Medigap Plan K may help with certain Original Medicare costs and offer a lower-cost Medigap plan with very basic coverage.

Medicare Supplement insurance Plan K pays a percentage of most of its covered benefits, with the exception of Medicare Part A coinsurance and hospital costs for an extra year, after you’ve used up what Original Medicare covers, Medigap Plan K covers this benefit in full. Your out-of-pocket costs tend to be higher with this policy. Medigap Plan K typically comes with a lower premium than most other Medigap policies.

Medicare Supplement insurance Plan K out-of-pocket limit

Medigap Plan K is one of two Medigap plans that includes a yearly out-of-pocket limit, which is $5,880 in 2020. After your out-of-pocket costs have reached this limit which includes the yearly Part B deductible, Medigap Plan K may cover 100% of your Medicare-covered costs for the rest of the year. As a reminder, Original Medicare doesn’t come with an annual out-of-pocket limit, so there’s no maximum cap on your health-care costs for a given year. The yearly out-of-pocket limit can be helpful if you want to be protected against high out-of-pocket costs if you have a chronic health condition that requires a lot of ongoing medical care or you simply want to be prepared in case of an unexpected medical emergency.

Keep in mind that the yearly out-of-pocket limit for Medigap Plan K is around twice the amount as the maximum out-of-pocket limit for Medigap Plan L, the only other Medigap plan that covers this benefit. If you want a Medigap plan that includes a yearly out-of-pocket limit, but would prefer to have a lower threshold before the plan begins to cover costs, then Medigap Plan L could be another option with a much lower limit: The annual out-of-pocket for Medigap Plan L is about half the amount as the limit for Medigap Plan K.

Medicare Supplement insurance Plan K benefits

As mentioned, Medigap Plan K offers partial coverage for a variety of Original Medicare costs that you’d normally have to pay out of pocket. This plan covers 50% of the cost for the following benefits:

  • Medicare Part A deductible
  • Medicare Part A hospice care coinsurance or copayment
  • Skilled nursing facility care coinsurance
  • Medicare Part B copayment or coinsurance
  • First three pints of blood for a covered medical procedure (yearly)

With Medigap Plan K beneficiaries must pay the Medicare Part B deductible and Part B excess charges out of pocket. Part B excess charges are the difference between what Medicare covers for a service and what your health-care provider may charge you. For every covered service or item, Medicare has set an “approved amount” that it will pay. Some doctors may charge above this Medicare-approved amount, and the beneficiary is responsible for paying what Medicare doesn’t cover.

There’s a maximum limit that providers can charge above what Medicare will cover. Doctors and physicians who don’t accept assignment (meaning they don’t accept the Medicare-approved amount as full payment) are allowed to charge up to 15% over the Medicare-approved cost for their services. These “excess charges” are the responsibility of the beneficiary once Medicare pays its approved amount.

As an example, you’ll usually pay 20% of the Medicare-approved cost for outpatient services, while Medicare pays the remaining 80%. Let’s say the approved amount set by Medicare is $150 for a doctor’s appointment. A doctor who doesn’t accept assignment may choose to charge up to 15% over this amount, or $15 in excess charges. In this situation, Medicare will cover 80% of the cost, or $120. However, the beneficiary would be responsible not only for paying the remaining $30 but the additional $15 for a total out-of-pocket cost of $45. While Medigap Plan K doesn’t cover Part B excess charges, Medigap Plan G and Plan F do if you are interested in this benefit.

As mentioned, while Medigap Plan K offers partial coverage for most of its benefits, the plan completely covers the following benefit:

  • Medicare Part A coinsurance hospital costs up to an additional 365 days after Medicare benefits are exhausted

Medicare Supplement Plan F won’t be sold to people who become eligible for Medicare on or after January 1, 2020. You may still be able to keep your Plan F if you have one. You might be able to buy Plan F if you’re eligible for Medicare before January 1, 2020.

Medicare Supplement insurance Plan K costs

One factor to keep in mind with Medigap Plan K is that you may have higher out-of-pocket costs with this Medigap policy. Because the plan only covers 50% of most of its benefits, you’ll still be responsible for paying half the cost for the first three pints of blood, the Part A deductible; and cost-sharing for Part B-covered services, Part A hospice care, and skilled nursing facility care. You may find that Medigap Plan K policies in your service area tend to have lower premium costs than other Medigap plans that cover more benefits or a greater percentage of costs.

Since every person’s situation is different it may be a good idea for you to start by estimating your typical out-of-pocket costs given how frequently you see a doctor or require certain health-care services. You may find that you only need minimal help with certain health-care costs, in which case the coverage of Medigap Plan K may be enough for your needs. If you find that your medical expenses are higher than you like and want more coverage, other Medicare Supplement insurance plan options may also be available for only a slightly higher cost, depending on your service area and location.

Remember that as you compare plans basic benefits are standardized across Medigap plans of the same letter category, regardless of location or insurance company. Premium costs may vary by insurance company and location. When looking at costs, it’s important to pay attention to not just the listed premium cost for a plan but how the Medigap insurance company prices its premiums. Each insurance company sets its Medigap premium costs differently, and the method that it uses can impact how much you pay for your Medigap coverage both now and down the road.

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