How to Pick a Medicare Supplemental Policy

Dear Savvy Senior,

I will be turning 65 in a few months and applying for Medicare, and have been told I need to consider purchasing a supplemental policy to help pay for the things Medicare doesn’t cover. What can you tell me about this and where can I find help? —Supplemental Sally

Dear Sally,

If you’re nearing 65, and plan to choose traditional Medicare Part A and B as your primary source of health coverage, a supplemental policy (also known as Medigap insurance) is definitely something you need to consider. Medigap insurance helps pay for things that traditional Medicare doesn’t cover like deductibles, co-payments and other services. Here’s what you should know.

ABCs of Medigap
Medigap policies, which are sold by private health insurers, come in 12 standardized benefit packages, labeled "A" through "L." The coverage and price generally increase as you move through the alphabet from the basic Plan A through the more comprehensive Plan J. Plans K and L are high-deductible policies that carry lower premiums but higher out-of-pocket costs. The most popular choice is Plan F, which strikes a good balance between costs (averaging around $160 per month) and coverage. (Note: If you live in Massachusetts, Minnesota or Wisconsin you have a different set of Medigap plans.)

How to Choose
To choose a policy, consider your health status and family medical history. The differences among plans can be small and rather confusing so you’ll need to do some homework to pick the right plan. To help you get started go to the Medicare Options Compare tool at Once you get there, click on "Find & Compare Medigap Policies" then type in your zip code. It will give you a break down of what each plan covers, along with a list of companies that offer them in your area.

Since all Medigap policies with the same letter cover the exact same benefits, you should shop for the cheapest policy. You can get the best price if you sign up within six months after enrolling in Medicare Part B. During this open-enrollment period, an insurer cannot refuse to sell you a policy or charge you more because of medical issues.

You also need to be aware of the three company pricing methods which will affect your costs. Medigap policies are usually sold as either "attained-age" policies, which are premiums that start low but rise every year as you get older. "Issue-age" policies, which only increase prices because of inflation, not because of your age (these policies may start out a little more expensive than attained-age policies but may save you money in the long run). And "community-rate" policies, which are where everyone in an area is charged the same premium regardless of age.

No Drug Coverage
Medigap policies no longer cover prescription drugs. If you don’t have drug coverage you need to consider buying a separate Medicare Part D drug plan too. You can compare drug plans and cost at Also note that standard Medigap plans do not cover vision or dental care, hearing aids or private-duty nursing.

All-In-One Plans
Another option to consider is a Medicare Advantage plan. Instead of paying separately for Medicare Part B, plus a Medigap supplemental policy and a Part D drug plan you could sign up for a Medicare Advantage plan that provides all-in-one coverage. These plans, which are sold by insurance companies, are generally available through HMOs and PPOs. To find and compare Advantage plans visit

Low Income Help
If you have limited income there are a variety of programs that may be able to help you cut or eliminate your health care costs such as Medicare Savings Programs, Medicaid, and prescription drug assistance. To find out if you qualify, visit

Savvy Tips: If you need help or if you don’t have Internet access, call Medicare at 800-633-4227 for assistance over the phone. Also ask them to send you a free copy of the "2009 Choosing a Medigap Policy," publication 02110. Another good source for help is your State Health Insurance Assistance Program (SHIP) which provides free one-on-one Medicare counseling. To find a local SHIP counselor call 800-677-1116 or visit