Video: Medigap and Medicare Supplement Plans
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Hi there. Steve Thurmond here with Medigap Tennessee. Your source for Medicare Supplemental, Medicare Advantage, Prescription Drug and Dental plans in Tennessee & 29 other state.
I often get asked “What is the Best Supplemental or Medigap Plan”?
Well…the answer is, the best Medicare Supplemental plan is the plan that’s best for YOU. That is, there isn’t a one plan fits all answer.
That being said, I’m going to go down the list of the 10 different Medicare Supplemental Plans available to you and explain their differences, and yes…I’ll also tell you which plan is my favorite and why I recommend it to the majority of my clients.
So, just a quick refresher. Medicare Supplemental plans (also called Medigap Plans) are plans from private insurance companies that supplement or cover the gap that original Medicare doesn’t cover.
Medigap plans pay the other 20% Medicare doesn’t pay, so when you have Original Medicare Parts A & B covering 80% and a Medigap plan covering the other 20%, you then have 100% insurance coverage between the two. Don’t forget, you also need a stand-alone prescription drug plan for your medications in this scenario, but we’ll cover that in another video.
The ten different Medicare Supplemental plans available to Seniors that have Original Medicare Parts A &B are as follows:
Plans A, B, C, D, F, G, K, L, M, N These plan letters are Medigap Plan Names. Don’t confuse these PLAN letters with Medicare PARTS A, B, C or D as these are very different things.
In any given market there can be 20-50 different private insurance companies that offer some or all ten different Medigap plans. All ten different plan letters have differing levels of coverage and deductible amounts, but all 10 plans are standardized by CMS….the center for Medicare and Medicaid services.
That simply means that when comparing the SAME plan letter from multiple companies, you don’t have to worry about a difference in coverage between those different companies. In other words, a Plan G from Company A is identical in coverage to a Plan G from company B, company C, D, etc.
No matter the company offering the specific plan letter, you will get the exact same level of coverage from any company you choose to purchase your plan letter from, because they are standardized by CMS.
But, what isn’t standardized is the monthly premium price.
So in that same scenario, while a Plan G from company A has the exact same coverage as a Plan G from company B, they can charge very different monthly premium prices for the same plan. This keeps competition fierce between the different insurance companies and you as the consumer get to reap the benefits of a competitive, free market. So, keep that in mind as we continue and go over each plan specifically.
While price isn’t everything, it should be a big factor because plan coverage between the companies is standardized. You’ll get the same coverage from any company you choose, but choosing the wrong company could cost you thousands extra over the life of your policy when it doesn’t have to.
So, there are ten different plans to choose from. Which one is best for you? Well let’s start from the top regarding coverage and work our way down.
Plan F…the Cadillac plan.
Plan F is the most comprehensive Medigap plan there is. It has no annual deductible to meet and covers the other 20% completely including any Medicare Part B excess charges. If you want the Cadillac of Medigap plans and don’t want to worry about meeting an annual deductible…this is the plan for you. The downside of this plan, obviously, is that it also comes with a Cadillac price-tag.
Plan F is the most expensive Medigap plan available. Also, something to consider is, Plan F will no longer be available as a Medigap plan after 2019. Starting on January 1st of 2020, you will not be able to purchase a Plan F from any Medicare Supplemental provider.
Now, if you already have a Plan F or if you purchase one before that cutoff date, don’t worry…your plan F won’t just vanish in 2020… it will still be honored by insurance companies and medical providers, BUT since consumers will no longer have it as a purchase option after 2019, that means as people age and drop off of Plan F, there will be fewer customers on the insurance company’s books with Plan F and this could cause a spike in premiums from the companies that are still serving their customers with this specific F plan.
For insurance companies, it’s all about diffusing risk and strength in numbers. The fewer amount of people with a specific plan letter, the higher risk those individuals are for an insurance company and therefore the higher premiums they typically charge for that plan. This brings me to the next, and in my opinion, better plan option.
Plan G…the best value plan.
Plan G is, in my opinion, the best value plan available and the one I recommend to the majority of my clients. Plan G covers everything that Plan F (the Cadillac plan) covers with the exception that it has an annual Medicare Part B deductible to meet.
Currently, that Part B deductible is $166/year. That simply means that you’ll get a bill in the mail from your doctor until that $166 deductible is met each year. Remember, that deductible pertains specifically to the 20% that Original Medicare doesn’t cover, so it might take several doctor visits before you actually meet the deductible amount each year. Once the yearly deductible is met, you shouldn’t receive any more bills in the mail as Plan G covers the other 20% completely, just like Plan F. The nice part about Plan G is that it is costs considerably less per month than Plan F. Even after you take into account the cost of paying the $166 annual deductible for plan G, most of my clients still save upwards of $200-$500 annually in premium when comparing Plan G to Plan F.
Now, the Medicare Part B deductible can change yearly. Sometimes it increases, but sometimes it actually decreases. Even so, with a $200-$500 yearly savings over plan F, you’d still have quite a bit of wiggle room in the event your Medicare Part B deductible does increase.
So, basically, with Plan G you get the same level of coverage as Plan F with a much lower price-tag. It’s a Cadillac plan with a Chevy price-tag and that’s why I think it’s the best value plan and recommend it to the majority of my clients.
Plan N…the next best value plan…in my opinion, of course.
Plan N is a great plan for those that don’t mind assuming a bit of financial risk. It’s a lower cost plan than the F or G plans, because you will be responsible for some cost-sharing in certain situations. Like plan G, you will have the annual part B deductible to meet (Currently $166/year) in addition you may have some copays for doctor visits such as a $20 copay for your primary care doctor and up to a $50 copay for an emergency room visit if you aren’t actually admitted into the hospital. If you are admitted upon arrival to the ER, that $50 copay will be waived.
Now, I’ve heard that some doctors will also waive the $20 copay for doctor visits, but it’s not guaranteed…your mileage may vary. The other cost-sharing aspect about Plan N is that it doesn’t cover Medicare Part B excess charges. That means that if a doctor doesn’t accept Medicare “assignment”, you will be responsible for any excess fees that your doctor charges above what Medicare covers. A doctor that accepts Medicare assignment agrees to be paid by Medicare a certain fee for each service or procedure they perform and they don’t charge any excess fees above that. A doctor that doesn’t accept Medicare assignment can charge fees in excess of 15% above and beyond what Medicare covers for services and procedures and those extra fees and charges will fall squarely in your lap if you go with a Plan N.
The easiest thing to do is simply ask your doctor if they accept medicare assignment. If they do, you’d be fine with a Plan N. If they don’t…I’d play it safe and go with the Plan G instead.
The other 7 Medigap Plans, A, B, C, D, K, L, M have varying levels of coverage and deductibles to meet, but they seem to be going the way of the Dodo bird…that is, extinct as fewer and fewer companies are offering them.
They either aren’t as robust in coverage and put you at risk for significantly higher out of pocket costs per year or they simply don’t offer as much coverage for the price point as the F, G, or N plans and therefore,
I don’t recommend them when you can get better coverage for around the same price point as one of the F, G or N plans. Another way of saying this is that they’re simply not as popular as the F, G or N plans and therefore these plans are at a higher risk for premium hikes or being discontinued altogether. Remember…from an insurance company’s perspective, it’s all about diffusion of risk and strength in numbers.
Unpopular plans are the first to get rate hikes or the first to be discontinued when a company looks at its numbers.
Now, technically there is an 11th plan, called the High Deductible Plan F. However, I only recommend this plan to certain individuals. The High Deductible plan F is just like it sounds. It’s essentially an F (Cadillac) plan, but it has a high annual deductible to meet every year. Currently the deductible is $2180 per year, but that can change yearly.
That means you’ll have to come out of pocket $2180 every year before the Medigap plan starts to cover the other 20%. The nice part about this plan is that it’s very cheap…usually around $40-$50 per month in most markets. I only recommend this plan to healthy individuals that have some savings set aside or are used to something like a Health Savings or Health Retirement Account. Your out of pocket costs each year with the High Deductible Plan F could end up costing your more than the price of the regular plan F if or when your health fails.
It’s one of the cheapest Medigap plan options, but also puts you at a higher risk financially. Only consider this plan if you’re in perfect health and have some money set aside to meet that deductible in the case of an emergency or unexpected hospital stay. If you’re not healthy…skip this plan altogether.
So, we’ve gone over a few of the most popular and comprehensive medigap plans, but we haven’t talked about which company to purchase one from.
The easiest thing to do is just give us a call for a free, no obligation consultation.
We’re an independent brokerage and that gives us the ability to show you an unbiased view of ALL of your options from ALL the medicare supplemental companies in YOUR specific market.
We help you shop and compare based on many different company factors. Price isn’t everything, so we provide all the information you need in order to make an educated decision and choose the right plan for YOU the first time.
Take a look at our “Why Medigap Tennessee” video for several reasons why we’re your best choice when choosing a Medicare Supplemental plan.
Remember, Medicare doesn’t cover everything…so give us a call at 1-800-431-5431 and let us help you zap the gap.