The Medicare Supplement Insurance King…Plan F or Plan G?

Picture of a peak represents medigap plan F and medigap plan G. The top Medicare supplemental offerings.This may be the number one question I get day to day from customers who want to make a decision on which Medicare Supplement insurance plan is best for them.  Most often, it does comes down to either Plan F or Plan G.  In this post, I hope to help you figure out which Medicare Supplement, Plan F or Plan G is best for you.

If you were to ask me that question almost 20 years ago when I got into marketing/selling Medicare Supplements, I would have probably shouted “Plan F” from the mountain tops.  Truth be told, my happiest clients touted it then and most often, still do.

Why were they so happy with it?  They didn’t or don’t have to hassle with anything.  Between Medicare and the Plan F, no dealing with medical bills, period.  Absolutely nothing out of pocket.   The larger majority would pay for the Cadillac” F Plan ” and rant how great it was.

Some agents will suggest it has to do with higher deductible insurance plans many boomers had while still employed.  While I do agree with that for the most part, what I see to be the biggest factor in the rise of the Plan G is the cost.  Plan F has risen at such a rate for 20 years that a retiree ends up with “sticker shock.”  It just makes sense to save the money because it costs a lot of extra money to have one additional benefit.  Retirement today is considerably different than 20 years ago yet the financial resources seem to dwindle at a higher rate.

Jumping forward to 2018…I have a different attitude and mindset.  Opinion will often leak into my recommendations.  Good or bad, it’s the truth.  I have a good amount of wisdom you could say.  I’ve watched consumers go through extensive rate increase since those paper rate sheets   A good independent agent should always offer advice of not only the upsides, but the possible downsides.  Now, with Plan F or G, you’re well covered…that is not what I mean here.

The Mighty Plan F

In the world of Medicare Supplemental Coverage, Plan F is clearly the top flight plan you can buy.  You are not going to get a more benefit rich plan.

Sometimes I see questions as to Part F of Medicare.  Let me clear that up quick.

There actually is no part F.

However, there is Plan F.

Medicare can be confusing.  There are only 4 “parts” of Medicare A-D.  There are 10, actually 11 Medigap “Plans.”

On all Medicare approved claims and a Plan F, you will have nothing out of pocket.  There is nothing you need to keep track of.  Just make sure your premiums are paid to date.  The catch, with this plan, is that there is a lot more administrative costs to the insurance company.  These are the management of typical claims from dollar one.  Nothing is free in this world, especially with insurance.

In 2018, each Original Medicare beneficiary must pay the first $183 for all Part B (outpatient/doctor care) each year… if you don’t have a Plan F that is.

Sounds pretty good right?

​Guess what…the insurance company charges hundreds of extra dollars to pay that $183 for you.  Convenient it may be, but expensive for many that additional benefit is.  Those policy owners are not going to get that benefit for free.

What happens if you do not go to the doctor?  On a Plan F, you pay it in your premiums whether you go or not.  Maybe you or someone else you know just goes to the doctor for a yearly physical.  That is a wellness benefit that Medicare pays 100% for.  It is not even applied to your Medicare Supplement or Part B deductible.

Medigap Plan G – The Great Value

How about a similar plan that would let you save that $183 (2018 Medicare Part B deductible) each year if you did not have any outpatient care yet still provided benefits matching the highly regarded Plan F?  What if I told you the cost was hundreds of dollars less a year as well even if you had to pay the $183?

And…that policy is…the Plan G.

The G Plan has been a favorite of this office for 20 years or better.

Plan G is definitely a better value for your Medicare Supplemental Coverage than a Plan F or the ” F Plan ” as it is sometimes called.  The key here is…you pay the annual Part B deductible required by Medicare ($183 in 2018).  Call it “skin in the game.”  In return, you save hundreds of dollars a year and have a lower average increase in premiums over time.

Let’s face it, insurance costs rise, they don’t go down as a general rule.  Yes, you might have heard somewhere about ABC or XYZ company lowering the cost of Plan G.  Over time, premiums go up.  Twenty years ago, Medicare Supplement agents had nothing but paper rate sheets provided by each insurer.  Now with our very modern database quoting technology it is very easy to see the percentage of increased costs.  All the plans from all insurers have gone up quite a bit!!  On a positive note, Plan G however has gone up a lot less than Plan F over the years and is now my first suggestion.

Who is the the Plan G for?

If you are the type of person who does not see him or herself visiting the doctor often and/or would rather live without some payment convenience of the Medicare Part B deductible in exchange for lower premiums than a Plan F, then Plan G is absolutely the top option.

Since I have lost count of how many people that have purchased Plan F with my assistance, I don’t want to suggest it was a bad decision on their part.  Plan F is a no hassle plan, period.  To a heck of a lot of people, it is really worth the first dollar coverage.  Even if it is more expensive to own year in and year out.

Their money, their decision.

With that said, it is also important that I mention a big change in the available Medicare Supplement plans starting January 1, 2020.  Plan F will no longer be available to people turning 65 as of that date.  People already over 65 will still have the Plan F as an option.

I foresee a very possible problem brewing for policy holders still on Plan F after that date.  Since the younger folk turning 65 will not be allowed to enter the Plan F as of that respective date, the aging individuals covered under this plan will likely experience larger than historical rate increases.  Being a first dollar coverage plan, Plan F policy holders tend to be use coverage a bit more than those people who elect a Plan G for example.  It is a fact of life, we generally do not get healthier in our later years of life.  Insurance companies have statistics and history to prove it. That is why insurance premiums are more expensive as we age.

The anticipation of higher and higher claims experience will result in lower or no profits for each insurer.  Remember, without “young whippersnappers” (seniors age 65) entering the Plan F in 2020, those blocks of business will just age.   With greater losses comes higher premiums.

Those people who are stuck on Plan F due to certain health conditions are looking at a significant difference in cost compared to a Plan G which will remain a very attractive alternative to a Plan F now and for the very foreseeable future.  This is especially important for those on a fixed income and/or tight budget.

Now, am I telling you you should definitely hurry and buy or change to Plan G?  No.  Not knowing your income level, needs and wants I can just make suggestions.  Maybe your finances will allow for the additional premium?  All Medicare Supplements are guaranteed renewable as long as you pay your premium.  No worries there.  Medicare is not going to take away your Plan F coverage.  This is just experience based advice combined with facts about Medicare Supplements to help you make a good informed decision as you move forward.

The idea here is to give you some important details about the two most benefit rich Medicare Supplement offerings.  Plan F and Plan G.

The Take Home…

Hope this article has helped you make a better decision for yourself on your healthcare benefits.  Medicare can be a bit tricky to navigate.  If you are confused about Medicare Supplemental coverage and how it works with Medicare, go to our article on “Your Medicare Benefits” to get a refresher course.

We are advising seniors to look at the Plan N before deciding on a Plan F or even the Plan G.  The new MACRA laws are going into force January 1, 2020, but we are already seeing the effects of larger rate increases in Plan G then in the past.  Understand that these laws are going to affect the ease of entry into a Plan G.  Insurers are getting prepared for the additional risk they will be required to accept.

Further detail is beyond the scope of this article.

Plan N looks to be better prepared to have the lowest rate increases year in an year old now and it may be the new king in the future.  MACRA 2020 will not negatively affect it.

Make sure you work with a seasoned Medicare specialist to guide you.  Not all companies have stable rates and it is important to understand the history before you buy.  Make sure your independent agent/broker has been around the block for a few years.

If you have any further questions and or need or help, please don’t hesitate to call us 800-598-6445.

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