I. What Medicare Plan M Covers

Plan M provides comprehensive coverage of the out-of-pocket costs you’re expected to pay for regarding your Part A hospitalization services. When you’re admitted to a hospital, check into a live-in substance abuse rehab center, move into a skilled nursing facility, or transfer into a hospice facility care, Medicare Part A pays 80% of the cost of your room and basic services. On top of that, there may be extra costs related to diagnostic tests and certain medications or procedures. Medicare Part A may cover some of these up to a point, but you can be on the hook to pay a significant percentage of these costs. In addition, you’re expected to pay a Part A deductible of $1,408 in 2020 before Medicare coverage kicks in at all. Together, these costs can be ruinous for a senior on a fixed income.

Managing the Expenses of Part A

Plan M pays 50% of the Part A deductible, plus all of the 20% of unpaid costs of Part A services. This means that if you went to the hospital and incurred the average cost for a hospital stay of almost $16,000, your Part A-only coverage would kick in after you paid the first $1,408, leaving $14,592 owed for your time in the hospital. Of that, Medicare can pay 80%, or $11,673.60. In this scenario, your deductible and unpaid costs together would leave you with a bill of $4,326.40. If you have Plan M, however, this would mostly be covered, leaving you with just $704, or half of the Part A deductible.

Even better for some seniors, Plan M pays up to 365 days of hospitalization beyond what Part A usually covers, as well as extended coverage for skilled nursing care that’s provided on an inpatient basis. Plan M can also pick up some of the costs associated with medications administered to you in the hospital, such as IV drips and surgical anesthetics. Additionally, Plan M provides for up to 80% of the cost of emergency medical care you might need if you travel abroad. There are specific limits and exclusions to this benefit, however, so it’s best to talk it over with an insurance agent or plan representative before you commit to a policy.

Services Not Covered by Plan M

Not all medical services are covered under Plan M, including the myriad outpatient services that fall under Medicare Parts B, such as:

  • Ambulance rides
  • Urgent care appointments
  • Medical office visits
  • Drugs your doctor administers in the office
  • Diagnostic tests performed outside of the hospital
  • In-home health care
  • Orthopedic devices
  • Durable medical goods
  • Diabetes supplies

Prescription drugs, routine eye exams, and dental coverage are also excluded — these benefits aren’t covered by Original Medicare or any Medigap policy — they’re offered through Part D and some Medicare Advantage (Medicare Part C) plans.

II. Eligibility for Medicare Plan M

Medigap plans are closely regulated by the federal government, and they all have the same eligibility criteria. To qualify for participation in Medigap Plan M, applicants must be eligible for Original Medicare. This usually happens in the year you turn 65, although you can also become eligible for Medicare if you’ve been receiving SSDI benefits for a medical disability for at least 24 months continuously. To qualify for Medicare, seniors must be U.S. citizens or permanent legal residents who’ve lived in the country for at least five years. In addition, eligible applicants must have a record of at least 10 years of payroll contributions to the Social Security Administration. If you meet the criteria for enrollment in Medicare, you can apply for the Medigap plan of your choice from a private insurance company in your state.

III. Enrolling in Medicare Plan M

You can apply for Plan M Medigap coverage during one of three enrollment periods: open, annual, and special. During these times, you’re guaranteed acceptance, the insurer must offer you the lowest rate possible in your area, and you can’t be denied coverage for a preexisting condition. If you enroll outside of these periods, the insurance carrier can use the normal underwriting practices to assign higher premium rates, and you could be refused coverage for some preexisting conditions. In Massachusetts, Minnesota, and Wisconsin, state law requires insurers to offer at least one Medigap plan, and you must be offered a group rate based only on your geographic area.

Open Enrollment

Each Medicare enrollee is allowed a six-month open enrollment period (OEP) when they can sign up for a Medigap plan through any insurer in their state. Your OEP begins automatically the month you’re both aged 65 and enrolled in Medicare Part B. For example, if you meet the criteria on April 1st, you can sign up for a Part M Medigap plan at any time through October 31st.

Annual Enrollment

Every year, Medicare beneficiaries are given an opportunity to modify or to switch plans without penalty. The Medicare annual open enrollment period begins on October 15th of each year and closes on December 7. If you sign up for a Medigap policy during this period, you’re free to cancel and switch to another plan with a full refund within 30 days.

Special Enrollment

Some people can sign up for or switch their Medicare supplement plans during a special enrollment period (SEP), if they meet certain criteria. As a rule, you can qualify for an SEP if you have other coverage that you lose through no fault of your own. For example, if you receive health benefits through your own or your spouse’s employment and that coverage ends, you may sign up for Plan M outside of the normal enrollment period. The same enrollment and plan change rules apply during an SEP as during open enrollment, but the SEP is particular to you and lasts 67 days from the date you qualify. Other circumstances that can trigger an SEP include:

  • Your current carrier discontinues a policy through no fault of yours
  • Your current carrier goes bankrupt or commits fraud
  • You’re released from an institution, such as a medical or correctional facility, and need coverage
  • You return from overseas, where you could not sign up for Medigap during the normal enrollment period
  • You cancel a Medicare Advantage plan you’ve had for less than 12 months

IV. FAQs

Can my spouse and I share a Plan M policy?

Each Medigap policy covers one person, so it’s necessary to buy a second policy for a spouse who’s also covered by Medicare. If the primary beneficiary makes any changes to their coverage, the spouse’s policy isn’t affected unless the change is also made to that plan. The exception to this is when a senior loses insurance coverage provided through a spouse’s employment. In that case, both partners can take advantage of a special enrollment period to pick a new plan, although each has to purchase a separate Medigap policy.

Can I combine Plan M with another policy?

You can’t have more than one Medigap policy at a time. One exception to this rule is the 30-day “free look” period allowed by Medicare that lets you buy into a new policy and try it out for the first month with the option to cancel. You have to pay premiums for both policies for that month, and if you decide to switch permanently, it’s your responsibility to send a notice of cancellation to your previous insurer.

Do I still have to pay a Part A premium if Plan M is covering my hospital costs?

Less than 1% of Medicare recipients pay any premium at all for their Part A coverage, since this insurance is free for recipients with at least 40 quarters of work history and Social Security payments. Beneficiaries with between 30 and 39 quarters of work pay an average premium of $252 a month, while those with fewer than 30 quarters pay $437. Plan M does not cover any of these costs, which you must pay to participate in Medicare Part A.

Can I combine Plan M with Medicaid?

Medicaid provides health insurance for beneficiaries with income and assets below a minimum threshold that varies state by state. Many seniors combine their Medicare benefits with Medicaid acting as a supplemental policy to plug the gaps in coverage. While it’s possible to have both Medicaid and a Medigap policy, it’s unusual, since Medicaid usually does an adequate job of supplementing Medicare for those who qualify. It’s also unlikely that a beneficiary with low enough income to receive Medicaid can gain many benefits from a Medigap plan with relatively high monthly premiums. It’s always helpful to speak with an insurance agent when choosing your Medicare coverage and to have your major decisions finalized before you become eligible to apply for the program.

Does Plan M work with Medicare Advantage?

No. Federal law prohibits insurance companies from combining Medigap with Medicare Advantage plans. If you currently have a Medicare Advantage plan and are interested in switching to Plan M, speak with an insurance specialist who has experience with Medicare benefits. It may be possible to switch over without incurring a penalty or to try out new Medigap insurance without fully committing to the switch during a free look period.