Ashford Insurance

Medicare Supplement Plan K

Medicare Made Easy

Medicare Supplement Plan K

Will you be joining Medicare this year? If so, there’s a lot for you to learn. Medicare has its vocabulary and rules. There are deadlines you must meet and penalties (some lasting a lifetime) for not doing things at the right time.

There are many new terms for you to understand and several options to choose from. Medicare has four different parts: A, B, C, and D. You can stay with Original Medicare (Parts A & B) or buy a Medicare Advantage Plan (Part C) or a Medicare Supplement (also called Medigap), which is private insurance that works with Parts A & B. Most people also buy Drug Insurance (Part D).

If you’re looking for some help with certain Original Medicare costs and want a lower-cost Medigap plan with very basic coverage, then Medigap Plan K may work for your situation.
Medicare Supplement insurance Plan K pays a percentage of most of its covered benefits, except 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. Because 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 Plan K

Medicare Supplement Plan K is the Medicare supplement that covers the Part A hospital deductible while also covering about 50% of the other gaps in Medicare.  Consumers are beginning to be more interested in plans that offer lower premiums if they are willing to pay more for the cost-sharing.

Fewer Benefits, but Lower Premiums

Medicare Supplement Plan K offers the same basic benefits as other supplements, but with lower premiums. For example, this plan will still cover preventive care services and give you an extra year in the hospital. However, you must split the cost-sharing with the insurance carrier on some items like the Part A deductible. You also get to pay the Part B deductible and any excess charges.

Medicare Plan K also includes a cap on the amount you spend called an out-of-pocket maximum. For example, say you have a year with a lot of medical treatments. If your out-of-pocket spending reaches the maximum limit, then your Medigap K policy will kick in to pay all of the rest for that year.

Medigap Plan K – Maximum Out of Pocket

Medigap Plan K’s MOOP cap is $5560 in 2019, so that is the maximum you would spend in any calendar year. This cap works very similarly to the out-of-pocket maximums that you have had in the past on employer group health insurance plans. Your insurance carrier will track exactly how much out-of-pocket spending you’ve done for that calendar year. If for any reason you spend more than the cap, then the insurance policy must cover 100% of the rest of your expenses after that point.

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.

Not every Medigap insurance carrier offers a Plan K. At Ashford Insurance, we know which carriers in Texas offer this policy.

Medigap Plan K benefits

Medicare supplement 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 healthcare provider may charge you. For every covered service or item, Medicare has set an “approved amount” that it will pay. However, 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 assignments (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.

For example, you’ll usually pay 20% of the Medicare-approved cost for outpatient services, while Medicare pays the remaining portion of 80%. Let’s say the approved amount set by Medicare is $100 for a doctor’s appointment. A doctor who doesn’t accept assignments may choose to charge up to 15% over this amount, or $15 in excess charges. In such a situation, Medicare will cover 80% of the cost, or $80. However, the beneficiary would be responsible not only for paying the remaining $20 but also for the additional $15, for a total out-of-pocket cost of $35. While Medigap Plan K will not cover Part B excess charges, Medigap Plan G and Plan F will if you are interested in this benefit.

Medigap Plan K offers partial coverage for most of its benefits, however, 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 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. On the other hand, 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 healthcare services. You may find that you only need minimal help with certain healthcare 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. However, 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 affect how much you pay for your Medigap coverage both now and down the road.