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How do Medicare Supplement Plans Work with Medicare?

Updated: June 24, 2024
By: Jonathan Trout
Jonathan Trout
Content Manager
Jonathan is a former product and content manager for Retirement Living. His background spans sales/marketing, finance, and telecommunications. Jonathan’s expertise in consumer wellness and research-backed data stories helped educate seniors on financial planning, retirement, and community resources. Jonathan graduated from Oklahoma State University with a B.S. in Environmental Sociology.
Content Manager
Edited by: Lauren Hamer
Lauren Hamer
Sr. Editor
Bringing more than a decade of editorial experience to Retirement Living, Lauren focuses on reporting senior-related issues, including retirement planning, finance, consumer protection, and health and wellness. Lauren has edited consumer content for Credible, Angi, Slickdeals, Jobs for the Future, and more.
Sr. Editor

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You’ve had a lifetime of working, probably covered by your employer’s insurance. However, when you turn 65, you have other choices to consider when it comes to health care coverage. You will need to decide on signing up for a Medicare Advantage plan or decide on Medicare with a Medicare supplement plan (Medigap) to fill in the gaps associated with Medicare.

Medicare Advantage and Medicare supplement plans do not work together – you have to choose one or the other. If you choose the original Medicare option, Medicare supplement plans are important because these plans add an extra element, or boost, to your main coverage by paying for gaps for stand-alone prescription drug plans, employer group health coverage and other retiree benefits. Original Medicare will pay first, followed by the payment by the Medicare supplement plan you’ve subscribed to in order to fill in the gaps.

However, if you are retired already or plan to retire soon, investigating Medicare’s full package – or a Medicare Advantage policy – should be on your to-do list during the three-month period before your 65th birthday and the seven months afterward. Part A covers most inpatient hospital stays, blood transfusions and hospice care, while Part B may cover doctor visits and preventive care such as wellness exams, outpatient surgeries and diagnostic tests, and some medical supplies and equipment.

Keep in mind that this may not be the end of your medical costs. While Part A and Part B cover most of the costs of many health care services, there are deductibles from procedures and services that add up quickly. This is why you need to consider Medicare supplement plans to cover the “gap” between Medicare and other costs.

How Medicare supplement insurance plans work with Medicare plans


Source: Getty

There are up to 10 standardized plans available – labeled A, B, C, D, F, G, K, L, M and N – that cover anywhere from four to nine of these benefits:

  • Medicare Part A coinsurance for hospital costs (up to an additional 365 days after Medicare benefits are used)
  • Medicare Part B coinsurance, copayment
  • First three pints of blood for a medical procedure
  • Part A hospice care coinsurance or copayment
  • Skilled nursing facility care coinsurance
  • Part A deductible
  • Part B deductible
  • Part B excess charges
  • Foreign travel emergencies

Keep in mind, all 10 Medicare supplement plans cover the coinsurance and 100 percent of hospital costs for Medicare Part A, but after that, plans differ in what they cover. For example, only Medicare supplement plans C and F cover the deductible of Part B. Other examples of how Medicare supplement plans work with Medicare include:

  • All plans include coverage for blood work at varying levels; Plan K covers it 50 percent and Plan L covers it at 75 percent. The remaining eight plans fully cover blood work at 100 percent.

  • If you have to endure a lengthy hospital stay, a Medicare supplement plan can save you money. For example, coinsurance for hospitalization costs $335 per day for days 61-90. Beyond day 90, the cost is $670 until a lifetime reserve is met, in which case you must pay the rest of the costs. Keep in mind you must pay your Medicare Part A deductible before receiving these benefits.

  • Medicare supplement plans don’t cover routine dental or vision care, hearing aids, glasses, private nursing or long-term care. You’ll need to purchase other insurance for those costs or pay them yourself.

Medical supplement (Medigap) plans rules to keep in mind

  • You must be enrolled in Medicare Part A and Part B to get a Medicare supplement plan.

  • You pay the private insurance company a monthly premium for your Medigap policy in addition to the monthly Part B premium you pay to Medicare.

  • A Medigap policy only covers one person, so your spouse will need to apply separately.

  • If you have a Medicare Advantage Plan, you must leave it first before your new Medicare supplement (Medigap) policy begins; apply for the Medigap plan first before you leave your other plan.

  • Buy a Medigap policy from an insurance company licensed in your state to sell them.

  • Any standardized Medigap policy is guaranteed as renewable even if you develop health problems later on; the insurance company can’t cancel your policy as long as your premiums are paid.

  • In the past, some Medigap policies covered prescription drugs; however, this is not possible today. For prescription drug coverage, you can join a Medicare Prescription Drug Plan (Part D), which is a stand-alone policy. You can also look into prescription drug discount cards.

  • It’s illegal for someone to sell you a Medigap policy if you have a Medicare Medical Savings Account (MSA) Plan.

  • Every Medigap policy must be clearly identified as “Medicare Supplement Insurance.”

  • Medicare SELECT plans require you to only use doctors and hospitals in provider networks. This is an important factor if your doctor is not listed and you prefer to remain with that doctor’s service.

  • Premium costs may vary by plan and location, even for the same standardized benefits. That’s why you must research your options in your state and make your decision based on how well each plan works for your situation.

  • If you live in Minnesota, Massachusetts or Wisconsin, Medigap policies are standardized differently.

  • Medigap policies are not always available to disabled beneficiaries under the age of 65.

  • Don’t just consider the price per month of a Medicare supplement insurance policy plan. Also consider the benefits each plan includes, and excludes.


Source: Getty

Medicare and its related costs are tricky and your choices may be confusing. What works for one applicant is not for every applicant. For example, if you are still working, you might choose to remain on your employer’s group policy. But that doesn’t mean you can’t – and shouldn’t – sign up for Medicare when your 65th birthday comes around.

You can get a part of Medicare, the free benefits that cover some hospital services, even if you are still working and don’t need the full package. That is just one example of how it pays to do your homework on Medicare and other insurance choices by researching policy information to ensure your needs match your policy’s benefits.

Before making any final decisions regarding Medicare and Medicare supplement insurance, speak to a policy expert professional to make sure you are covered properly and your premium is affordable for your budget.