I. What Medicare Plan L Covers

Plan L, like all Medigap plans, provides some coverage for the out-of-pocket expenses beneficiaries owe as part of their Original Medicare Part A and B policies. Medicare Part A pays most of the costs associated with inpatient care, such as the daily hospital fee and the various treatments ordered by hospital staff. Part B pays much of the outpatient costs seniors incur from office visits, ambulance services, and home medical supplies. Both parts can leave a senior struggling to meet the co-payment requirements, which is where Medigap comes into play.

Authorized Medigap policies must all meet minimum federal standards for covering out-of-pocket costs on Medicare Parts A and B, but they do this in different ways. Plan F, for example, is the most popular plan in the Medigap system because it provides 100% comprehensive coverage for all of the expenses Original Medicare doesn’t pay. Plan G does something similar, though it does not pay the Part B annual deductible, which in 2020 is $198. Because Plan G leaves this expense for the beneficiary to pay, it is somewhat less expensive than Plan F. Plan L follows this pattern of sharing costs to save on monthly premiums by only paying 75% of the Part B costs of care.

Under Original Medicare Part B, your doctor could order an MRI for you as part of your diagnostic care. That MRI test could easily generate an invoice of $1,000 that you would have to pay in its entirety if you had no insurance. With Original Medicare, 80% of the cost would be covered under Part B, leaving you with just $200 unpaid. Assuming you have already paid your annual $198 deductible on other services, Plan L can step in to pay $150 of the leftover cost. In this example, you would pay $50 for the rest of the bill.

This cost-sharing arrangement applies to all Part B expenses. You can use Plan L as a supplement to the uncovered costs of essential Part B services, such as:

  • Medical office visits
  • Diagnostic tests ordered by a doctor and performed on an outpatient basis
  • Outpatient surgery and other non-elective procedures
  • Dialysis treatments performed at home or in a clinic
  • Home nursing care
  • Non-emergency medical transportation
  • Ambulance services, including medical interventions performed in transit to the hospital
  • Diabetes supplies and other chronic condition equipment
  • Durable medical goods, such as mobility aids and prosthetic devices

In all cases, once your Part B deductible is paid in full, Original Medicare picks up 80% of the unpaid costs and Plan L takes 75% of what remains, leaving you with an effective co-pay of 5% of the total cost of the service.

II. Eligibility for Medicare Part L

Eligibility requirements for Plan L are similar to what’s required to qualify for Original Medicare. To sign up, seniors must be U.S. citizens or legal permanent residents aged 65 or over who have worked and paid into Social Security for at least 10 years. Some adults under 65 may qualify for Medicare benefits if they have been receiving SSDI for a chronic condition for at least 24 months.

Once you have met the program requirements for Medicare, it’s necessary to sign up for Part B coverage. Federal law prohibits insurance carriers from selling a Medigap plan to customers who already have a Medicare Advantage policy, so you need to choose the kind of supplement that works best for you.

III. Enrolling in Medicare Part L

Plan L Medigap policies are offered by private insurance companies, but state and federal governments regulate who can join and how. Initial enrollment in a Medigap plan occurs during the first open enrollment period in which you are eligible to join. This starts on the first day of the month in which you turn 65, and it continues until the last day of the month, six months later. Thus, if your birthday is June 15, your initial enrollment period begins on June 1 and continues until November 30 of the same year. It is very important to make your Medigap choices during initial enrollment, since federal law requires insurers to offer you the best price possible during this period, regardless of the state of your health and any pre-existing conditions. If you sign up outside of the open enrollment period, your request is subject to underwriting, and you could be denied coverage.

If you don’t find a Medigap plan you like during initial enrollment, you can try again within a year. Most states set an open enrollment period for the month of your birthday each year. Enrollment during this window functions as it does during your initial sign-up period. When the annual enrollment period opens, you have 30 days to sign up for Plan L coverage or to switch from another plan to a Plan L policy. As with initial enrollment, you have a right to coverage at the lowest rate you can be charged, without consideration of your pre-existing conditions, if any.

Some seniors are able to sign up for Medigap outside of these windows, during special enrollment periods (SEPs). SEPs are recognized on a case-by-case basis for individuals, and several events can trigger one. You are considered to be in a 63-day SEP if you have recently lost your Medicare supplement through no fault of your own. If, for instance, you have recently lost the health insurance you had through your job, or through your spouse’s job, due to the end of employment, including retirement, you may be in an SEP for new signups.

Likewise, you can qualify for an SEP if your current Medigap provider cancels your policy without cause, goes bankrupt, or commits fraud against you. You can also ask for SEP consideration if you were overseas during the most recent open enrollment period you qualified for, but were unable to return and complete your application before the period closed. During an SEP, you can sign up for, switch between, and cancel your Medigap policies without penalty. It is also possible to cancel your Medicare Advantage plan, if you have one, and switch to a Medigap plan within the first 12 months after initial sign-up.

IV. FAQS

How much does Medigap Plan L cost?

Medigap plans vary a lot in both their monthly premiums and co-payments due at the point of service. Plans also vary by insurer and by the state they are offered in. Because Plan L benefits are limited to 75% of the uncovered costs of Part B, your out-of-pocket expenses are likely to be higher than they would be with Plans F and G, though your monthly premiums are likely to be significantly lower with Plan L.

Do I still have to pay the Part B deductible?

Yes. Plan L does not eliminate the annual $198 Part B deductible. If you have Original Medicare and a Plan L supplement, you must pay the entire cost of this deductible before Plan L can begin to pay for your Part B expenses.

Can I use Plan L with my Medicare Advantage plan?

Federal law prevents seniors from buying a Medicare Advantage plan and a Medigap plan to use together. Instead, seniors who become eligible for Original Medicare are allowed to choose one supplement or the other during initial sign-up. If you choose Plan L or another Medigap plan, you have 30 days to cancel your policy and request a full refund. If you choose Medicare Advantage, you can cancel at any time in the first 12 months without paying the unused part of the policy. You can then enroll in a Plan L policy without incurring a penalty as part of the SEP process.

Can I use Plan L with Medicaid benefits?

Many seniors who qualify for Medicaid, the low-income insurance plan administered by the federal and state governments, use the program as a Medicare supplement. Coverage varies from state to state, but as a rule, Medicaid picks up most of the expenses Original Medicare leaves unpaid. Seniors are free to buy into the Medigap plan of their choice during the initial signup and then use Medicaid as their primary supplement for most out-of-pocket costs. If you have all three plans, Medicare, Medicaid, and Plan L, you are likely to have few or no costs out of pocket. Income and asset limitations apply to Medicaid eligibility.

My insurance carrier doesn’t offer Plan L. What can I do?

Plan L is less common in most markets than the far more popular Plans F and G. That is changing somewhat, as Plan F coverage is set to be phased out in 2020, but in some states, it’s hard to find a carrier that offers Plan L. If your insurance carrier doesn’t offer a Medigap plan you like, you can usually ask a licensed insurance agent to help you find a company with the benefits you need. Some states require authorized Medigap insurers to offer at least one Plan L option, and the agent can usually find it for you at no charge to yourself.