Medicare Supplemental Plan B is sometimes confused with Medicare Part B, the portion of Original Medicare that covers necessary and preventive outpatient medical services. They are not the same, and it is important to understand that Medicare Plan B coverage pays some of the medical expenses that Original Medicare Parts A and B do not cover.
What Is Medicare Plan B?
As one of the ten approved Medicare Supplemental Plans, Plan B, also called Medigap Plan B, provides full coverage for five of the nine policy benefits specified by Medicare. Because it does not cover all of the possible benefit categories, premiums for Medicare Plan B may be somewhat lower than for other supplemental plans.
What Medicare Supplemental Plan B Covers?
Under Medicare rules, Medicare Plan B coverage is the same for everyone who selects Medicare Plan B no matter which insurance company provides it. Like all Medigap plans, Medicare Supplement Plan B covers 100% of the costs of Part A coinsurance along with hospital expenses for 365 days after Medicare benefits have been exhausted.
Medicare Supplement Plan B also covers 100% of:
- Medicare Part B coinsurance or copayment
- First three pints of blood
- Medicare Part A hospice care coinsurance or copayment
- Medicare Part A deductible
What Doesn't Medicare Plan B Cover?
Medicare Supplemental Plan B does not cover any of these expenses:
- Skilled Nursing facility coinsurance
- Medicare Part B deductible
- Medicare Part B excess charges (the amount doctors are allowed to charge up to 15% over standard Medicare rates)
- Medical expenses while traveling in foreign countries
Note that as long as you purchase your Medicare Plan B coverage during your guaranteed issue period, the insurance company is required by law to issue you a supplemental policy regardless of pre-existing health conditions. However, Medicare Plan B coverage for the pre-existing conditions may be delayed for six months.
During that period you would be responsible for the portion of expenses that are not covered by original Medicare, and that resulted from the pre-existing condition.
Medicare Supplement Plan B Cost
Although coverage is the same for every Medicare Supplement Plan B, premiums will vary from one insurer to another. The method they use for determining premiums can also differ significantly.
It is important to understand how the insurer determines premiums before purchasing a supplemental plan. Insurance companies use one of three methods to determine Medicare Plan B premiums:
- Community or Standardized Rating - every policyholder is charged the same premium
- Age at Issuance - premiums are based on the age of the policyholder and remain the same from that point on
- Attained Age - premiums are lower initially and then rise as the policyholder gets older
Under Medicare Supplement Plan B you are also responsible for paying the Medicare Part B deductible ($183 in 2018), but Medigap Plan B fully covers the Medicare Part A Deductible ($1,340 in 2018 for every hospital stay more than 60 days apart). This is a key benefit for those who may experience a stay in a hospital during a calendar year.
Here are a few examples to demonstrate your potential costs with Medicare Plan B. In all cases, it is assumed that you have already paid the Medicare Part B annual deductible of $183:
- A doctor submits a bill for $2,000 of covered expenses. Medicare Part B pays 80%, or $1,600. Medigap Plan B covers 100% of the balance. – You pay $0
- A doctor submits a bill for $2,300 which includes the allowed 15% excess charges of $300. After Medicare Part B pays 80% of the normal charges or $1,600, Medigap Plan B covers 100% of remaining covered normal expenses or $400 – You pay the excess charges of $300
- You are confined to a hospital twice during the same calendar year, and the stays were more than 60 days apart. The hospital submits a bill for covered expenses, and after the portion covered by Medicare Part A, Medigap Plan B pays 100% of the balance. It also pays the deductible of $1,340 for each of the hospital confinements for an additional amount of $2,680 - You pay $0.
Who Should Consider Medicare Plan B?
Medicare Supplemental Plan B offers good benefits but not as much coverage as some other supplemental plans. For those who want to lower monthly premiums while retaining full coverage of hospitalization without having to pay the Medicare Part A deductible for hospital stays, it can be a good option. Keep in mind that Medicare Plan B does not cover medical expenses during foreign travel.
Remember that before purchasing any supplemental plan, including Medicare Plan B, find out how the insurer determines premiums and ensure that the monthly amount will work with your budget. If a set premium for life is preferable to you, then an insurer that uses community or age at issuance rating may be best. If lower premiums in the early years are important, then an insurer that uses attained age rating may be more suitable.
Finally, pick an insurer that is responsive, processes claims quickly and is willing to answer your questions.
