You’ve decided to go the Medicare Supplement (Medigap) route to supplement the health insurance coverage you have through Medicare Parts A and B, but you’re not quite sure which plan is right for you.
There are ten different Medicare Supplement plans, but my years of experience in working with people in Medicare planning tells me most people choose either Plan F or Plan G. (These are by FAR the most purchased plans in my experience.) I call Plan F the “Cadillac Plan.” That’s because it fills all the gaps in Medicare coverage, but Plan G is not much different.
What I tell people when it comes to choosing between a Medigap Plan F and G is it is both a simple math problem and a preference question.
The Medicare Supplement Math Problem
The math problem looks like this: Plan F Premium – (Plan G Premium + Part B Deductible) = Premium paid for not having to write a check, lick an envelope and use a stamp.
Before I go into explaining what I mean by the formula, it is important to compare what Plan F and G cover. Remember, Medigap policies are regulated by the government. Regardless of what company you purchase the plan from, Plan F is Plan F regardless of what company you’re purchasing it from, and the same is true for all the other plans. (Though some companies do throw in some added benefits which are not a part of the actual plan itself.)
The important differences between the companies are rating, cost, experience and customer service. Therefore, I recommend working with an independent agent, like myself, who can shop for the best rates for you and only works with “A” rated companies.
Medicare Consultation Request
The chart below comes directly from page 11 of the 2017 edition of “Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare.” (a free publication by the Center for Medicare & Medicaid Services)
For the purpose of this article, we’re just comparing Plan F and Plan G, and as you can see there’s only one difference, and that is the Part B Deductible. Plan F pays that deductible and Plan G does not. It is an annual deductible and is for ALL of Part B. In 2018 the Part B deductible is $183. That’s the only difference.
The Only Difference Between F & G
So let’s say the Medigap Plan F premium for the company you choose in your area is $1392 per year, or $116 per month. (This is a real quote for a female turning 65 in my zip code with the household discount.) She is not going to pay for the Part B deductible with Plan F.
For Plan G, with the same quoting parameters, the cost is $1,099.32 or $91.61 per month. Plan G is $292.68 per year less expensive. However, with Plan G she will be paying the $183 Part B deductible. And let’s be honest, visiting a doctor once is most likely going to take care of that deductible. So assuming you visit the doctor once, you’re actually only saving $109.68 per year or less than $10 per month.
This brings us to the value question or “Do I want to write a check, lick an envelope and use a stamp?” question. If the answer is you don’t mind doing so for $109.68 per year, then you choose Plan G. If you’re tired of paying bills and just want to be done with it, you choose Plan F.
It is worth noting that as of 2020 Plan F will no longer be available to new beneficiaries and will likely continue to increase over time. If you already have Plan F prior to 2020, you will be able to keep your coverage. At this time, there is no plan to phase out of Plan G to new beneficiaries.
Does this mean either of these plans are the right plan for you? I recommend talking to an independent agent who can help you answer questions like:
- Do I need supplemental insurance?
- Which is better for me, a Medicare Supplement or a Medicare Advantage Plan?
- What Medicare Supplement or Medicare Advantage Plan is right for me?
- What about prescription drug coverage?
Finally, as a licensed financial professional, I recommend speaking with a Financial Advisor to see how your choices in this area work with your overall financial plan. Healthcare expenses are a significant portion of expenses in retirement. Making the right decision regarding your health insurance in retirement could make or break your retirement plan.