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Medigap Plan K & Plan L – the Convenient Middle Ground of Medicare

Last updated March 16th, 2020

Reviewed by Louise Norris

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Medigap Plan K and Plan L are unique in the Medicare Supplement (Medigap) world. These two plans cost relatively little on a monthly basis since you’ll also share the cost of coinsurance for your Plan K and L bills (50 percent for K and 25 percent for L) up to an annual out-of-pocket limit.

For example, if you had Plan K and received a Medicare-approved outpatient bill for $100:

  • Original Medicare would pay $80, leaving $20 left to pay.
  • Medigap Plan K would then pay $10, and
  • You would pay $10.

Without a Medicare Supplement, you would pay the full $20 out-of-pocket charge, with no cap on the amount you might be charged during the year. With a different type of Medicare Supplement, you would pay a higher monthly premium but your plan would pay the full $20 charge.

Your cost-sharing ends once you reach that annual Plan K or L out-of-pocket limit. After you spend a certain amount, you don’t have to contribute to coinsurance for the rest of the year. Since most people don’t reach that out-of-pocket limit, monthly prices may be significantly lower than other Medigap plans, for all plan members.

Like all other Medicare Supplements, these plans step in to pay a portion of the deductibles and coinsurance that Original Medicare would otherwise charge to you. Once you meet your out-of-pocket maximum for the year, they cover the full cost. Let’s look at Medigap Plan K and Plan L, and compare them both.

Some Call Medicare Supplement Plans K and L “the Middle Ground of Medicare”

There are a variety of ways to get help with Medicare payments, ranging from zero-premium Advantage plans to very expensive Medicare Supplements. For many people, neither one of those extremes is a good fit for their health insurance needs. Plan K or Plan L could give you a reasonable compromise between price and benefits, a compromise that you can live with.

Don’t Shun A Lower-Priced Supplement

The monthly premiums for the most popular Medicare Supplements, Plans F and G, are among the highest for those of all Medicare Supplements. Perhaps that price is higher than you feel comfortable paying. If so, then discover what a lower-priced Plan K or L has to offer.

Plans K and L cost less than other Medigap plans on a monthly basis. This makes them similar to Medicare Advantage with its low monthly costs, but with different Medicare Supplement benefits like the ability to see any Medicare doctor.

The Benefits of a Medicare Supplement Plan K or L

  • You have reasonable out-of-pocket costs when you need medical care, similar to typical Medicare Advantage plans.
  • Your maximum out-of-pocket expense for Medicare-covered deductibles and coinsurance is limited. For 2020, it is $5,880 with Plan K and $2,940 with Plan L. The yearly maximum out-of-pocket costs of Medicare Advantage plans are federally required not to exceed $6,700, but the limit is around $5,000 on average.

Interested? Here Are Your Out-Of-Pocket Costs with Plan K and L

  • 50% or 25% of the hospital deductible per benefit period ($1,408 in 2020)
  • 50% or 25% of the cost of the first three pints of blood
  • 50% or 25% of your hospice care and 50% or 25% of your skilled nursing facility (SNF) copayments (already largely covered by Medicare Part A)
    • For example, SNF copayments in 2020 are $176 per day for days 21 through 100 that you spend in a rehab facility. So, you would pay either half or a quarter of that amount, $88 or $44 per day, for up to 80 days (for the first 20 days, Original Medicare covers the cost in full, as long as you had an inpatient hospital stay of at least three days prior to being transferred to the skilled nursing facility).
  • 50% or 25% of your Part B coinsurance
  • Plan K and L both cover 100% of your Part A coinsurance charges. Those come into play when you accumulate over 60 days of hospital stays in a single benefit period.
  • Foreign travel emergencies, the annual Part B deductible, and Part B excess charges are not covered.

As for the services that are covered by Plan K or L, once you reach your out-of-pocket limit on them, they’re covered. These plans do not replace Original Medicare, which will also continue to pay its share of charges.

Medicare Supplement Plan K vs. Plan L

In practical terms, is the lower out-of-pocket limit and 75 percent coverage of Plan L worth paying for, beyond the higher out-of-pocket exposure and 50 percent coverage of Plan K? It depends. Typically, the Plan L monthly premium approaches the price of a Plan N, depending on which insurance company you buy it from. In that case, it is often best to buy Plan N instead of buying a Plan L.

Plan K has more members than Plan L in most states, but both are typically close in size to one another. But if you like Plan L and are most concerned about the maximum out-of-pocket limit, then know that Plan L caps your maximum yearly expense at half of what Plan K has.

Get Your Biggest Worry Solved First – Hospital Bills

It’s not doctor’s bills but hospital bills that worry many people. When you enter the hospital with Original Medicare, you have an immediate deductible of $1,408, out of your pocket.1 You could pay that deductible up to five times each calendar year (though five hospital visits in a single year would be rare, and would need to be at least 60 days apart). Without Medicare Supplement coverage, your costs could be much greater. You’d be covered for a 60-day stay, but days 61-90 would require daily coinsurance of $352, and day 91 and beyond would require $704 coinsurance per each “lifetime reserve day” you use. You only have 60 such days to use over your lifetime. After that, you’d pay all the costs. 

Rather than worry about paying that $1,408 deductible (in 2020) by yourself, know that Plan K would pay half of it for you and Plan L would pay 75 percent, as many times as necessary. That means only $704 out of your pocket if you’re on Plan K, and $352 if you’ve got Plan L. Compare that to your hospital copayments under Medicare Advantage plans, which would typically be from $300 to $400 per day for the first four to seven days. Looking at it like that, Plans K and L look pretty good.

Conclusion

If you’ve been frustrated trying to decide which Medicare insurance is the right fit, then Medicare Supplement Plans K or L might be a good compromise from among your options. You can enjoy a lower monthly cost, with room to choose a good (perhaps even the best) standalone RX plan available for medications in your area.

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Article Sources
  1. U.S. Government Website for Medicare. “Inpatient hospital care.” Medicare.gov (accessed February 24, 2020).