Author: Daniel Petkevich

05-29-2020

Making Sense Out of the Medigap Alphabet Soup

Ever heard folks talking about Plan F or Plan G? Those are Medigap plans. Here, we'll explain what they are and why we think Plan G is a good fit for folks who want the most coverage.

Medigap plans exist to - you guessed it - fill the gaps in Part A (In-Patient Coverage) and Part B (Out-Patient) coverage. They are plans that are subsidized and defined by Medicare but offered by private insurance carriers. What that means is you'll purchase a Medigap plan from a private carrier, like Cigna or Anthem, and that the benefits of the same plan are the same across carriers. Plan G from Cigna is the same as Plan G from Anthem. If you buy a Medigap plan, you'll pay a premium for it on top of the Part B premium you're already paying.

At first, choosing a Medigap plan can be daunting because there's a literal alphabet soup of options. There's Plan A, Plan B, Plan C, Plan D, Plan F, Plan G, Plan K, Plan M, and Plan N. Here's a description of their benefits:

Whew! That's a lot of information. Let's go through this table by choosing one of the plans with the most checkmarks: Plan G. With Plan G, you get:

• Coverage for Part A Coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up - With just Part A, you have to pay $389 per day or more after the 61st day you're in the hospital. Plan G covers this and gives you an extra year of covered days.

• Part B Coinsurance - With Part B, you're on the hook for 20% of medical expenses after you meet your deductible. Plan G covers all qualifying medical expenses after you meet your deductible.

• Blood - Should you need blood, Plan G covers the first three pints, which Part A does not.

• Part A Hospice & Skilled Nursing Facility Care - Should you go to a hospice or skilled nursing facility, Plan G covers your coinsurance.

• Part A deductible - Plan G covers your Part A deductible, $1,556.

• Part B deductible - Plan G does not cover this.

• Part B Excess Charge - Doctors who accept Medicare will sometimes bill more than what Medicare will reimburse. Usually, you are on the hook for this "excess charge" but Plan G will cover it.

• Foreign Travel - Plan G will pay for 80% of your medical expenses abroad up to $50,000.

• Out of Pocket Limit - There is no out-of-pocket limit

Now let's get to choosing a plan. In the world of insurance, paying more doesn't always get you better coverage. A plan's premium is dictated by a number of factors, one of which is how many people are enrolled in it. Generally, the more people enrolled in a plan the lower it's premium.

This relationship between coverage and premium is important to remember because around two-thirds of the people enrolled in Medigap plans are enrolled in Plans F or G. They offer the most coverage of all the Medigap plans but aren't the most expensive. As an example, consider the average prices of Medigap plans in California for a 65-year-old non-smoking female from carriers with at least an AM Best rating of "A-".

Looking at this data, we can immediately rule out five of the 12 Medigap plans available. Here's how:

• Five plans are more expensive than Plan G, but only one, Plan F, has stronger benefits. This lets us rule out Plans C, D, B, and M. No point in paying more for less coverage.

• The only difference between Plan F and G is that the former covers the $233 Medicare Part B deductible. However, looking closely at the chart we see that Plan F costs, on average, about $50 more per month than Plan G. No point in paying an extra $600 a year for $233 in savings.

So we've whittled down our options to G, A, L, N, K and the high deductible versions of Plans F and G. Which one you choose depends on the prices unique to you (we used averages) and how much coverage you want. For folks who want maximum coverage, Plan G is usually the best fit. Go to www.fairsquaremedicare.com to see how much you'd pay for Plan G.