When we start talking with individuals about their Medicare options, they always want to know which plan will give them the best coverage. We all know how expensive healthcare is, so taking steps to ensure you have great insurance is important. Many of our clients have heard about Plans F and G and want to know the better option. While our answer used to be Plan F, recent changes have been made that have made that question a little more difficult to answer.
Medigap Plans: An Overview
Medigap plans fill in the “gaps” in Parts A and B of Original Medicare. While the Medicare program offers great benefits with Parts A and B, Medicare beneficiaries are still responsible for paying deductibles, copays, and coinsurance costs. These can add up quickly.
For example, the Part A deductible is $1556 per benefit period, which can occur multiple times in one year if you’re admitted to the hospital more than once. Plus, hospital coinsurance runs out after 90 days. Then you’ve got your Part B expenses. There’s a $233 annual deductible to start, and then Part B only pays for about 80% of the Medicare-approved services. There is no limit on how much you could pay out-of-pocket each year.
Medigap policies help pay for those remaining costs. There are ten Medigap options on the market today: Plans A, B, C, D, F, G, K, L, M, and N. Each of these has varying levels of coverage, but their coverage remains the same from one year to the next and from one insurance company to the next. This is called “standardization” and makes these plans more predictable than other Medicare products.
The Old Cadillac: Medicare Supplement Plan F
Until recently, Medigap plan F was the “Cadillac” of all Medicare supplements (another word for Medigap). It offered the most comprehensive coverage out of all the plans because it left the beneficiary with ZERO out-of-pocket costs. It paid for the Part A and B deductibles, coinsurance and copays, Part B excess charges and gave the beneficiary an extra 365 days of hospital coinsurance payments.
If you had Plan F, your only cost was the monthly premium.
So, what happened? Why is there a new Caddy rolling into town?
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) was passed, which made sweeping changes to provider reimbursements. It was part of an effort to reward providers for their quality of care instead of the volume. Quite a few new measures were put in place, but the one that’s important to the Medicare program is the one that prohibited Medicare supplements from paying the Medicare Part B deductible.
We didn’t see this change until January 1, 2020. Any newly eligible beneficiary who turns 65 on or after that date is not eligible to enroll in Plan F. Those who were already enrolled were allowed to keep their plan, and it’s also still available for any beneficiary to purchase, as long as they turned 65 before the cutoff date.
The New Cadillac: Medicare Supplement Plan G
With the new rules prohibiting Plan F enrollment for new beneficiaries, Plan G has quickly become popular for those looking for luxury healthcare coverage.
There isn’t much difference between Plans F and G. In fact, the only difference in coverage is that Plan G does not pay the Part B deductible. So the coverage difference is simply the $233 yearly deductible. That’s it!
It sounds like a downgrade since it has less coverage, so why would we consider Plan G the new Cadillac? Let’s look at monthly premiums between the two plans.
Your premium is going to depend on a few personal things: your age, tobacco use, gender, and where you live. It will also depend on the insurance company you choose and what pricing method they use to calculate premiums. And, of course, you’ll pay a higher premium for more coverage.
The average premium for Plan F is between $130-$230, with an average annual increase between 3%-6%. The average premium for Plan G is between $100-$200, with an average annual increase between 2%-6%. Let’s pretend you get quotes at the lowest end, so you could either pay $130 for Plan F or $100 for Plan G. How does that math work out?
Your annual premium for Plan F would be $1560, and your annual premium for Plan G would be $1200. That’s a difference of $360, which is more than the current Part B deductible of $233. The smarter choice here is to go with Plan G.
If you’re currently driving around the old Cadillac, you may want to trade up for this newer model.
Which Medicare Supplement Insurance Is Right for You?
Old or new, both of these plans are still Cadillacs, so you can’t go wrong. Ultimately, you’ll need to weigh the difference between coverage and premiums. The easiest way to do this is to work with one of our licensed insurance agents. They can educate you on these plans, as well as your other Medicare options. Then, when you’ve made a decision, we can compare premiums across many insurance companies, so you get the most competitive rate on the market.
Is Plan F better than Plan G?
Yes and no. Plan F does have slightly better coverage since it will pay the Part B deductible. However, you’ll pay more in premiums, which may outweigh the increased benefits.
Which is the best Medicare supplement insurance plan?
The best plan is the one that fits your needs and budget. Medicare Plans F, G, and N are the most popular choices.
Can I switch Medicare plans?
Yes, but you may have to pass medical underwriting first. Some states allow you to switch Medicare supplement plans during certain times the year, while others have more strict regulations.
Which is cheaper: Plan F or Plan G?
Generally speaking, Plan G is cheaper since it has less coverage. However, premiums are calculated using a variety of factors.