August 3, 2015
From there, it’s simply a matter of getting a Medicare Supplement quote to find which company offers Plan F at the lowest price in your area, and the deal is done. Some seniors and agents never look closely at the features of each plan to see if they are really worth the extra money. They never re-shop their plan as the years go by and persistent rate increases have pushed their monthly premium well beyond what they were originally paying. As a result, many seniors are overpaying for their Medicare Supplement coverage by hundreds and sometimes thousands of dollars per year.
What we will show in this article is how Medicare beneficiaries can save hundreds of dollars per year in insurance premiums by considering Medicare Supplement Plan G, which can be a much better value for your insurance dollars. That value stems from the fact that insurance companies can use minor benefits to bolster their profits. It’s also important to note that historical price increases in Plan G have been historically lower than Plan F, creating a price differential to the benefit of Plan G policy holders.
First, if you own a Medicare Supplement Plan F now, or are considering Plan F for your supplement, you should know that a new law passed in April 2015 and effective as of 2020 prevents insurance companies from offering Medigap Plan F and Plan C to anyone was not eligible for Medicare Part A prior to January 01, 2020. Both of these Medigap plans cover your Medicare Part B deductible ($166 per year as of 2016). As of they year 2020 no Medigap plan offered to people new to Medicare will be allowed to cover the Part B deductible.
If you already own one of these plans you will be grandfathered in and be able to keep your Medigap Plan F or Plan C.
There is much more to finding the best value in Medicare Supplement plans than looking for the most comprehensive coverage and getting Medigap plan quotes from different insurance companies. In order to find the best value and not overpay for your insurance coverage, you should also have a basic understanding of the nine different benefit categories listed in the left-hand column of the table below. You will want to know what you are paying for. The two benefit categories that are most responsible for people overpaying for their Medigap insurance coverage are the “Part B deductible” and “Part B excess charges”. In a previous article on Medicare Supplement Plan N we discussed Part B excess charges in detail, so we will not repeat that discussion here. However, we encourage readers to review that article on Plan N if you are evaluating which Medicare Supplement plan is right for you, or simply shopping for the best value in Medigap plans.
From Page 93 of the 2015 Medicare & You handbook
Unlike the deductible for Medicare Part A, the Medicare Part B deductible is a simple annual deductible paid once per year. As of the year 2016, this annual deductible is just $166. Keep in mind, the deductible is only incurred when or if you see a doctor for reasons other than a Medicare Wellness check-up. Medicare recipients receive a free annual Wellness preventive check-up that is exempt from the Medicare Part B deductible and all other co-pays. Also, people on Medicare are often surprised to see that Medicare assigned prices are very low and, as a result, may services have a lower cost than expected. Medicare has negotiated doctor and hospital fees down to just 15% to 18% of their non-negotiated price, a single doctor visit can be under $100. This means that for a person to have enough medical treatment to warrant paying the entire $166 deductible they may need to see the doctor at least twice per year in addition to regular annual preventive care checkup.
To receive your free annual Wellness benefit you must request the Wellness preventive care checkup when setting your doctor appointment. Also, be certain it has been at least 12-months between Wellness visits.
Now, let’s take a look at how paying extra so that the insurance company pays your Part B deductible is responsible for so many Medicare beneficiaries overpaying for the Medicare Supplement plans every month.
The above table lists all the Medigap plans available as of 2015. The plans are denoted by a letter and listed across the top row. The benefits covered by each plan are listed in the left-hand column. Note that the row denoting coverage of the Part B deductible is highlighted in yellow. We can easily see that of all the plans available, only Plan C and Plan F insure against the annual Part B deductible.
Medicare Supplement Plan F insures against medical bills from all the benefit categories listed. This means that a person with Plan F will not receive any bills or be expected to pay for any Medicare-related coverage. They are only responsible for the Medigap insurance premium.
The benefits of Medicare Supplement Plan G are illustrated in the column to the right of Plan F. Note that Plan G’s benefits are identical to Plan F except that instead of the insurance company paying the $166 Part B deductible, you pay the deductible. This means that if you have a Medicare Supplement Plan G, your only out-of-pocket expense, other than insurance premiums, for Medicare-covered services would be the Part B deductible of $166.
Logically, you would think that if the only difference in benefits between Medicare Supplement Plan F and Plan G is $166 per year, then Plan F should cost just $166 more than Plan G. Right? Wrong. In reality Plan F often cost $320 per year or more than Plan G. The reason for this is that some insurance companies view the Part B deductible as an opportunity to increase profit. Whether you call it a convenience fee or simply excess profit, insurance companies typically charge Medigap Plan F policyholders $150 to $300 or sometimes more just for the benefit of wiring the Medicare Part B deductible to Medicare on your behalf.
If you would like to know prices in your area, check out this handy tool from Mutual of Omaha: Mutual of Omaha price quote. We encourage you to also use the quote comparison feature at the bottom of this page to find prices from other insurance companies.
The first example shows the Medigap Plan G and Plan F prices for a 70-year-old male living in Oklahoma zip code 73068. I am illustrating the best two prices for each, although there are approximately 40 different companies offering the exact same plan. These prices do not reflect the 5% to 7% household discounts available.
Plan F $146.25 per month $1,755 per year
Plan G $104.21 per month $1,250.52 per year
Plan G is $504.48 less per year than Plan F, saving $42.04 per month in premium.
However, the ONLY difference between Plan G and F is the $147 Part B deductible. Since the people with plan G have to pay the $147 deductible out-of-pocket, the net savings for people with Medigap Plan G is $504.48 -$147 = $357.48 per year.
70-year-old, non-smoking male Oklahoma zip code 73068
The second case illustrates a 69-year-old woman in Virginia zip code 24501. I am again illustrating the best two prices for each, although there are approximately 40 different companies offering the exact same plan. These prices do not reflect the household discounts available.
Plan F $114.85 per month $1,378.2 per year
Plan G $85.13 per month $1,021.56 per year
Plan G is $356.64 less per year than Plan F, saving $42.04 per month in premium.
Again, the ONLY difference between Plan G and F is the $166 Part B deductible. Since the people with plan G have to pay the $166 deductible out-of-pocket, the net savings for people with Medigap Plan G is $356.64 -$166 = $190.64 per year.
69-year-old non-smoking woman Virginia zip code 24501
These two examples are typical of cases from age 65 to 80 in almost all states. The only state I have found where Medigap Plan G is consistently a better value than Medigap Plan F is Florida.
That said, just because Plan G can be a better value than Plan F does not make it the BEST value. Please see our video on Medigap Plan N for when that plan may be a better value.
A final reason to consider Medigap Plan G as your Medicare Supplement instead of Medigap Plan F is the fact that annual price increases for Plan F policy-holders have averaged much higher than price increases of the Plan G policy-holders. In fact, we have seen many companies lower their Medigap Plan G prices recently; by as much as 18% to 22% in the last two years.
The chart on the right accurately displays the average price changes in Medicare Supplement Plan G (blue line) vs. Medicare Supplement Plan F since 2003. If you had to pay the monthly premium to keep your insurance, which would you rather have the price increases represented by the red line, or the blue line?
In a casual review of new client policies over the past 36 months, we have found that on average seniors were overpaying for their Medigap plan by between $500 and $1,000 per year, with the most we saved a single person being over $3,800 per year for their Medicare Supplement, without reducing benefit coverage.
If you would like to know the price of Medigap Plan G for yourself, simply complete the Medicare Quote Request form found below and in the menu at the top of this page. We will email you a Medicare Supplement G price quote and a quote on any other supplement plan(s) that interests you. If more than one member of your household is interested, you may qualify for household discounts of 5% to 7%.
I welcome your questions.