December 13, 2021
There are a number of videos and articles with headlines like this one – what is the best Medicare supplement plan for 2022 or 2023 and so on. This article will be different than any you may have seen to date. I will help you identify which 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. If you want to know which Medigap Plan is the best Medicare supplement plan for you, then read on.
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 reading this article 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.
People that choose the Medicare supplement route do so because they want 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 will keep the benefits of Original Medicare regardless of which supplement plan you choose, or even which insurance company you choose. All Medicare supplement plans keep Original Medicare as your primary insurance.
So, if all the Medicare supplement plans are good, which one is the best Medicare supplement plan?
Instead of asking which is the best Medicare supplement plan, 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. For most of the country only a few plans are priced such that they are a reasonable value for the premium. Those are usually Medicare supplement Plan G and Medicare supplement Plan N. For most of the country, these are the two plans that offer the best value of benefits relative to premium.
In some parts of the country there is another plan you should consider called the High Deductible Plan.
In this article I am going to go show you how to identify which of these plans is right for you. This will answer the question, which is the best Medicare supplement plan FOR YOU?
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. That is not entirely true. It’s not the supplement plan. It’s the insurance company.
Some insurance companies will have high price increases regardless of the plan, some will not. Each company has its own pricing strategy as well as medical claims experience which is, in part, a consequence of their pricing strategy and their ability to filter out potential high-cost policy holders through medical underwriting.
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 Medicare supplement Plan G you can spend a year in the hospital as an inpatient and it will not cost you a dime. 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.
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 deductible you have 100% coverage.
As I write this article the Medicare Part B annual deductible is approximately $200. 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%
This is what I call the Peace of Mind plan. People who choose a Medicare supplement Plan G just want great coverage. They do not want to think about their healthcare. It’s just paid for. It 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. Peace of mind is what makes the Plan G the best Medicare supplement plan for many people.
Let’s compare that to the Medicare supplement Plan N.
Medicare supplement Plan N has less insurance coverage than the Plan G and it cost less.
But there is a catch beyond just the lower premium.
We need to look at this closely to understand.
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 Medicare supplement Plan G you will have to pay the Medicare Part B deductible when you first see a doctor as an outpatient in any calendar year. That’s approximately $200.
But here is where this plan is different. With a Medicare supplement 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 misunderstood; the $20 copay is for diagnosis and evaluation visits only.
The copay is only for an in-office visit for diagnosis or evaluation.
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.
I should note that CMS (Center for Medicare and Medicaid Services) is allowing doctors to charge (if the choose) a $20 copay for telehealth meeting during as our country deals with the COVID pandemic. But this is temporary. In addition, many of my client shave indicated they are NOT being charged a copay for telehealth meetings.
The biggest weakness of a Plan N is that there is no insurance against something called Medicare Part B Excess charges.
That’s an interesting term.
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.
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 and instructs them on what to pay and when. All the supplement company does is what Medicare tells it to do.
Doctors like this because it’s cost effective and provides steady cashflow. The doctor gets paid quickly, usually within two weeks 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. This is called a Non-Participating Provider contract. They do not participate in Medicare’s assigned rates.
That extra 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?
Why Doctors Choose to be Participating Providers
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 really 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 Medicare supplement company either because the doctor has no contract with the Medicare supplement company. What they do is they ask the patient to pay up front and be reimbursed by the Medicare supplement company. You pay upfront, then you send the bill to the Medicare supplement company to get your money back.
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.
People who choose a Medicare supplement Plan N do so because they like saving money. But if you have a Medicare supplement Plan N, you must avoid being charged an excess charge. An excess charge can erase what you saved on a lower premium. For these people, Medicare supplement Plan N is the best Medicare supplement plan.
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. For these people, Medicare supplement Plan N is the best Medicare supplement plan.
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 views the Medicare supplement Plan N as the best Medicare supplement plan 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. To people who value saving money and don’t mind being responsible for taking action needed to save money, Medicare supplement Plan N is the best Medicare supplement.
By the way, if you are not 100% sure on which plan is the best Medicare supplement plan for 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 cost versus value of a Medicare supplement Plan G and Plan N, measure the price difference in office visit copays. Remember the $20 office visit copay? Calculate how many office visits per month, each month, every month for the rest of your life would it take for a Medicare supplement Plan N not to be a better value relative to a Medicare supplement Plan G?
Again, both 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 act of looking up their doctor to see if they charge an excess charge.
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?
Now you know, hopefully, if you are a Plan G personality or a Plan N personality. If you are still not certain, I have two detailed videos comparing Medicare supplement Plan G vs Plan N.
Next, as promised, I am going to talk about 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.
The high deductible Medicare supplement plan is the best Medicare supplement plan when the premium difference over your lifetime is overwhelmingly in your favor.
There are two, there is the Medicare supplement 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 $2,370 for 2021. This deductible 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, Original Medicare, is your primary insurance. You will pay the deductibles and coinsurance of Medicare Part A and Part B up the point where you have spent $2,370 in a calendar year. That’s it.
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 a full coverage Medicare supplement, the Plan N or the Plan G is close to or greater than the annual deductible.
If you live in an area of the country where supplement prices for a Plan N or a Plan G are expensive, I use $160 a month or more, then compare the premium of a full coverage Medicare supplement to the deductible, which is the maximum out-of-pocket of your high deductible supplement.
If you do not live in a high cost area for Medicare supplements, I advise that you compare the difference in premium of a full coverage Medicare supplement vs. a high deductible supplement PLUS the Medicare Part A deductible. The amount you will have out of pocket with just a few days hospital stay.
Let me explain:
There are areas of this country where a Plan N is nearly $200 a month. That’s $2,400 a year 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 is equal to or greater than the 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 an entire video on the high deductible Medicare supplement plans linked here.
My advice 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.
Now, 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. You can spend a year in the hospital and not pay a dime.
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 $1,400. That is a per event deductible, not an annual deductible.
Hospital stays “under observation”, are covered under Medicare Part B as an outpatient. The cost can easily reach the $2,370 annual maximum out-of-pocket.
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.
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 $160 a month or more, compare the premium of a full coverage Medicare supplement to the deductible, also known as the maximum out-of-pocket with your high deductible supplement.
You are comparing what you would be required to pay in monthly or annual premiums every year regardless of health 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 this is what you do. Compare the difference in premium of a full coverage Medicare supplement vs. the premium of a high deductible supplement. Then deduct the Medicare Part A deductible. The Part A deductible is the amount you may have out of pocket with just a few days hospital stay. That is your out-of-pocket with a high deductible plan.
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.
In that case, 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.
There you have it. Once you decide to go with a Medicare supplement, consider your personality when choosing a Medicare supplement plan. Ask yourself; are you a saver or a person who prefers Peace-of-Mind?
There are places in this country where the High Deductible 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. Many people think the low premium of a high deductible plan means they will save money. They find out they were wrong when surprised by more medical bills than they can afford when they get sick.
I know that was a lot of information. I hope you can put it to good use by calling us at MedigapSeminars. We can help you through this process. You can reach us at 800-847-9680 or use this Contact Us form and we will reach out to you.
Which Medicare supplement is your Best Medicare supplement plan?