Which Medicare Plan should I buy? Medicare Supplement (also known as Medigap or MedSupps) plans help cover the out-of-pocket costs if you have Original Medicare.
If you have Original Medicare, you can go to any doctor or hospital in the United States if they accept Medicare as payment (which most do).
There are 10 plans types available in most states, and each plan is labeled with a different letter that corresponds with a certain level of basic benefits.
Important Note About Supplement Plans F & C: You won’t be able to buy these plans if you qualify for Medicare on or after January 1, 2020. That includes high-deductible Plan F. If you already have Medicare or are eligible on or before Dec 31 2019, this will NOT affect you. Please check our BLOG page for all the articels which will explain all upcoming changes.
In most states, Medigap plans have the same standardized benefits for each letter category. This means that the basic benefits for a Plan G, for example, is the same across every insurance company that sells Plan G, regardless of location.
This makes it easy to compare Medigap plans because the main difference will be the premium cost. And different insurance companies charge different rates for the exact same plans.
Massachusetts, Minnesota, and Wisconsin standardize their Medigap plans differently from the rest of the country. Please check with a licensed insurance agent in those states.
Most people purchase Plan G, N or a High Deductible plan. That is because these plans offer the best benefits if you compare the premium vs benefits over all the other options.
Let me explain why I say that
Plan F used to be the primary plan everyone buys. Plan F covers everything, it’s the Cadillac plan of Medicare plans. I don’t recommend Plan F because since that option is going away for new Medicare beneficiaries after Dec 31, 2019, that means that the yearly price increase will be higher. Since no new beneficiaries will be allowed to join Plan F, the costs of maintaining that plan for the insurance companies will be increasing over the years.
As people get older they require more medical care, and since no new younger seniors will be joining the pool of people in Plan F, the ones who have it will increasingly use more medical service overall as they are getting older and the insurance companies will increase the rates to cover the extra costs. It’s basic economics if you think about.
The only difference between Plan G and F is that Plan F pays for the Part B deductible. Over the long run, that reason is not worth it because your increases will be more then if you just paid that deductible yourself.
Let’s look at Plan G
Plan G covers all the financial gabs which are left behind from Medicare approved bills. Except the Part B deductible which in 2020 is $198. Plan G is the most popular plan for new and current Medicare beneficiary.
Let's look at an example for Plan G
The average price for Plan G in my area (which is the Tampa Bay area in Florida, zip code 34655) for a FEMALE NON-SMOKER turning 65 is around $ 175.
So that means you will be spending $2,100 per year on your premium. And since Plan G is not allowed to cover the Part B deducible you will also pay the first $198 (2020) of your Part B bills. The total out of pocket cost for your Medigap Plan G should be around $2,298 per year in 2020.
Let’s look at Plan N
If you buy Plan N, you will have to pay up to $20 per office visit and up to $50 per emergency room visit. The ER co-payment is waived if you are admitted into the hospital as an in-patient.
You are also responsible for ALL Part B Excess Charges with Plan N. These are charges form doctors who do not accept Medicare payment as full payment. They want more money so they are allowed to charge you directly up to 15% extra on top of what they get from Medicare. This is simply avoided by just asking your providers “Do you accept Medicare as full payment?”. If they say “NO” find another provider because 95% of all doctors and hospitals accept Medicare as full payment.
Let’s look at an example for Plan N
The average price for Plan N in my area (Tampa Bay in Florida, area zip code 34655) for a FEMALE NON-SMOKER turning 65 is around $130 per month. Where you live, it might be different.
That means you will be spending $1,560 per year on your premium. Plan N is not allowed to cover the Part B deducible, so you will also have to pay the first $198 (2020) of Part B expenses.
The average person goes to the doctor about 3 times per year, let’s take the $20 co-payment x3 which is $60. So your total out of pocket cost for your Medigap plan N in a average persons year would be around $1,818 per year. Just remember, this is a simple example and I’m just trying to get you to understand how you can compare these plans.
High Deducible Plan
If you want to save more money and you are healthy and have some money in the bank, a High Deducible Plan might be the right fit for you.
You have to pay the $198 Part B deductible, after that you have to pay the 20% share of costs until you reach $2,340 in out-of pocket costs. Once you have paid that much out of pocket, the plan will pay for everything over that amount for the rest of that year.
The average price for a High Deducible plan in my area (Tampa Bay area in Florida, zip code 34655) for a FEMALE NON-SMOKER turning 65 is around $45. That means you will be spending $540 per year on your premium.
This is a great option for healthy people who can afford the deductible if the worst happens. Remember, if you don’t go to the doctor that often, you can safe a lot of money with this plan. But if the worst happens, you are still covered.
Note about High Deductible Plan: High Deductible plans are not offered in all areas and only few insurance companies offer them. This might not be an option for you.