Medigap Plan F or Plan G in 2021
When a person first enrolls for Medicare, they often wonder whether they should sign up for Medicare Plan F or go for Plan G.
If it was in 2014, it would be advisable for a Medicare beneficiary to sign up for Plan F. Today, however, Plan G is the better option.
An individual automatically gets hospital and medical insurance after signing up for Medicare Part A and Medicate Part B. The policyholder, however, is left with a myriad of out-of-pocket expenses that Part B and Part A do not cover. For instance, there was a $1,364 hospital deductible in 2020, as well as $167.50 daily co-payment from the 21st to the 100th day in a skilled nursing facility. Additionally, there was a 20% Part B coinsurance that the beneficiary is responsible for after meeting the deductible. Note that there was also no maximum limits on the out-of-pocket expenses under the plan. In this instance, if an individual has cancer, they would be forced to pay for 20% of every chemotherapy or radiation treatment.
To reduce such costs, a person who has Medicare can buy a Medigap policy. These are also referred to as Medicare supplement insurance. They are available from private insurance companies that sell the polices to help cover the bills that Medicare Part A and B do not pay for.
All policies from Medigap are standardized in the 47 states. Seniors can choose from the ten plans available. Each of the plans is labeled with a letter that represents different cost-sharing and packages. For instance, Plan A is quite basic offering cover for 100% of 4 benefits. Plan K and L covers a total of 6 benefits. However, the beneficiaries must pay some costs for 5 of the 6 benefits which can amount to 25% or 50% of the total costs.
Plan F has been christened the “Cadillac of all the plans from Medigap”. This is because it covers the maximum that all the 9 benefits permit. Policyholders enjoy first-dollar coverage after paying the premium. This implies that the plan starts to take effect from the first day. When the beneficiaries use healthcare providers who collaborate with Medicare, they do not have any out-of-pocket expenses. AHIP records that 55% of people enrolled for Medigap signed up for Plan F or its form of high deductible option in 2016.
Plan G covers 8 of the nine benefits going a notch lower when compared to Plan F. Under these beneficiaries take care of Part B deductible. In 2019, this was $185. After paying the $185 for outpatient services the first time, the plans go-ahead to cover Medicare expenses for the rest of the year.
What was the Situation in 2015?
In April 2015, the Medicare Access and CHIP Reauthorization Act was signed into law. Its main aim was to offer a solution for the physician payment system while availing other perks as well. Among these were that insurance firms will not sell Plan C and Plan F to persons who are newly eligible for Medicare from 1st January 2020 because these cover Part B deducible. However, persons who had already signed up for the plans in the past can continue using them.
Plan F was still viable until 31st December 2019. Nonetheless, not many people opted to enroll for this plan because it has already lost its competitive edge especially in terms of pricing. A majority of the plans now charge more to offer Part B deductible cover than its value which was $198 in 2020. Check out various prices available in different states below.
- A company in Florida sells Plan F annual premium at $2,738 and Plan G at $2,496 making it $242 more costly.
- Plan F premium in Washington is $2568 while Plan G goes for $1,896 making it $672 more expensive.
- In North Carolina, there is a firm selling Plan F premium at $3,556 while their Plan G premium is $2552. This creates a huge difference of $1,004 covering a benefit worth $185.
There is no solid reason for paying over $198 for Part B deductible. Additionally, people are worried about the future of Plan F monthly premiums once new beneficiaries who are mostly healthier and younger can no longer sign up for this specific plan.
The States Not Part of the Standardization
Wisconsin, Minnesota, and Massachusetts are exempt from the Medigap policies standardization that work in the other 47 states. Instead, the 3 states have their system which scraps off Plan F in the states. Even so, the three states cannot offer coverage for Part B deductible when selling Medigap policies to newly eligible beneficiaries starting 2020.
What about Persons who Already Have Plan F?
Before the changes were announced, many people were already signed up for Plan F. the individuals may be worried about having to pay more for premiums in the future. What options can they explore?
- In some states, beneficiaries can change plans. For instance, in New York, there is a continuous open enrolment period where people can get policies. The laws here stipulate that insurance companies cannot reject applications based on pre-existing medical conditions. Things are a little bit different in California because the state works with a birthday rule. This makes it possible for persons to switch up their plans for a similar one or one that has fewer benefits when they are celebrating their birthdays.
- People who are in states that do not facilitate changing of policies can opt to enroll for Plan G. Insurers, in this case, can choose to impose pre-existing conditions and medical underwritings. These can lead to the denial of an application or a person may have to pay higher premiums to enjoy the perks of the plan.
When looking for a good Medigap coverage in 2021, Plan G is a top choice. It is always best to sign up for a cover that will give you great value where you do not have to overpay.