Medicare Supplements: Medigap
Medicare Supplements, officially known as Medigap have been around since Medicare was started in 1965.
Medicare Supplements are secondary policies that can cover Medicare deductibles, copayments and coinsurance.
There are currently, 9 Medicare Supplement policies that you can choose from if you turned 65 on or after January 1st, 2020. If you were 65 prior to January 1st 2020, then you have 11 different plans that you can choose from.
The 3 Medicare Supplement Plans You Should Consider
When it comes down to it, there are 3 of those plans you should consider if you want a Medicare Supplement policy.
Plan G:
• Pros:
- Plan G is now the most comprehensive Medigap plan you can purchase and own. It covers 100% of what Medicare does not cover, except for your Medicare Part B Annual Deductible.
- It’s simple—you pay a premium, you pay the annual Part B deductible (only if you use Part B during the course of your 12 month period) and that’s it. No worries about extra bills.
- If you have a debilitating health issue requiring lots of medical visits, then the Plan G is typically the way to go.
• Cons:
- Because Plan G is the most comprehensive plan and because Medicare deductibles, copayments and coinsurance increase each year—that means the insurance company has a greater obligation each year and that means they have to make up for it by increasing your premiums.
- Plan G is also one of the default plans for those who use their Guaranteed Issue right. Why is that a big deal you may ask? When anyone with any medical condition can get a policy, that puts the insurance company at greater risk for claims and higher costs. When you have potentially thousands of people with chronic conditions or more advanced in age obtaining a policy with their Guaranteed Issue right, then the insurance company has to compensate for that by increasing everyones premium even more.
Plan N:
• Pros
- Lower premium than Plan G
- Not subject to high risk people with Guaranteed Issue (other than during Open Enrollment) becoming part of the pool of people you are grouped in. This should help keep premiums from not going up as much as a Plan G…but there is no guarantee that you will avoid rate increases.
- Over time, the premium savings from a Plan G to a Plan N typically becomes greater and greater.
- Covers most of what Medicare does not cover. Like the Plan G, you will have to pay for the annual Part B deductible. Plus, you “may have a copayment of up to $20” for any Part B event…not bad considering an outpatient surgery could be $20,000 or even more. And you “may have a copayment of up to $50” for the ER. While the Plan N does not cover “excess charges” like the Plan G, the odds of you incurring those are pretty slim and only happens when you see a provider that does not accept Medicare Assignment.
• Cons
- If, by chance, you develop a serious health issue requiring lots of medical treatments and appointments and you have to pay “up to $20” each time, then theoretically, there’s no limit on what can come out of your pocket as compared to the Plan G.
Plan HG: The High-Deductible G—“Medicare’s Best Kept Secret”
• Pros:
- Very low premiums freeing up money to use elsewhere.
- Theoretically, smaller percentage premium increases.
- The current deductible for 2023 of $2,700 is also the cap on what can come out of your pocket for a year… also known as your Maximum Out Of Pocket.
• Cons:
- In the event of a hospital stay or outpatient surgery, you need to be comfortable with being able to come up with that $2,700 at any time.
- Best only for people in excellent health. I only advise the HG for people who are in excellent health, work at maintaining their health and hope to stay in good health.
**For more about the High-Deductible G, see Medicare Secrets.
Contact me for a free, no-obligation quote on any or all of these options. I represent all the top insurance companies that offer Medicare Supplements.
Who Doesn’t Need A Medicare Supplement Policy?
Medicaid Recipients: If you qualify for Medicaid in Virginia (or just about any other state) where Medicaid covers your Medicare deductibles, copayments and coinsurance…then there is no need or benefit for having and paying for a Medicare Supplement policy.
Tricare Beneficiary: If you have Tricare For Life, then Tricare is your secondary insurance and you have no need for a Medicare Supplement and you probably should not even consider getting a Medicare Advantage Plan. See Tricare for more info.
Retiree Healthcare: If you have retiree healthcare through your previous or current employer or union, then you should have no need for a Medicare Supplement policy. Always be sure to compare your retiree healthcare option with a Medicare Supplement. You may find the Medicare Supplement option is less money and sometimes with more coverage and/ or benefits.
Hospital Financial Aid Recipients (maybe): You qualify for financial aid at your local hospital where the hospital writes off your Medicare deductibles, copayments and coinsurance.
Receiving financial aid from your local hospital typically eliminates your major deductibles, copayments and coinsurance at the hospital, but does not eliminate other providers from charging you your appropriate share. So, be careful.
Medicare Advantage Plan Members: If you have a Medicare Advantage Plan then you should not also have a Medicare Supplement plan. When you have a Medicare Advantage Plan through a private insurance company contracted with Medicare, then any Medicare Supplement policy will not pay any deductibles, copayments or coinsurance you may owe. Medicare Supplement ONLY work with Original Medicare as the primary payor.
Understanding Medicare Supplement Rate Increases
Your future rate increases and premiums are determined by how insurance companies rate their policies. It is one of three ways.
1. Community-Rated: Essentially this means everyone pays the exact same rate regardless of age and perhaps health condition and claims made. If the premium goes up on one, it goes up on all. Healthcare inflation will, of course, raise rates on everyone in the plan.
2. Issue-Age-Rated: Premiums are based upon the age you obtained the policy. Rates do not increase because you go up in age each year. Rates will increase due to healthcare inflation and claims made by the pool of people your policy is part of.
3. Age-Attained-Rated: This is the most common method. You start out at one premium and each year the premium typically goes up because you went up in age. Rates can and will go up because of healthcare inflation, overall claims made by the pool of policy holders you are mixed in with, and other factors.
Question: Will my premiums increase if I make excessive claims?
• The Standard Answer: The standard answer is insurance companies do not increase your premiums based upon the claims you make.
• My Answer: From years of experience, I find that hard to believe. I have clients with the same company, on the same plan, in the same area, with the same age and same gender, but yet some have had exorbitant rate increases, while others have not.
Question: Is one way of rating and adjust premiums better for me than another?
Answer: There are just too many factors to determine if one rating form is truly better in the long run. My suggestion is, find the best rate from a top-rated company and go with it. As your Independent Medicare Agent, I work with the top-rated Medicare Supplement insurance companies and can give you FREE quotes from numerous companies.
Question: Since the Plan G has to cover more, does that mean its premium increases will be greater than a Plan N?
Answer: Theoretically, the more the insurance company has to cover, the greater the percentage of rate increase each year. But, in my real world experience, I’ve seen in some cases a Plan N have a higher percentage of a rate increase than a Plan G.
