Which is the best Medicare supplement plan? This article is for those people researching Medicare and who want to know which is the best Medicare supplement plan. Or, more accurately, which Medicare supplement plan may be right for you.
There are a number of videos and articles with headlines like this one; what is the best supplement plan for 2021 or 2020 and so on. This article, and accompanying video, will be different than any you may have seen to date. I will help you identify the Medicare supplement plan that you will most likely be happiest with, and I will accomplish this without showing you a table of benefits and pointing at deductibles and such. That’s just not necessary to find the best Medicare supplement plan for you.
No Bad Medicare Supplement Plans
Let’s first address the elephant in the room; the fact is there are no BAD Medicare supplement plans. Every Medicare supplement plan will do exactly what Medicare tells it to do. If you are watching this video and you have already decided to go with a Medicare supplement plan and not a Medicare Advantage plan, then I congratulate you. You have already made the most important decision facing those who are new to Medicare.
If you haven’t made up your mind, I invite you to watch my New To Medicare series of videos where I go through Medicare Advantage Plans, Supplements Plans, Part D and more. You will find this series on my website, MedigapSeminars.org and by subscribing to this channel.
Why People Choose a Medicare Supplement Plan?
People that choose the Medicare supplement route do so because they get to keep the two most important benefits of Original Medicare. What are those benefits?
First, you are not limited by a network. With a Medicare supplement you can see any doctor, go to any medical facility in the U.S. or its territories, as long as they accept Original Medicare. That’s almost every doctor and medical facility in the country.
Second, no insurance company has a say in your healthcare. Medicare’s intent is to cover everything that is medically necessary, and they lean on your doctor to determine medical necessity. Your healthcare decisions are between you and your doctor.
Keeping those two benefits of Original Medicare are overwhelmingly the deciding factor for those who choose a Medicare supplement over a Medicare Advantage plan.
You get to keep the benefits of Original Medicare regardless of which supplement plan you choose, or even which insurance company you decide to go with. They all keep Original Medicare as your primary insurance.
So, if all the Medicare supplement plans are good, which on is best?
Which Medicare Supplement Is Right for You?
Perhaps the better way to word that question is which plan is right for you?
If you have seen a Medicare supplement benefit table, you know there are a lot of plans to choose from. Thankfully, for most of the country there are only a few plans that are priced such that they are a reasonable value for the premium you pay. Those are usually Medicare supplement Plan G and Medicare supplement Plan N. In some states Medicare Supplement Plan G-HD (High Deductible) is also a good value.
Let me pause for a moment and note that I am very aware there are some of my competitors that want you to think that one plan is going to increase in price drastically more than the other. No. It’s not the plan. It’s the insurance company.
Some insurance companies will have high price increases regardless of the plan, some will not.
Medicare Supplement Plan G
Let’s start with this simple, but bold assertion; the debate between Medicare supplement Plan G versus Medicare supplement Plan N is not one of benefits and costs, but of personality. Your personality.
Let me show you.
Medicare supplement Plan G offers the most health coverage of any Medicare supplement that is available to those who are new to Medicare. With a Plan G you can spend a year in the hospital as an inpatient and it will not cost you a dime. Your inpatient services are covered at 100%.
With a Plan G your only expense for inpatient and outpatient Medicare bills is the annual Medicare Part B deductible. Please see my Medicare Maximum Out Of Pocket video and blog for details.
Part B is Medicare’s outpatient services. When you see a doctor as an outpatient for the first time during the calendar year you will pay the Medicare Part B deductible. Once you have paid that annual deductible you have 100% coverage when you have a Medicare supplement Plan G.
As I make this video the Medicare Part B annual deductible is approximately $233. That’s all. The Part B deductible will change a little every year. Medicare has a stated target of $250 sometime in the next four or five years. You pay this deductible once a year when you first see the doctor for outpatient services. After that everything is covered 100%.
It’s The Peace of Mind Plan
Medicare supplement Plan G is what I call the Peace of Mind plan. People who choose a Medicare supplement Plan G just want great coverage. They don’t mind that the plan cost more, they don’t want to think about their healthcare. It’s just paid for. Medicare supplement Plan G offers complete Peace of Mind.
To the person who chooses a Medicare supplement Plan G that peace of mind coverage is more important than the extra money it cost relative to your other Medicare supplement choices. It’s that simple.
Click this link for more details on Medicare Supplement Plan G
Medicare Supplement Plan N
Let’s compare that to the Medicare supplement Plan N. Medicare supplement Plan N has less insurance coverage than the Plan G and cost less. But there is a catch beyond just the lower premium.
We need to look at this Medicare supplement closely to understand.
Compare Plan N to Plan G
A Medicare Supplement Plan N is just like Plan G in that you can spend a year in the hospital, and it won’t cost a dime. You have 100% inpatient coverage.
Also, just like Plan G you will have to pay the Medicare Part B deductible when you first see a doctor in any calendar year. That’s approximately $233.
But here is where this plan is different. With a Plan N, whenever you see a doctor for a diagnosis or evaluation you will pay up to a $20 copay. It doesn’t matter if it is a Primary Care doctor or a Specialist, it’s no more than $20.
If you go into an emergency room, there is up to a $50 copay that is waived if you end up staying as an inpatient in the hospital.
Now, this is important and often mis understood, the copay is not applied to all doctor visits. The $20 copay is for diagnosis and evaluation visits only. There is no copay for physical therapy. There is no copay for when you get a flu shot. There is no copay if you end up with chemotherapy infusions once a week. There is no copay for *telehealth meetings and there is no copay when you go to an Urgent Care center. The copay is only for an in-office visit for diagnosis or evaluation.
*Due to COVID 19, Medicare has temporarily allowed copay charges for telehealth meetings. Not every doctor will apply this copay, but it is allowed. Please watch our Facebook Page (https://www.facebook.com/MedigapSeminars ) for when this temporary measure is suspended.
Diagnosis or Evaluation Only
When you go to a doctor’s office to find out what is ailing you, that’s a meeting for diagnosis.
When the doctor has you trying a new prescription or other treatment and you meet your doctor at their office to see if that treatment is working, that’s an evaluation. Those are the meetings subject to a copay.
What Are Medicare Part B Excess Charges?
The biggest weakness of a Medigap Plan N is that there is no insurance against something called Medicare Part B Excess charges.
That’s an interesting term. What is a Medicare Part B excess charge?
When a doctor decides to work with Medicare they can choose one of two contracts. More than 97 out of 100 doctors choose a Participating Provider contract.
The Participating Provider
Here is why, as a Participating Provider Medicare sets the prices for every procedure and service. Medicare assigns the rates, so the doctor knows exactly what they will get paid for every procedure.
In addition, Medicare becomes their One-stop biller. In other words, the doctor only bills Medicare. Medicare pays its portion and immediately notifies the supplement company electronically and instructs them on what to pay and when. All the supplement company does is what Medicare tells it to do. In fact, more than 80% of all Medicare bills are paid within 48-hours of Medicare notifying the supplement company.
Doctors like this because it’s cost effective and provides steady cashflow. The doctor gets paid very quickly and Medicare takes care of everything.
Some Doctors, fewer than 3 out of every 100, decide they want to charge more than what Medicare pays. Medicare allows them to have a contract that permits them to charge up to 15% more than Medicare’s assigned rate.
That 15% is called an excess charge. Some states outlaw this excess charge, but even outside of those states very few doctors will choose a contract that allows them to charge more than the rates Medicare assigns.
As I mentioned, only three out of one hundred doctors will take this contract. Why?
Medicare Discourages this contract by doing two things.
First, they pay that doctor only 95 cents for every dollar they pay the Participating Providers. Then the doctor can charge up to 15% more on that 95%, which is just 9.25% more than the other doctors.
Second, and most important, Medicare will not be that doctor’s one-stop biller. The doctor must bill Medicare, but Medicare will not notify the supplement company. The doctor can’t bill the supplement company either because the doctor has no contract with the supplement company. What they do is they ask the patient to pay up front and be reimbursed by the supplement company. You pay upfront, then you send the bill to the supplement company for reimbursement.
Obviously, this is not consumer friendly. Very few doctors find it worthwhile.
Still, it is your responsibility to avoid excess charges if you choose a Plan N.
Why Do People Choose a Medicare Supplement Plan N?
People who choose a Medicare supplement Plan N do so because they like saving money. But if you are going to have a Medicare supplement Plan N you must avoid being charged an excess charge because an excess charge can wipe out what you saved on a lower premium.
You do this by taking action. You must look up your doctor on the Medicare website before you visit them for the first time. The Medicare.gov website physician finder will indicate if that doctor accepts Medicare assigned rates and cannot charge an excess charge, or if that doctor has a contract that allows them to charge an excess charge.
The person who best fits a Medicare supplement Plan N is the person who wants to save money and enjoys participating or taking on a small responsibility to save that money.
It’s the person who might enjoy using coupons, for example. Or maybe drive a few blocks out of the way to save 10 cents a gallon on gas.
Compare Cost Savings in Copays Per Month
By the way, if you are not 100% sure on which plan fits you, I like to add one other thought here. Medicare supplement Plan N can save a person typically between $15 and $50 a month in premiums. Depending on where you live. When you compare the monthly premium cost between a Medicare supplement Plan G and Plan N, measure the price difference in office visit copays. Remember the $20 office visit copay? How many office visits per month, each month, would it take for a Plan N not to be a better value relative to a Plan G?
Click here for my article and video specific to Medicare supplement Plan N
Which Personality Are You?
Both Medicare supplements are good plans, they are just for people with different personalities. People that want Peace of Mind coverage value that peace of mind over the higher premium costs. People that want to save money, are bothered by the higher premium more than by the simple act of looking up their doctor to make sure they don’t charge an excess charge. Which are you?
Do you prefer the Peace of Mind of a Medicare supplement Plan G, or are you more interested in saving money with a Medicare supplement Plan N?
Medicare Supplement Plan G High Deductible
Next, as promised, I am going to discuss the high deductible Medicare supplement and how to tell if it’s something you should consider when deciding which is the best Medicare supplement plan for you.
The interesting thing about a High Deductible plan, is that the people who choose this plan aren’t a separate personality than the two I just described. They choose this plan when it is an overwhelming better value. A no-brainer is what I call it.
What is a High Deductible Medicare supplement?
There are two, there is the high deductible Plan F and high deductible Plan G.
They are the exact same plan with the exact same benefits and should be the exact same price from whichever insurance company is offering it.
The easiest way to understand a high deductible Medicare supplement plan is that it simply places a maximum annual out-of-pocket on your Original Medicare Part A and Part B benefits. You should think of the supplement deductible amount as your maximum annual out-of-pocket. The current deductible is $2,490 for 2022. It changes each year based on your Social Security Cost of Living Index.
With a high deductible Medicare supplement, Medicare Part A and Medicare Part B is your primary insurance. (link to website pdf You will pay the deductibles and coinsurance of Medicare Part A and Part B up the point where you have spent $2,490 (for 2022) in a calendar year. That’s it.
How I Determine Value
So, how do you determine if enrolling in a high deductible Medicare supplement is a no brainer? A great value?
Easy, when the annual cost of your full coverage Medicare supplement, the Plan N or the Plan G is close to or greater than the deductible.
Medicare supplement prices can be radically different from one state to another. In some places, the Medicare Supplement Plan N premium can be $160 to $200 per month at age 65. If you live in an area where the Plan N premium is this high, compare the annualized premium amount to the Plan G-HD deductible.
If you don’t live in a high-cost area, compare the difference in premium of a full coverage Medicare supplement vs. a high deductible supplement with the Medicare Part A deductible. The amount you will have out of pocket with just a few days hospital stay.
Let me explain:
Let’s say you live in an area where Plan N is $200 a month. That’s $2,400 a year in premium payments whether you get sick or not. Think about it, the mandatory annual premiums for a Plan N or a Plan G in some areas of the country are equal to or greater than your maximum out-of-pocket with a high deductible plan. Most people don’t reach that maximum out of pocket but a few years in their lifetime. Why not spend $50 a month plus or minus in premiums and then only $2,400 in a worst-case unusual year where you have a lot of health issues?
If this is a little confusing by the way, I have two videos on the high deductible Medicare supplement plans. I suggest watching my latest video on High Deductible Medicare Supplement Plans.
When evaluating this supplement, keep in mind it is the one supplement that is most vulnerable to inflation. Its deductible increases every year with the Consumer Price Index. LINK AFTER Edited
Another way to look at it is this. If you live in an area where the annual cost of your full coverage Medicare supplement is close to the annual deductible of a high deductible Medicare supplement, you should consider the high deductible plan. At least look at it.
Poor Value In Low Cost States
There are a lot of places in this country where a Medicare supplement Plan G or Plan N is less than $130 a month. In some places it’s less than $100 a month. That’s for full coverage where you can spend a year in the hospital and not pay a dime.
Here is the problem, with a high deductible plan you are going to pay the Medicare Part A deductible if you end up in the hospital for a few days. The Medicare Part A deductible is over $1,550. That is a per event deductible, not an annual deductible.
If you live in an area of the country where one stay in a hospital will wipe out the difference in premiums between a high deductible plan and a Plan N or Plan G, then a high deductible plan does not make sense financially. You would be taking a big financial risk to save a small amount of money.
Bottom line; how do you evaluate the value of a high deductible supplement relative to your other choices? If you live in an area of the country where supplement prices for a Plan N or a Plan G are expensive, then compare the premium of a full coverage Medicare supplement to the Plan G-HD deductible. Keep in mind, that Plan G-HD deductible is also the maximum out-of-pocket with your high deductible supplement.
You are comparing what you would be required to pay in annualized premiums every year for full coverage vs. what you would pay in a worst-case scenario with a high deductible plan.
If you live in a low-cost area for Medicare supplements, compare the difference in premium of a full coverage Medicare supplement Plan N vs. the premium of a high deductible supplement to the amount you risk with the Medicare Part A deductible. That is the amount you will have out of pocket with just a few days hospital stay if you don’t have full coverage.
That way you are comparing what you would save in premiums with a high deductible plan vs. how much savings goes out the window with the cost of one average hospital stay. You might save $500 to $700 a year in premiums with a high deductible plan, but lose all that savings or more with just one hospital stay. That’s not what I call a good value. It’s not a good risk to take at age 65 or older.
So, there you have it. Once you decide to go with a Medicare supplement, consider your personality when choosing a Medicare supplement plan. Are you a saver or a person who prefers Peace of Mind?
If you are going to consider a high deductible plan, there are places where that plan is an obvious value. A no-brainer. Still, use the process I just outlined to help you determine if it’s a good value. A low premium isn’t the only consideration. From my experience, too many people think the low premium of a high deductible plan means they will save money, only to be unpleasantly surprised by more medical bills than they can’t afford, when they get sick.