How to Save on Out-of-Pocket Medicare Costs with Medigap

Medigap policies

According to a study first published in Money magazine, the average 66-year-old couple will spend approximately 57% of their Social Security lifetime benefits on health care. If this statistic worries you, enrolling in a Medigap plan to cover out-of-pocket Medicare costs may be right for you.

Medigap currently offers 10 plans that are standard across most states (with the exception of Massachusetts, Minnesota, and Wisconsin, which have their own standard plans). Benefits and coverage are the same across all states, but premiums may differ, so it’s important to know which plan is right for you. Let’s take a closer look at the three most popular Medigap plans—Plan F, Plan G, and Plan N.

Medigap Plan F

Plan F is by far the most popular Medigap plan with 55% of all Medigap beneficiaries enrolled in this plan. Plan F is so popular because it offers comprehensive benefits and first-dollar coverage, meaning Part A and Part B deductibles are covered, so you pay nothing before Medicare benefits kick in. This is the best plan for you if you have serious or chronic health conditions with a lot of medical expenses each year. However, this plan does have higher premiums, so weigh your pros and cons before choosing a plan. Other coverage offered by Plan F includes:

  • Part A and Part B deductible
  • Part A and Part B co-insurance and co-payment amounts
  • Hospital co-insurance for a full year after Original Medicare Part A benefits are used up
  • Part B excess charges
  • Hospice care co-insurance
  • Skilled nursing care co-insurance
  • First 3 pints of blood per year (for approved procedures)
  • Foreign travel emergency care at 80% (up to plan limits)

The most important thing to know about Plan F is that it’s being phased out starting in 2020. No worries if you’re already enrolled; you’ll be grandfathered in.

Medigap Plan G

Plan G is different from Plan F in only one regard: Plan G does not cover the Part B deductible, which is $183 in 2018. Otherwise, Plan F and Plan G function the same. Like Plan F, Plan G also offers coverage for Part B excess charges.

Plan F and Plan G both allow maximum flexibility to choose health care providers. If you see a provider that does not participate in Medicare, they can charge you up to 15% more than the standard Medicare rate, and unless you have Medigap Plan F or Plan G, you will pay the difference out-of-pocket.

Another important note for Plan G: there is no plan to phase it out in 2020. It’s here to stay.

Medigap Plan N

Plan N strikes a balance between protection against catastrophic out-of-pocket expenses and affordable premiums. Plan N offers the same coverage as Plan F except:

  • No coverage for Part B deductibles
  • No coverage for Part B excess charges
  • You may have a co-pay of up to $20 for doctor visits and $50 for hospital visits that don’t result in admission

Like Plan G, Plan N has no plans to be phased out in 2020.

What to Keep in Mind When Choosing a Medigap Plan

  • No switching. Unless you move out of your policy service area, you may not be able to switch Medigap policies once you’re past your Initial Enrollment Period.
  • Medical underwriting. Once your Medigap open enrollment period expires, you could be subject to medical underwriting if you apply for a new plan, meaning the insurance company can refuse coverage or charge higher premiums for your plan.
  • No trading up. Some states have an annual enrollment period around your birthday month. You can change Medigap plans without medical underwriting, but only for plans with the same or lower benefits than your existing plan.
  • Be informed. When enrolling, be sure to discuss options with an experienced Medicare broker who can do cost-benefit analyses so you can enroll in the right plan the first time around.

If Plan F, Plan G, or Plan N doesn’t suit your needs, refer to the chart below to determine which Medigap plan is right for you.

medigap plans A-N

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