If you are trying to decide which Medicare Supplement to enroll in consider Plan G as it is now the best plan available to people turning 65 in 2020. A few years ago we would have recommended plan F but a few things have changed.
The Medicare Access and CHIP Reauthorization Act was signed into law in April 2015. Primarily focused on solving the problems with the physician payment system, it had other impacts as well. One of those: as of January 1, 2020, insurers will no longer be able to sell to newly eligible Medicare beneficiaries Medigap policies that cover the Part B deductible, specifically Plan F. But those who have one of these plans now will be able to continue with it. Also if you turned 65 prior to 2020 you can still enroll in Plan F if you would like and why wouldn’t you want to get one? One simple reason, Plan F has lost its competitive pricing edge. Many plans now charge more to cover the Part B deductible than its value ($198 this year). Plus, there are concerns about what will happen to the monthly premiums for Plan F once new beneficiaries, mostly younger and healthier, are no longer able to enroll in the plan.
What about those who have Plan F now?
Beneficiaries who enrolled in Plan F before these changes may be concerned about increases in premiums down the road. Can they make a change?
Yes you can apply for a Plan G. However, the insurer may impose medical underwriting and pre-existing conditions can lead to a higher premium or denial of the application. But if the premium for Plan F continues to increase it makes sense to apply for Plan G and try and for the lower premium.
In 2020, Plan G is the smart choice. Why pay more than a benefit is worth?
Why enroll in a Medicare Supplement?
Once enrolled in Medicare Part A and Part B, a person has hospital and medical insurance. However, Part A and Part B come with a slew of out-of-pocket costs. For example, in 2019, there’s a $1,364 hospital deductible, a $167.50 per day copayment for days 21-100 in a skilled nursing facility, and a 20% Part B coinsurance (once the deductible is met). And, most important, there is no maximum limit on out-of-pocket costs. A person stricken with cancer, for example, would be responsible for 20% of every radiation or chemotherapy treatment.
To control these costs, a Medicare beneficiary can purchase a Medigap policy, officially known as “Medicare supplement insurance.” This is coverage sold by private insurance companies to help pay bills that Medicare Part A and Part B do not cover.
Medigap policies are standardized. There are 10 plans, each labeled with a letter. From plan A to plan N Each letter-plan represents a different package of benefits and cost sharing. For example, Plan A is very basic, covering 100% of four benefits. Plans K and L offer coverage of six benefits. However, for five of the six benefits, the individual must pay a portion of the cost (50% or 25%). Only three plans are worth consideration, plan F, plan G and plan N.
Plan F has been called the “Cadillac of Medigap plans.” It covers the maximum allowed for all nine benefits. Pay the premium and there’s first dollar coverage, which means the plan pays from day one. The beneficiary faces no out-of-pocket costs when using healthcare providers who will accept Medicare.
Plan G is one notch down from Plan F. It covers eight of the nine benefits. The individual is responsible for the Part B deductible, which is $198 in 2020. Once the individual has paid the first $198 for outpatient services, the plan will cover all medical costs for the remainder of the year.