How to Choose a Medigap Plan
When it comes to choosing the right Medicare Supplement Plan, the process can seem a little daunting. There are lots of Plan letters, Plan F, Plan G, Plan N that you’re hearing about…and on top of that there are dozens of different insurance companies that offer Medicare Supplement Plans. So how do you know if you’re choosing the right one?
Today I’m talking about the steps to make this whole process incredibly simple.
Deciding to purchase a medicare supplement or Medigap plan is generally a smart idea. Original medicare doesn’t pay for everything – there are deductibles, coinsurance and out of pocket medical costs, but most Medigap plans cover these out of pocket costs very well, so you end up paying little to nothing at the doctor and hospital. And in many areas, you can get a great Medigap plan for about $100 – $150/month. So how do you know if you’re choosing the right plan?
Let’s break it down into some basic steps:
Step 1. Pick your Plan letter.
There are really only 3 Medigap plans that most people go with – Plan F, Plan G and Plan N. Plan F has been known as the ‘best’ Medigap plan, because it’s the Plan that covers the most. It covers 100% of Medicare Part A and B costs, so if you have Medicare Supplement Plan F you pay zero out of pocket at the doctor and hospital for all Medicare covered services. Zero deductible, no copays – Very excellent coverage. Medicare Supplement Plan G is very similar. It’s identical to Plan, F with one difference – it doesn’t cover the Medicare Part B deductible, which at this time is $183/year. So, if you go with Plan G, you pay an annual $183 deductible at the doctor, then everything is covered at 100% – no copays or coinsurance. Plan N, the third most popular Plan is usually the least expensive of these three because you have a little bit more out of pocket that you’re responsible for. Plan N, like Plan G, does not cover the Part B deductible ($183/year). Plan N does have co-pays associated with office visit and ER visits after this deductible is met. Up to a $20 co-pay at the doctor, and up to a $50 co-pay for an ER visit. Also, Plan N does not cover the Part B excess charges. Medicare Part B excess charges are rare, but you could come across them if you go to a provider that accepts Medicare but doesn’t accept Medicare assignment or Medicare as payment in full. Excess charges are not common, but there are not covered by Plan N.
When it comes to choosing which Medigap Plan is best for you, you’ll want to take into consideration how often you expect to visit the doctor, if you don’t mind office visit co-pays, and also take into consideration your monthly budget. Plan F is going to be more expensive than Plan G or Plan N, because it covers more, and Plan N will be the least expensive of the three.
Of these three plans I usually don’t recommend Plan F for most people. There are a few different reasons for this – Plan F usually costs much more than it’s competitive counterparts, Plan G or Plan N. The premium is usually $300-$400/month more than Plan G, even though the only additional benefit is coverage for the $183 Part B deductible. So it’s like you are paying the insurance company a “service charge” so that they’ll pay the deductible for you – and they get to pocket the extra premium.
Also, if you look at rate increases with different insurance companies, rate increases are usually always higher with Plan F than with the other Plan letters, so over the life of your policy as you get rate increases you may end up paying much more by going with Plan F. Both Plan G and Plan N are excellent Plans and the two plans we see most people going with today.
Once you’ve decided which letter Plan will best fit your budget and your lifestyle, it’s time to shop insurance companies. One thing that most insurance companies don’t want you to know is that absolutely all of these Medigap plans are standardized. So if you want a Plan G, it doesn’t matter at all which insurance company you get it from – it will always be the same exact plan, by law. Another important note – as long as your doctor accepts Medicare, they absolutely must accept your medicare supplement plan – no matter what insurance company you have it with. It does not matter is the doctor is contracted or ‘in network’ with that company – Medicare supplement plans are non- network plans and you can absolutely see any Medicare provider nationwide, no matter where you get your plan from.
Picking the right insurance company is important for a few different reasons. Since these Medigap plans are standardized the benefits are always the same from one company to answer, while rates can vary greatly. You do want to shop around and make sure you are getting a good price for your plan. That being said, you also want your company to have strong financials (generally a B+ or better), and a history of stable rate increases over time.
Another important decision is choosing your broker. I never recommend enrolling directly through the insurance company, as insurance companies have internal sales departments and while they’re glad to take your application over the phone, they will never follow up with you or help you shop around if new and better options become available. Enrolling with a broker is always free of charge, and if you choose an independent broker you maintain your freedom to shop around over the life of your policy. You definitely want a broker who is independent instead of captive – this means they can offer plans from many different insurance companies instead of being tied to one carrier only.
To sum it up, choosing a Medicare Supplement Plan can seem daunting, but if you follow these simple steps it doesn’t have to be. Of course I would love the opportunity to assist you and answer any questions you may have. I serve clients nationwide and you can contact me anytime for a free, no obligation quote at (888) 465-9728.
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