Choosing the right Medicare Supplement Plan, whether it is Plan F or Plan G, can feel overwhelming. The key to successful decision making is strategy. A person with the right strategy is not only well informed but confident in their ability to make the right decision. When looking at a Medicare Supplement Plan available to you, strategizing which plan is best ultimately boils down to two main things: price and coverage.
As you know, Medicare gives you access to any hospital, doctor or specialist throughout the U.S. who accepts Medicare. However, it only covers about 80% of your bills when you use it. A Medicare Supplement Plan or Medigap can cover most or all of the remaining 20%. It’s really that easy.
Medicare Plan F vs Plan G Strategy: The Background
Currently, there are 10 Medicare Supplement Plans. All the plans are identified by letters, A through N. Remember, these Medicare Supplement Plan letters are in no way related to Medicare Part A, Part B, Part C or Part D. Each Medicare Supplement Plan is just simply assigned a letter to identify that plan.
Medicare Plan G: Why It Is a Winner Over Plan F
Plan F does not have any out of pocket costs like copays or deductibles. But many people save hundreds, sometimes thousands of dollars a year by choosing Plan G over Plan F. This is because, with Plan G, you save big money in your premiums each year. You do have to pay a small, Part B annual deductible ($198 in 2020) with Plan G, but that pales in comparison to the savings you get overall with your monthly premiums.
Keep this part in mind, anyone newly eligible for Medicare on or after January 1st, 2020, cannot get a Plan F. If you were eligible for Medicare Part A and Part B before January 2020, Plan F is still an option for you (pending underwriting approval). Even if you are eligible to purchase Medicare Supplement Plan F, it is still not a recommended option for most seniors.
Medicare Plan F vs Plan G: The Strategy
Here’s an example of the savings you can expect to see. Plan F usually charges the highest monthly premiums over all other Medigap plans. In this example, Plan F for a 65-year-old male in Arizona is around $150.00/month. Plan G however, has lower monthly premiums, around $115.00/month.
With plan G, that’s a savings of about $420 dollars each year!
Now let’s say you see a doctor or specialist and meet that annual Part B deductible ($198 in 2020), you’re still saving almost $200 dollars annually over Plan F. After 10 years, that’s a savings of almost $2,000 dollars just because you chose to strategize by getting Plan G over Plan F!
All Medicare Supplement Plans usually have an annual premium increase. Historically, Plan F on average has an increase of around 9%. And remember, Plan F charges the highest monthly premiums over all other Medicare Supplement Plans. After only 5 years you can see that a 9% increase really adds up quickly. At 10 years, it’s almost double the price from year one.
Medicare Supplement Plan G however, historically has had an average annual increase of only 3%. And unlike Plan F, the premiums start out much lower. After 5 years, your monthly premiums hardly move. At 10 years, the cost is significantly lower than Plan F.
What Is Significant About Medicare Supplement Plan F Leaving the Market?
Anytime a Medicare Supplement Plan letter leaves the market, typically a higher than normal annual rate increase is seen. There is an interesting reason for this. Insurance companies strive through the competition to keep their customer’s premiums from increasing at a larger than normal rate by ensuring claims being paid out do not outweigh the premiums being collected.
For example, natural disasters such as fires or earthquakes can negatively impact property and casualty insurance rates. When claims are up, many will experience premium increases to offset the higher than normal claims being paid by insurance companies.
The same applies to health insurance, and it’s no secret that our health generally does not improve when we age. An 85-year-old person on Medicare will generally have more or higher insurance claims than a younger, 65-year-old person might. When Plan F leaves the Medicare market for newly eligible Medicare beneficiaries, who are going to help offset Plan F’s increasing claims? The answer? No one.
Starting January 1, 2020, younger, healthier, newly eligible beneficiaries will be prohibited from participating in Plan F. They will be unable to financially contribute their monthly premiums to Plan F resulting in rate increases to everyone else stuck in that plan.
The best strategy when considering your options is to stay informed of any changes to Medicare. Utilizing a Licensed Professional or Broker is one of the best ways to stay up-to-date while ensuring you don’t get left behind or stuck in the wrong plan.
The Clear Winner: Medicare Supplement Plan G Over Plan F
If you’re turning 65 or enrolling in Medicare for the first time, you can choose Plan G and there is no medical underwriting. This is called your Medicare Supplement Open Enrollment period. During this time you can choose any Medicare Supplement Plan and the insurance companies cannot refuse to sell or offer you a plan, even if you have pre-existing conditions. By law, they have to sell you the plan of your choice.
And switching plans is really easy because there’s no annual enrollment window. This means you can switch Medicare Supplement Plans any time of the year, as long as you can medically qualify.
We Can Help You Shop for Medicare Supplement Plan G
Contact MedicareInc.com today and we’ll help you shop the market for you because that’s exactly what we do. We’ll show you Plan F vs. Plan G and do the math for you so that you can see exactly what you’ll save by going with Plan G. The best part is, you’ll never see a bill from us. Our services are always at no cost to you. Are you ready to save big?