When you opt for Original Medicare (Parts A & B) after you turn 65, a Medicare Supplement plan is a vital piece of the insurance puzzle, filling the gaps that Medicare leaves you with. Now new rules mean you’ll be hearing more about one plan in particular: Medicare Supplement Plan G.
That’s because today’s most popular Medicare Supplement option, Plan F, will close its doors soon: As of 2020, insurers will no longer offer it to new enrollees. If you already have a Plan F policy, you can keep it. But premiums may rise more quickly as younger and healthier people aren’t added to the roles.
Once Plan F is unavailable for new sign-ups in just over a year, the most comprehensive Medicare Supplement policy for first-time enrollees will be Plan G—and experts expect it to become even more popular than it is now.
Here’s what you need to know about this coverage, how your plan choices are changing, and what your best moves are to protect your finances against crippling healthcare costs now and in the future.
Why a Medicare Supplement plan is crucial
Original Medicare pays for only the first 80% of your doctor and hospital bills. A Medicare Supplement plan, commonly called a Medigap policy, picks up much of the slack, helping you cover out-of-pocket costs such as copayments, coinsurance, and deductibles.
Currently there are 10 standardized varieties of Medicare Supplement plans, all going by letters of the alphabet (A, B, and so on). These policies are sold by private insurers, and all plans with the same letter offer the same coverage in most states (the exceptions are Massachusetts, Minnesota, and Wisconsin), though premiums vary by insurer.
You can use your Medigap insurance with any doctor that takes Medicare, anywhere in the country. (To make sure a doctor accepts Medicare—more than 90% do—use Medicare’s Physician Compare tool.)
Why Plans F and G are the gold standard
Of the 10 available Medigap plans, Plans F and G offer the richest coverage.
The only difference between Plan F and Plan G now is that Plan F covers the Medicare deductible, which is $183 in 2018, $185 in 2019. Plan F, which typically has higher premiums than Plan G, is currently the most popular plan, chosen by nearly 60% of Medicare recipients.
Medicare Supplement Plan G, like Plan F, offers generous benefits, including:
- Medicare Part A coinsurance and hospital costs (up to an additional 365 days after Medicare benefits are used)
- Medicare Part B coinsurance or copayment
- Part A hospice care coinsurance or copayment
- Skilled nursing facility care coinsurance
- Medicare Part A deductible ($1,340 in 2018)
- Medicare Part B excess charges
- 80% of foreign travel emergency (up to plan limits)
So once you’ve hit your Plan B deductible of $183 this year and $185 in 2019, a Medigap Plan G covers all of your doctor and hospital bills.
Certain preventive services, like mammograms, cancer screenings, and flu shots, are already fully covered under Part B. As long as you go to a doctor that accepts Medicare, you’ll face no copays or coinsurance, even without a Medigap plan.
No Medicare Supplement plan, however, provides prescription drug, vision, or dental coverage. Nor do any pay for long-term care or private duty nursing.
How Medicare Supplement Plan G curbs excesses
Medicare Supplement Plans F and G offer another valuable benefit: They are the only two plans that provide coverage for Medicare Part B excess charges, which occur when a doctor bills you for more than what Medicare has agreed to pay for a specific service.
While fairly uncommon, Medicare Part B excess charges can add up quickly, and Medicare places no limits on your out-of-pocket spending.
Even if none of your current doctors bills for Medicare Part B excess charges, it’s worth considering whether doctors or hospitals that you want to use in the future might.
How to find the best price
While the coverage provided by all Medigap Plan G policies are exactly the same, the premiums can vary by thousands of dollars. Since it’s common to pick one plan and stick with it, selecting an expensive Medigap plan at the outset could add up to an extremely costly mistake over the course of your retirement.
The premiums for Plan G policies are typically lower than what you’ll pay for Plan F, though it’s unclear how rates for Plan G will change if the plans see a large influx of new participants.
You purchase a Medigap Plan G from a private insurer, either directly or via a broker. You pay monthly premiums to the insurer, separately from your $134 monthly Medicare Part B insurance premiums ($135.50 in 2019).
Note that Medigap policies only cover individuals. If you and your spouse both want coverage, you’ll need to purchase two separate plans. Some insurers will offer you a 5% discount for bundling two plans together.
When to shop for a plan
You can buy a Medicare Supplement plan during a six-month open enrollment period that starts the first day of the month you’re both 65 or older and enrolled in Medicare Part B (hospital insurance).
You can buy a policy later—say you want to switch into Medigap from employer-based benefits or a Medicare Advantage plan—but in most cases outside of your open enrollment period insurers are not obligated to sell you a plan and may subject you to medical underwriting.
That means you could be turned down if you have a preexisting condition, or charged a higher premium based on your health.
There are some exceptions to this, such as if you lose an employer health insurance plan or move out of your Medicare Advantage service area, and some states have different open enrollment rules. But unlike Plan F, Plan G does not necessarily offer “guaranteed issue” rights in these special circumstances.
Once you’ve enrolled in a Medicare Supplement plan, your renewal in that plan is guaranteed as long as you don’t miss your premium payments, though your premiums may change.