For the purposes of this article, let’s say you Medicare eligible and wish to purchase a traditional Medicare supplement plan – as oppose to enrolling in a Medicare Advantage plan.
Let’s further suppose that you want one of the more comprehensive supplements like Plan G, D, F, C or N.
As a broker, I find that most Medicare eligible consumers are usually leaning towards Plan F as it’s the most comprehensive supplement available today.
Plan F covers all gaps in Medicare Parts A & B except for prescription Part D drug coverage. (Part D drug plan must be purchased separately no matter which supplement you choose.) So long as your medical care is a Medicare approved expense, Plan F will fill in all of the gaps. You will have no out of pocket to worry about, but is it the best choice?
Is Plan G A Better Choice For Medigap?
What are the best arguments for Plan G Medicare supplement insurance? First, it’s important to know Plan G fills in all gaps in Medicare Parts A & B except for one. Plan G does not cover the Medicare Part B deductible – and that amount is $183 for 2018 – the same as it was in 2017. It was $166 in 2016. For years 2013-15, the amount was $147. It does not move much each year.
The deductible can change each year when officials at CMS (Centers for Medicare & Medicaid Services) announce the annual changes to Medicare. So Plan F covers the one-time, yearly Part B deductible and Plan G does not – that is the only difference between the two.
Medicare eligible consumers should consider Plan G for a couple of reasons. The first reason is simply cost. As you price Medicare supplements from the vast number of insurance carriers available, you will see in many instances Plan G can be over $20 less per month than Plan F in many cases.
When you take $20 and multiply it by the 12 months in a year, you come up with $240. So why spend an extra $240 more per year in Plan F premiums to cover a $183 deductible? It does not usually make financial sense to do so. You are saving money with Plan G over Plan F!
Watch Our Video to Learn More about the Advantages of Plan G
What About The Annual Medicare Part B Deductible?
This all begs the question: “Well, what happens if CMS raises the Part B deductible well above $183? What if they decide to increase it to $500 or even a $1000?
First, you should know that Part B deductible increases are tied to inflation metrics. So unless the rules change or inflation increases wildly, the deductible should only increase incrementally each year – as it has in the past.
In the unlikely event the Part B deductible increases significantly, Plan F premiums will increase as well because Plan F must cover this gap. Insurance companies are not going to absorb this increased cost should it occur. They are going to pass it on to policyholders.
One way or another you will be paying for it – either in the way of increased monthly premiums or by meeting the deductible when accessing medical care. At least with Plan G, you are in more control and will almost always save money in the way of lower premiums.
Plan G Is Not A “Guarantee Issue” Medicare Supplement
And that brings us to the next point: Consumers should consider Plan G because of smaller rate increases. The primary reason for lower yearly increases is Plan G is not a “Guaranteed Issue” Medicare supplement plan.
The only time Plan G can be purchased without medical underwriting (in most states) is when you are new to Medicare Part B and in your open enrollment window. Otherwise you must answer several yes/no health questions, list your prescription usage and take part in a phone interview.
Conversely, Plan F is a Guaranteed Issue plan. This simply means there are a lot more ways people can purchase Plan F outside of their Open Enrollment without medical underwriting. Examples of this would be folks who are losing group coverage, leaving a Medicare Advantage plan before one year, or moving to a new service area.
Thus, there are usually less people in general (and less unhealthy people specifically) enrolled in Plan G when compared to Plan F. When there are less unhealthy people in a Plan G block of business, the corresponding insurance company will usually increase rates more slowly.
As a broker, I have seen this many times. An insurance company will announce new rates for both new and in-force Medicare supplement plans, and Plan F will have a higher rate increase than Plan G. I see Plan F rates go up by 7-10% and Plan G rates increase by 4-6% on average.
In fairness, not all insurance companies price their Medicare supplement business this way, but many do. Many carriers adjust their rates per each plan, but not by all plans as a whole. And because Plan G is not a Guaranteed Issue plan, typically the increases are smaller. That practice can save Plan G members significantly over a several year time period.
I Heard Plan F Is Being Discontinued In 2020
Yes, its true. Plan F will no longer be for sale for those who are gaining Medicare eligibility starting in January 2020. Those who were eligible for Medicare before 2020 can keep their F plans – and even shop for new ones – but new members will not be able to buy one.
What does this mean? In practice, Plan F blocks of business will trend older and perhaps unhealthier. And rates may increase more dramatically because of this. When rates go up, consumers shop. Those who are healthy enough to find new coverage (like Plan G, D or N) will likely leave the pool further exacerbating the problem. This happened with Plan J in 2010 when it went off the market.
That’s why you see a lot of companies introducing Plan G to their portfolio now. Just recently, United Healthcare (AARP branded) and Anthem Blue Cross and Blue Shield began offering Plan G in Ohio and several others states. These companies are a little behind the curve if you ask me, but better late than never.
Contact Us To Compare Plan G Medicare Supplement Quotes
In summary, when shopping for Medicare supplement insurance and comparing benefits, plans and prices – Plan G should be on your list when considering comprehensive Medigap insurance. The premium difference can more than make up for the the Part B deductible and the lower rate increases will make you happier in the long run. Contact us to learn more!