For many years now, the Plan F Medicare Supplement plan has been the top selling plan. The reason is very simple – it covers all the deductibles and co-pays for Medicare-approved procedures. Remember -Medicare won’t pay for cosmetic procedures like most dental work, hearing and vision services, etc. It looks like a great deal at first glance – you pay a monthly premium and your Plan F covers all the gaps in Medicare. But don’t overlook Plan G. You could be overpaying the insurance company!
There has been a shift recently. The claims paid out for coverage under Plan G have been significantly lower than for Plan F nearly industry wide the last few years, which I will get into in a moment. More importantly, because of the Medicare Access and CHIP Reauthorization Act of 2015, the Plan F will no longer be available for sale for people who turn 65 in 2020 and thereafter. People who have a Plan F in force at that time can keep their current plan. They can even switch to another Plan F with a different company, but they may not want to. Here’s why:
As history has shown with other plans that have been eliminated in the past, Medigap enrollees can likely expect their premiums to rise significantly if younger and healthier seniors are prevented from enrolling in their plan. It is important for new, healthy people to be coming into any health insurance plan for the rates to stay low. If a plan is no longer for sale to people who turn 65 starting in 2020, the average age of people that stay on the plan will only get higher. And as we get older, we can expect to have higher healthcare costs. This means the insurance company is paying out more and more in claims to cover those costs. Higher claims equate to higher premiums. The rates are not likely to stabilize or remain low if there are no new policies being sold to new, healthy enrollees. History has already proven that when Medicare did away with the Plan J in 2010. Those who stayed on that plan either by choice or because they had pre-existing conditions that prevented them from changing plans saw significant rate increases.
Let Me Introduce You to Plan G
Plan G is a better a value even for those that believe that they are limiting their out-of-pocket costs by enrolling in the Plan F because it has no deductibles or co-pays for any Medicare-approved healthcare. There is only one difference between the Plan F and Plan G. That difference is that the Plan G does not cover the annual Part B deductible (see the Medicare supplement plan chart on our comparison page). Part B of Medicare is the part that is paid to physicians for your care.
So with a Plan G, you would be responsible for the annual Part B deductible – which is $183 in 2017. That is the only difference between the two plans; the coverage is identical except for that one deductible.
Today, more and more seniors are finding that they can save on out of pocket costs by choosing Plan G instead of the Plan F. It also provides a way to keep a much more comprehensive health plan in place without the network limitations and high out-of-pocket expenses of a Medicare Advantage plan. After all, unlike with a Medicare Advantage plan, a Medicare supplement plan allows you to go to ANY doctor, specialist, or hospital that accepts Medicare anywhere in the country without worrying about networks.
Look at the difference in costs in a year between Plan F and Plan G in 2016 for ZIP code 29841 in South Carolina for a female non-smoker at age 65:
|Plan F||Aetna Life and Health||Plan G||Cigna Health and Life|
The difference in premium is $328.60 over a 12-month period. So for those who choose a Plan F over a Plan G, they are paying $328.60 for the insurance company to pay the $183 deductible for them. That leaves $145.60 for the insurance company to keep as profit – basically a convenience fee you are giving to them. Believe me, the insurance companies have enough money without us throwing extra money at them unnecessarily! If you would be willing to pay that Part B deductible yourself, you could keep that $145.60 in your own pocket. The Part B deductible will get paid to Medicare whether you pay directly with a Plan G or by letting the insurance company pay it through a Plan F with a convenience fee tacked on. There is no need to donate it to the insurance company’s coffers.
Why The Big Difference In Premium?
There are many theories as to why there is a big difference. One school of thought attributes it to the fact that Plan G does not accept Guaranteed Issue enrollees. These are typically enrollees who are leaving an employer or union plan to go on Medicare. This allows the premiums on Plan G to maintain more stability by keeping the less healthy individuals off of the plan. However, Plan F policies must accept all Guaranteed Issue enrollees without any underwriting. Therefore there are more people with pre-existing health issues coming into the Plan F with various companies.
Another school of thought blames the higher claims (and thus higher premiums) under Plan F on the fact that many people will be more apt to see a doctor for minor issues as they have no deductibles or co-pays under the Plan F for doctor or emergency room visits. However, that theory has been shown through studies to be incorrect. It is offset by the fact that by not going to a doctor at initial symptoms of a problem, many people have higher medical expenses because a condition was not caught earlier when it could have been more controlled.
Either way, the better option is to go ahead and look at the Plan G (or Plan N). This way you will not have to make a change down the road when premiums could start elevating on the Plan F after 2019. The good news is that Plan G is already a better deal today as I demonstrated above. So, making a change could actually be beneficial now instead of waiting to see what happens to Plan F premiums down the road.
Please keep this in mind – as an independent agent, I contract with the different companies to work for you. There is no charge for my service to you. I do not work for the insurance companies. Therefore, I am always on the lookout for these pitfalls to help my clients avoid them. I want to help you to make the best decisions by having as much information as possible. Please call if you have any questions. I have over 21 years of experience dealing with Medicare insurance. I would love the opportunity to work for you, as well.
The advice on this website is informational. Please contact us before making a purchasing decision to best determine what is best for your individual situation.