For the most part, Medicare allows beneficiaries to make changes to find the best coverage that fits their needs. You may have to wait for the proper enrollment period, but there aren’t any penalties for exploring your options. The exception is Medigap. Due to the program’s medical underwriting requirements, you have one chance to find your ideal Medigap plan without paying higher rates or being denied coverage altogether. This article compares Plan F vs Plan G to help you make the right choice.
How Does Medigap Work?
Medicare Supplement Insurance, commonly known as Medigap, helps pay some of the costs not covered by Original Medicare (Parts A and B). Private insurers (approved by Medicare) provide Medigap insurance.
There are 10 plans, each represented by a letter of the alphabet: A, B, C, D, F, G, K, L, M, and N. These plans are standardized, meaning that every Plan A (or B, C, etc.) has the same benefits and coverage no matter where you buy your plan. But, each insurer has the right to set its own price and medical underwriting guidelines.
At a minimum, every plan pays your hospital co-insurance and provides an additional 365 reserve days for hospital stays. We offer a high-level overview of each plan in our Guide to Medicare Supplement Insurance. Here, we drill down into Plans F and G, and defend our stand that Plan G is the true Cadillac plan.
Why Do Most People Love Medigap Plan F?
If you’re looking for the plan that offers the most extensive coverage, Plan F fits the bill. At least on the surface. It covers 100 percent of your out-of-pocket expenses for Parts A and B (except premiums – none of the Medigap plans reimburse monthly premiums). Plan F’s coverage includes:
- Part A hospital co-insurance
- 365 hospital reserve days
- Part B co-insurance/co-payment
- Blood benefit
- Hospice co-insurance/co-payment
- Skilled nursing facility co-insurance
- Part A deductible
- Part B deductible
- Part B excess charge
It also covers 80 percent of the cost of medical care received in another country. This is the most comprehensive coverage of any of the Medigap plans, which is why, on its surface, most people think that Plan F is the best option.
Why Do We Recommend Plan G?
Medigap Plan G offers all of the same coverage as Plan F with one exception: it does not pay the Part B deductible. This is where details matter, though.
The Part B deductible is $185 per year (in 2019). In nearly every case, though, you’ll save at least $200 a year in premiums for Part G versus Part F. Some beneficiaries’ savings are significantly higher – $600 or more. What’s more, Plan G has lower rate increases every year compared to Plan F.
In addition to savings on your Medigap plan’s premium, Medicare announced that Plan F is being phased out. It will no longer be offered after 2020. And, although beneficiaries may keep their plan, history has shown us that rates increase significantly when Medicare phases out a plan. This is due to the fact that newer – and therefore younger and healthier – beneficiaries can no longer join the plan. The result is that the plan’s costs go up, which means YOUR costs go up.
This short video explains these changes clearly and succinctly.
What Happens when Plan F Ends?
When Plan F ends, you’ll be able to keep your plan. The question is whether you’ll be able to afford your plan. As we stated above, when plans have ended in the past, beneficiaries saw significant increases in premiums. Unfortunately, changing to a new plan means you must go through the medical underwriting process. We describe underwriting in detail in this blog post, but here are the basics.
Medical underwriting is the process of determining how risky it would be to sell you a Medigap policy. The insurance company asks you a variety of questions and compares your answers to their actuarial table. If your answers indicate you’re a high risk (i.e. likely to make claims), the insurer may determine you’re too risky to insure. Alternatively, the company will provide you a policy but at a higher rate to account for the increased risk.
The only time you avoid medical underwriting is during your Medigap Open Enrollment period. This is why we encourage beneficiaries to (1) purchase a Medigap policy as soon as they’re able to and (2) purchase Plan G since it’s their best long-term option.
What if You Already Have Medigap?
There is one other way to avoid medical underwriting and that is to qualify for guaranteed issue rights. There are two ways to qualify: loss of coverage that occurs through no fault of your own and trial rights.
If you have Original Medicare as well as private insurance through an employer or COBRA and your secondary insurance ends, you qualify for loss of coverage. You also qualify if you leave your Medicare Advantage (MA) plan’s service area or your MA plan no longer covers your area.
Trial rights are a one-shot opportunity. If you have never had an MA plan, trial rights allow you to drop your Medigap plan and switch from Original Medicare to an MA plan. If you change back to Original Medicare within 12 months, you can sign up for a new Medigap plan without undergoing medical underwriting.
Buying a Medigap Plan
If you have questions about your Medigap options, call us toll-free at 855-350-8101. One of our licensed agents can walk you through the different plans and answer any questions you have. If you currently have Medigap but want to change plans, we can help you with that, too.
You can also use our online tool to review plans in your area.