider accept Original Medicare, your insurance will cover you.  There is no limiting Network and virtually every doctor and hospital in the country and its territories accepts Medicare.

    For most people, those two simple benefits are the most important features of their healthcare.  You have freedom of choice, choosing any doctor or hospital available, and you have control over your healthcare because your doctor never has to get their recommended procedure or tests pre-approved by an insurance company.  That is why more than 70% of the people starting Medicare today keep Original Medicare as their primary insurance.

    One caveat; there are some doctors that will accept select Medicare Advantage Plans but not Original Medicare.  In some cases, the doctor is an employee of the Medicare Advantage company.  We see this with Kaiser in California, for example.  In other cases the Medicare Advantage plan may pay a doctor a monthly bonus for their business and the doctor decides to only accept their insurance in order to increase their bonus.

    I should note, preventive care is run slightly differently between Original Medicare and Medicare Advantage plans.  With Original Medicare, preventive care is allowed on a specific schedule set by Medicare. Some preventive care tests can be completed annually, or every other year and so on.   I have another video specifically on that subject called Avoid Surprise Medicare Bills. It’s an important video for everyone on Original Medicare and it’s linked in the top corner of this video.

    Are Medicare Supplement Plans Worth It?

    Now we know the benefits of Original Medicare that are passed on to a Medicare supplement.  The next question to answer is “By how much can a person limit financial risk?”.

    There are more than 10 Medicare supplement plans to choose from, but there are usually only three or four whose price and benefits are worth considering.

    Within those options you can limit your financial exposure to medical bills down to zero or just a few hundred dollars per calendar year.  Or limit your financial risk to approximately $2,500 in any calendar year when looking at the one of the two High Deductible Medicare supplement plans.

    Think about that.  With a Medicare supplement plan you have national coverage.  You can see any doctor, go to any hospital in the entire country as long as they accept Medicare.  Plus you and your doctor control your healthcare, not an insurance company.  And, you can limit your financial risk, your annual maximum out-of-pocket for medical bills, your MOOP I mentioned earlier, down to near zero.

    No other health insurance program in the country provides the consumer with this much freedom and control.  You have the freedom to use the medical provider of your choice and control over your medical decisions.  Considering how inexpensive Medicare supplement premiums are, the Medicare supplement is one of the best values in healthcare.

    One point of confusion is with the Medicare supplement plan benefit table and the your Maximum Out-of-pocket.  I have a separate video that details your maximum out-of-pocket with Medicare supplement Plans and answers why there is so much confusion around this subject.  You should view that video here: 

    The Best Medicare Supplement Plans

    The next question you may be asking yourself is which Medicare supplement is right for you?

    First, understand that all these plans are good plans.  I frown on suggesting there is a BEST Medicare supplement plan because the right plan for you may not be the right plan for someone else.  It depends on both the individual and your geographic location.

    The medical benefits of each Medicare supplement plan are written into Social Security law so they do not vary from one insurance company to another. In addition, none of the Medicare supplement insurance companies has any say in what is or is not covered or even how much is paid.  Medicare calls the shots and makes all decisions.

    How Your Supplement Works With Medicare

    You go to a doctor, and they copy both your red, white and blue Medicare card and your Medicare supplement card.  But the doctor only bills Medicare.  Medicare pays its portion and sends an electronic communication to your Medicare supplement plan instructing them on what to pay, who to pay and when.  The Medicare supplement insurance company simply does as instructed.  If, after these payments, there is still money due.  It must be a copay or deductible your Medicare supplement plan does not cover by design.  That would be the amount you owe.

    One exception; if your doctor requires that you pay upfront for services and be reimbursed by Medicare, they are likely a Non-Participating Medicare provider and may charge an excess fee.  Excess fees can be up to 15% more than Medicare’s assigned rates.

    So, in choosing a Medicare supplement plan you need to ask yourself how much insurance you want, and how much you can afford.

    The Medicare supplement plan that is right for you is the one that fits both your needs and your budget.

    I have articles and videos on each of the Medicare supplement plans you should consider.  Go to my “New to Medicare” tab to see links to each video and article.

    How Much Does Medicare Supplement Insurance Cost?

    Prices on Medicare supplement plans can vary by 100% or more from one insurance company to another and from one state to another.  For example, the price of a Medicare supplement plan for a 65-year-old in New York or Miami can cost three times more than the same plan in Virginia or the Carolinas.

    The same can also be said between insurance companies.  The cheapest priced plan in any state can be one third the price of the most expensive plan.  There is no difference in Medicare benefits between one insurance company and another, but there is a big difference in premiums.   Choosing the right insurance company is important.

    At Medigap Seminars we work hard to help you find the insurance company that is most likely to provide you your lowest premiums over your lifetime.  The lowest price over your lifetime is not always today’s cheapest plan.

    Can a State Override a Medicare Law?

    The next thing you need to know about Medicare supplement plans is that many states have created laws that override Medicare to the benefit of the consumer.  Some states have annual special enrollment periods.  Some states outlaw certain Medicare charges, which favors one plan over another and so on.  These laws can impact your decision on which Medicare supplement plan is right for you.

    Trying to find out if your state has specific laws can take hours of internet sleuthing.  I know, I’ve done it. But, to make it easy for you we include a couple paragraphs discussing your states rules, if there are any, in our email to you whenever you request a Medicare supplement plan quote from us.  Use our free Medicare supplement plan quote request and we will provide you that information for free.

    Medicare Supplement Enrollment Period

    Next from this Medicare supplement plans explained article, you will want to understand enrollment periods.  The enrollment period for a Medicare supplement plan is different than the enrollment period for any other part of Medicare.  That’s important.

    First, in most states you can apply for Medicare supplement plan up to six months before it is to start if you are new to Medicare Part B. You are simply getting the application process out of the way.  States with application dare exceptions to this Medicare rule include:

    Connecticut: No more than 60-days prior to the effective date.

    Maine, Missouri and Washington State:  No more than 60-days prior to the effective date.

    New York:  up to 90-days prior to the month the applicant turns 65

    Wisconsin: Applications may be accepted up to three months prior to the Medicare Part B eligibility date.

    Medicare Supplement Initial Enrollment


    Warning: some insurance companies consider your Medicare Supplement initial Enrollment Period to be the first six calendar months of your Medicare Part B coverage. But some insurance companies use a 360-day year, which means your Medicare supplement Initial Enrollment Period is only 180-calendar days from your Medicare part B start date.


    If you are not new to Medicare Part B, your application can typically be submitted no more than 60-days prior to its proposed effective date.  There are often exceptions to this rule during the Annual Election Period when a person is switching from a Medicare Advantage Plan to Original Medicare and a supplement.

    This is what’s important; your Medicare Supplement Initial Enrollment Period lasts for six-months or 180-days.  It starts the day your Medicare Part B becomes effective.  That initial enrollment period is when you can get any plan available to you without any medical questions.  You can get any plan at the best price it’s offered, and no health questions asked.

    For example, if your Medicare Part B starts on July 01. Right in the middle of the year.  In most states you can apply and get the application process completed starting the previous January 01 and you can still apply without any medical questions asked up to December 31.  With some insurance companies, your enrollment period  will end December 28th.  Still, this gives you the entire year to complete the process, no medical questions asked. No one can deny you coverage.

    When Can I Switch My Medicare Supplement Plan?

    After you have been on Medicare Part B for more than six-months you can still apply for a Medicare supplement plan any day of the year.  You can switch plans, switch insurance companies, do anything you want as often as you wish.  However, in order to do so you must qualify medically.  The insurance company you are applying to has the right to deny your request if your current or recent medical history includes serious critical or chronic illness. They can deny your request for a new Medicare supplement policy. In which case you just keep what you have.

    Three important points to build on this.  One is don’t assume your condition, if you have one, will disqualify you.  You can be two years cancer-free or had open heart surgery 10-years ago and still qualify.  Every insurance company has a different set of underwriting guidelines.  We help with this, so just ask.

    Expect Us to Ask About your Medical History

    Two, an insurance company is very likely to request underwriting even if you are changing plans within the same insurance company. That is standard.  If your insurance company says they will let you switch plans at any time without underwriting, be careful of what they are not saying.  What they are not saying is “at what price”. Don’t assume it’s at the same price as if you qualified medically.  It’s not.  Those companies have a separate price table and it’s much higher for people who switch plans without underwriting.  I know, I work with these companies.

    Third; there is no annual election or open enrollment period for Medicare supplement plans.  The Annual Election and Open Enrollment period pertain only to Medicare Advantage Plans and Medicare Part D prescription drug plans.

    Of course, some states have special rules. As I mentioned earlier.  New York, Connecticut and Vermont have a perpetual Open Enrollment Period for Medicare supplement plans.  Washington state allows you to switch Medicare supplement plans at any time, no medical questions asked, if you already have a Medicare supplement.  Other states allow consumers to switch plans during a birthday month or a policy anniversary, without medical underwriting but with other limitations.

    What About Pre-Existing Conditions?

    Lastly, in most states you can become subject to a period of pre-existing conditions when switching Medicare supplement plans.  This confuses a lot of people.  So please understand it is very easy to avoid any pre-existing condition clause because one of two conditions must exist before you can be subject to pre-existing conditions.

    • The first condition is that you must have a gap in Medicare coverage of at least 63-days. This includes either a Medicare supplement or a Medicare Advantage Plan.
    • The second is if you try to switch Medicare supplement plans without holding on to the first plan for at least six-months.

    One of these two conditions must apply after your Medicare supplement plan initial enrollment period in order for you to be subject to a preexisting condition.   Even then, the preexisting condition clause can last no more than six-months and is often less.  Speak to one of our knowledgeable insurance agents for more details.   Consult with us personally if you have questions.

    So, there it is.  Medicare supplement plans explained.  Your next step is to either check out my Medicare Advantage Plans Explained video or one of the other videos I mentioned earlier and linked above. Or, of course, call us T 800-847-9680  for personalized service.


    Matthew Claassen, CMT and CEO of Medigap Seminars Insurance Agency. Medigap Seminars is an award winning premier national Medicare Insurance Brokerage, ranked among the top in the U.S.A. Matthew is considered a leading national expert on Medicare and Social Security. Mr. Claassen is a distinguished member of the Forbes Business council, an invitation only organization of business leaders and entrepreneurs. He and his team have received awards from many of the countries largest insurance companies including Mutual of Omaha, Aetna, Humana, Cigna, United American, United Healthcare and others. His videos have become the most popular Medicare educational videos on YouTube with millions of views. As a financial analyst Matthew lead a team of researchers to win the 2009 Best Equity Research & Strategy Award from The Technical analysis magazine.


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