Whether you’re new to Medicare or you’re thinking about switching your plan to save money, there are many variables that you should consider when picking the best Medicare supplement for you. Below, I will outline what should be your most important considerations when picking a Medigap policy. The below considerations do not take into account if you have health insurance other than Medicare such as coverage through the VA or through your employer-funded health plan.
1.) Your Plan type: What’s best for you? F, G or N. First, let’s discuss plan type. For seniors new to Medicare before 01/01/2020, Plan F is an option. For seniors who are new to Medicare after 01/01/2021, the two main options are Plan G and Plan N. For those that don’t know, Plan F is what is sometimes called the “cadillac plan” of Medicare supplements by many seniors, which means this plan pays for the other 20% that Medicare doesn’t cover like most supplements, but this also includes covering the cost of the Part B deductible (currently $203 annually) and excess charges that some providers may charge who don’t accept Medicare assignment. However, these plans are the most costly, and just like with any thing else, you get what you pay for. Plan G, on the other hand, is identical to Plan F except for one minor difference. Plan G does not cover the cost of the Part B deductible.
Lastly, Plan N is a good low cost plan, but there are some differences between Plan N and other plans such as Plan G and Plan F. With Plan N, you must pay the Part B deductible just like Plan G, but you also have a $20 copay for general office visits and a $50 copay for the Emergency Room unless you are admitted. One side note, Plan G pays for the excess charges some providers may charge who don’t accept Medicare assignment just like Plan F. However, Plan N does not pay for the excess charges. Excess charges are charges that some providers charge who don't accept Medicare assignment and are an additional 15% over and above what Medicare allows. With that being said, about 96% of doctors in the nation accept Medicare assignment so the chances of you paying for excess charges is slim to none. Also, rate increases with Plan N historically seem to be less than with Plan G and Plan F.
2.) Rates: Another important consideration are the rates of the plans and the stability of the rate at which it increases?. There are a few variables someone should consider when looking at a company in regard to the company’s rates. First, someone should consider a company’s ratings. Is the company you are looking at an “A” rated company as deemed by the A.M. Best rating organization? Secondly, is that company easy to reach and helpful to their clients. Third, how long has that particular company been in the Medicare market.
Lastly, how has the company been historically in regard to rate increases? For instance, does that particular company lure you in based on the best rate for your supplement at the time you are looking at that company, but increase their rates dramatically once you have been enrolled with them for the a few years? I’ve seen a select few well-known companies do this. This can be an issue for you because once you pick a company, you may not be able to switch to a different company due to being unable to qualify medically based on the health questions on a particular company’s application unless you are in your Open Enrollment period when you’re turning 65.
When I meet with seniors, the one thing I hear often when they are in a particular plan with a high rate is, “Well, they’ve been very good to me and I’ve never had to pay anything when I go to the doctor.” And, I understand that it seems easier to keep your plan with the same company. However, a Plan G with one company will pay your claims the same as a Plan G with another company. The ONLY difference is the premium rate the company charges for an identical plan, and differences can be dramatic.
It’s important to keep all of these variables in mind whether you’re picking a Medicare supplement for the first time or picking a Medicare supplement after you’ve had your current supplement for several years. This is especially important when you’re on a fixed income.
3.) Solicitation calls: Another important variable is if the company you pick is going to solicit Medicare Advantage plans to you. Many companies will attempt to call you under the guise of getting you a better plan and attempt to enroll you in a Medicare Advantage plan, a plan with networks, lesser coverage and much lower premium prices. I’ve not notice this happening often, but I know it has happened with some of my current clients. So, beware if a company calls you and begins talking about a better lower cost plan. These plans are only lower cost plans on the front end of your healthcare costs and not on the back end of your healthcare costs when it comes time to pay for a claim. Remember again, you get what you pay for.
In closing, knowing and understanding how all of these variables come in to play in picking a Medicare supplement that’s best for you is extremely important. Further, it’s even more important you have access to all of the information that’s available to you to make the best decision because this is a very important decision that affects your future healthcare. I urge anyone looking at a Medicare supplement plan for the first time or even the second or third time to reach out to a trusted advisor who specializes in this area of health insurance. At Knelson Financial, we are here and available for guidance with this important decision at no cost to you. If you feel as if you need guidance, feel free to reach out to us at 270-231-2623.