Jesse Smedley
Jesse Smedley is the Principal Broker for iHealthBrokers and the founder, president, and CEO of Smedley Insurance Group, Inc. and iHealthBrokers.com. Since the inception of SIG in 2007, Jesse has been dedicated to helping people save money on their health insurance by providing them with resources to educate themselves on all their health insurance options, both under age 65 and Medicare beneficiaries. He is featured in many publications as well as writes regularly for expert columns regarding health insurance and Medicare.
There’s no doubt that Plan G offers the best and most comprehensive coverage to new Medicare enrollees. But is it the best? More often than not, we tend to think so, but is it right for you?
Original Medicare
Medicare offers excellent coverage but there are a lot of out of pocket costs that people don’t take into consideration.
Original Medicare is broken up into Part A and Part B. There are separate out of pocket costs for each.
Part A will not usually have a monthly premium. There is, however, a deductible and copays or coinsurance. There is also no OOP Maximum.
A deductible is the amount that you have to pay out of pocket before your insurance begins to contribute to the cost share. Part A is a little strange because it is not applied annually, but rather per benefit period
For Part B, the deductible is applied once annually. In 2024, the Part B deductible is. $240.
Then there is coinsurance. For Part A your coinsurance is determined by the type of care facility and the length of care.
For Part B, your coinsurance is 20% of the Medicare approved amount. So if the Medicare approved amount for a given service treatment is $1000, your cost would be $200 (assuming you’ve already met your deductible).
There is no out of pocket maximum for either Part A or Part B. An out of pocket maximum is basically a cap on your yearly medical spending. Once you’ve met this threshold, traditionally your health insurance carrier would be taken on the remainder of the bills for the in network covered services for the rest of the year.
So, you can see that these costs without an OOP MAX can stack up. And that is where Medigap steps in.
Comparing Medigap
There are 10 different plans to choose from with varying levels of coverage and varying price points.
Benefits are standardized. This means the benefits offered by Plan G will be the same regardless of who your carrier is. The only thing that would change is the price.
And remember, that if your doctor accepts Original Medicare, they accept your Medicare Supplement Plan, regardless of who the carrier is.
Prices
So, obviously, Plan G is a great option. So, why wouldn’t you want one? When looking at premiums alone, Plan G does tend to have a slightly higher monthly premium. When comparing rates, make sure to take into consideration the other out of pocket costs not covered by the other plans.
For example, Plan A does not cover the Part A deductible. So, if you need to be hospitalized at any point during the year, you would likely end up spending much more with Plan A than with Plan G when factoring in the Part A deductible.
Rate Increases
We used to often compare Plan F and Plan G in terms of value. That’s because the only real difference between these two plans is the Part B deductible. Plan F covers it. Plan G doesn’t. However, when you usually compared the difference in monthly premiums for a full year, Plan F would be more than $200 more expensive, making Plan G the clear cut winner.
However, there was another reason to recommend Plan G over Plan F.
Every year monthly premiums for Medigap (and health insurance in general) tend to increase to accommodate for rising healthcare costs and inflation. However, historically, Plan F rates increased at a more drastic rate than Plan G. Another point in Plan G’s favor.
However, now that Plan F is slowly being weeded out, Plan G rates may increase more drastically from year to year. So, Plan N might be a safer option.
This is where working with a broker really comes into play. Brokers not only will be able to compare all of the rates for you more expediently than you having to call each carrier, but they also have experience working with these carriers year after year. So, a broker will be able to guide you not only the the least expensive options currently but the one most likely to increase at a slower rate than the others.
And remember, with medical underwriting as a factor to take into consideration should you enroll outside of the initial six month window after you turn 65 and enroll in Part B, you need to be thinking long term.
