Lower monthly premiums and limits on out-of-pocket expenses make Medicare Supplemental Plan L an attractive option for many. It does require policyholders to participate in more upfront medical expenses, and it is important to understand what it offers before selecting additional coverage with Plan L.
Medicare Supplemental Plan L is one of the ten approved Medicare supplemental plans. Also called Medigap Plan L, it is a cost-sharing plan. That means that unlike most other Medigap plans, Medicare Plan L does not pay the full amount of covered expenses. For most covered expenses, it pays 75%.
By sharing expenses with the plan holder in this way, Medicare Plan L coverage offers lower premiums and a yearly cap on out-of-pocket expenses which can make the co-payments easier to accept since they cannot be more than the yearly cap set by Medicare.
In 2018, the cap is $2,620. Once a policyholder has reached that limit in out-of-pocket expenses, the plan pays for all remaining covered expenses, even if a major medical issue arises during the year.
What Medicare Supplemental Plan L Covers?
As with other supplemental coverage, all Medicare Plan L policies provide the same coverage, regardless of the insurance company offering it or who is insured. Like other Supplemental plans, Plan L covers 100% of the costs of Part A coinsurance along with hospital costs for 365 days after Medicare benefits have been exhausted.
Medicare Supplement Plan L also covers 75% of:
- Medicare Part B coinsurance or copayment
- First three pints of blood
- Skilled Nursing Facility care coinsurance
- Medicare Part A hospice care coinsurance or copayment
- Medicare Part A deductible
What Doesn't Medicare Plan L Cover?
Medicare Supplemental Plan L does not cover any of these expenses:
- 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 under Medicare Plan L, coverage for pre-existing conditions may be excluded. A pre-existing condition may also prevent a policy from being issued to you.
Medicare Supplement Plan L Cost
Although Medicare Supplement Plan L premiums are lower than those for other Supplemental plans, the premiums for Medicare Plan L coverage can vary between insurance companies. Some may base premiums on age at issuance. Others offer standardized premiums for everyone.
Additionally, under Medicare Plan L coverage you are responsible for paying the Medicare Part B deductible of $183 as well as 25% of the Medicare Part A Deductible ($1,340 in 2018), or an additional $335 out of your pocket in the event of a covered service.
Finally, as Medicare Supplement Plan L pays for 75% of covered medical expenses, you are responsible for the remaining 25% of costs, but keep in mind that there is a maximum annual out-of-pocket cap that cannot be exceeded, and you will not pay more than the cap in any single year. Here are a few examples to demonstrate your potential costs:
- A doctor submits a bill for $2,000. Medicare Part B pays 80%, or $1,600. Medigap Plan L covers 75% of the balance, or $300 – You pay $100
- 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 L covers 75% of $400, or $300. – You pay $100 plus the excess charges of $300 for a total of $400
- In the same year as the examples above, you are in a skilled nursing facility. The facility submits a bill for covered expenses and $10,000 remains after the portion covered by Medicare Part A. Medigap Plan L pays 75% of $10,000, or $7,500 – Although the balance is $2,500 you pay only $2,120, which is the remainder of your expense cap of $2,620 for the year. Your Medicare Plan L pays the remainder and any other covered expense for the rest of the year.
Who Should Consider Medicare Plan L?
For those who want to lower monthly premiums and limit annual out-of-pocket medical expenses while retaining full coverage for the year, Medicare Supplemental Plan L may be a good option. When deciding, keep in mind that Medigap Plan L pays for 75% of covered expenses and not the full amount like other supplemental plans, but it provides 100% coverage after you have met the out-of-pocket expense cap for the year.
Also, if traveling is part of your retirement plans, remember that Medicare Plan L does not cover medical expenses during foreign travel. Finally, before purchasing any supplemental plan, including Medicare Plan L, you should shop for a premium that fits your budget, and look for a provider that is responsive, processes claims quickly and is willing to answer questions.
