Why is Medicare Plan G cheaper than Plan F?
Medicare Supplement (Medigap) Insurance Plan F and Medicare Supplement Insurance Plan G offer more benefits than most of the other types of Medicare Supplement Insurance (also known as Medigap policies) plans available. Medicare Supplements (Medigap) plans work with Original Medicare Part A and Part B to fill in the gaps of coverage left behind.
What Does Plan G Cover?
Medigap plan G provides coverage for your portion of any Medical service that Original Medicare Part A and Part B covers, except for your outpatient deductible. Once your annual part B deductible of $198 for 2020 is taken care of, Original Medicare Part A and Part B will pay first, and then your Medigap plan G pays the rest.
For example, Brenda is generally healthy and sees her primary doctor twice a year. However, she has diabetes, so she also needs to see a specialist. In January, she sees her endocrinologist. The specialist bills Medicare, which pays 80% of the bill, except $198, which is billed to Brenda. For the remainder of the year, any covered services and supplies Brenda receives will be taken care of by her Medigap plan. She will continue paying her monthly premium and won’t have to worry about doctor co-pays, lab-work, or imaging.
What Does Plan F Cover?
Medigap Plan F fully covers your Original Medicare Part A and Part B deductibles, all co-pays, and co-insurance. Medicare Supplement Insurance Plan F is known as “first-dollar” coverage. Once Original Medicare Part A and Part B pay its portion, 80% of your services, your Medigap plan pays the rest, which leaves you with zero out-of-pocket expenses. At a glance, it’s easy to see why Plan F is so popular.
Here is an example, Dan enrolled in a Medigap Plan F. In February, he’s unexpectedly hospitalized and has to have emergency surgery. Once Dan is discharged he doesn’t have anything to worry about, Medicare pays 80%, and his Medicare Supplement Plan F picks up the rest, including the $1,408 Part A deductible. All he is responsible for is his Medicare Supplement insurance plan monthly premium.
Medicare Supplements (Medigap) Plans are Standardized
Private insurance companies provide Medigap plans. These companies are not required to offer all lettered plan types. However, the federal government requires that each lettered plan type offer the same basic benefits. Medicare Supplement Plans (Medigap) have significant differences when it comes to cost, additional benefits, and how they work based on the plan’s provider. Currently, plans A, B, D, G, K, L, M, and N are available for new enrollees. As of January 1, 2020, individuals that are newly eligible for Medicare won’t be sold plans that cover the Original Medicare Part B deductible. Because of this change, plans C, F, and HDF are no longer available for new enrollees. However, if you were Medicare-eligible before January 1, 2020, you can still purchase plans C, F, and HDF.
Medicare Supplement (Medigap) Plan G and Plan F are the two most popular Medigap plans. These two plans rank the highest of standardized plan types offered by private insurance companies and enrollments, according to AHIP’s Center for Policy and Research analysis of the NAIC Medicare Supplement Insurance Experience Exhibits.
- 85% of insurance companies that offer Medicare Supplement (Medigap) plans offered Plan F, and 62% offered Plan G
- 55% of beneficiaries with Medicare Supplement standardized plans enrolled in Plan F
- 13% of beneficiaries with Medicare Supplement standardized plans enrolled in Plan G
|Medigap Benefits||Medigap Plans|
|Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up||Yes||Yes||Yes||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Part B coinsurance or copayment||Yes||Yes||Yes||Yes||Yes||Yes||50%||75%||Yes||Yes***|
|Blood (first 3 pints)||Yes||Yes||Yes||Yes||Yes||Yes||50%||75%||Yes||Yes|
|Part A hospice care coinsurance or copayment||Yes||Yes||Yes||Yes||Yes||Yes||50%||75%||Yes||Yes|
|Skilled nursing facility care coinsurance||No||No||Yes||Yes||Yes||Yes||50%||75%||Yes||Yes|
|Part A deductible||No||Yes||Yes||Yes||Yes||Yes||50%||75%||50%||Yes|
|Part B deductible||No||No||Yes||No||Yes||No||No||No||No||No|
|Foreign travel exchange (up to plan limits)||No||No||80%||80%||80%||80%||No||No||80%||80%|
$5,560 in 2019
($5,880 in 2020)
$2,780 in 2019
($2,940 in 2020)
* Plan F also offers a high-deductible plan. If you choose this option, this means you must pay for Medicare-covered costs up to the deductible amount of $2,300 in 2019 ($2,340 in 2020) before your Medigap plan pays anything.
** After you meet your out-of-pocket yearly limit and your yearly Part B deductible, the Medigap plan pays 100% of covered services for the rest of the calendar year.
*** Plan N pays 100% of the Part B coinsurance, except for a co-payment of up to $20 for some office visits and up to a $50 co-payment for emergency room visits that don’t result in an inpatient admission.
Since private insurance companies offer these plans, premiums may vary significantly for the same Medicare Supplement plan. Rates can be;
- Attained Age – Monthly premiums based on your age at enrollment. The prices will be lower when you first enroll but may increase as you get older.
- Issue Age – Monthly premiums based on your age at the time of application, once the policy is issued, it won’t go up
- Community Rated – The age of the beneficiary does not affect the premium price, monthly premiums based the same for everyone who has that Medicare Supplement insurance plan.
If you are enrolling outside of the Open Enrollment or Guaranteed Issue periods, your rate can also vary based on medications, height and weight, tobacco use, and other health questions.
Not all Medigap plans are offered in all areas. The Law requires insurance companies that sell Medicare Supplement Insurance must offer Plan A. If they choose to offer additional plans, they must offer Plan C or Plan F. Some beneficiaries may have access to Plan F and not Plan G.
Which plan is better?
There’s no perfect answer to this question because everyone has different circumstances that help determine the best plan for you. Medicare Supplement Plan F currently offers the most benefits, and Medicare Supplement Plan G comes in at a close second. Aside from the difference in enrollments, the main difference between the two plans are:
- Original Medicare Part B deductible coverage
Not all plans or insurance companies are available in all areas. However, all lettered plan types are required to provide the same base benefits by law. Keep in mind that Plan G does not cover the Original Medicare Part B deductible. Since plan F offers more coverage than Plan G, it may be more expensive. Ultimately cost’s will vary based on the insurance company, the plan’s service area, rating, and underwriting (if applicable). If you were Medicare-eligible before January 1, 2020, and would like help comparing your options, or have become eligible after January 1, 2020, contact the licensed professionals at Medicare Pathways for your no-cost consultation.