Justin Brock is the President of Bobby Brock Insurance. Our book Medicare Breakdown on Amazon talks about the different Medigap Plans.
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If you are covered only by Original Medicare, you will likely find that Parts A and B don’t cover all you want them to. From prescription drugs and outpatient service to emergency room visits and more, Original Medicare leaves coverage gaps. To fill in these gaps in service, many people find it useful to buy Medicare Supplement Insurance, also called Medigap.
Medigap Plan G helps to fill in most of these gaps. While Plan G does leave a small amount of out-of-pocket costs to policyholders, the comprehensive nature of Plan G helps give policyholders peace of mind.
What Is The Medigap Plan G?
Though Medigap Plan G is a relatively new plan, its popularity is growing rapidly; from 2017 to 2018, its enrollment rate spiked 39%. People like Plan G because it provides broad coverage at a reasonable price. Further, because Medigap Plan F was phased out for new enrollees beginning in January 2020, Plan G is now the most comprehensive Medicare supplement policy for new Medicare beneficiaries.
Medigap Plan G is very similar to Plan F. However, Plan G does not cover the Medicare Part B deductible, which is $203 for 2021. Besides this deductible, Plan G covers all other Medicare Part A and B approved costs, including outpatient treatment, emergency room visits and visits to healthcare specialists. Plan G also offers up to $50,000 in foreign travel emergency benefits.
It’s noteworthy, too, that Medigap policies do not cover prescription drugs. If you’d like prescription drug coverage, you’ll need to enroll in a Medicare Part D plan.
So How Much Will This Coverage Cost Out-Of-Pocket?
This will depend on which Medigap Plan G policy you decide to enroll in. There are two Plan G policies, each of which carries different out-of-pocket costs.
1. “Standard” Plan G: Under the typical Plan G policy, the only out-of-pocket cost you will incur is your Part B deductible. Say you have a Medicare-approved surgery, and Medicare fully covers its 80% share of the cost, your Plan G supplement will pick up the remaining 20% after you’ve fully paid your Part B deductible.
2. High-Deductible Plan G: Some people want the broad coverage Plan G provides but do not like the higher premiums that come with a low out-of-pocket Medigap plan such as Plans F, G or N. If that is you, you can enroll in the Plan G high-deductible option. Under this plan, your monthly premiums will be lower in exchange for a higher deductible, which is $2,370. Once you have paid the deductible in full, you will not have any out-of-pocket costs for Medicare-approved treatments.
How Much Are Medigap Plan G Premiums?
While not technically an out-of-pocket cost, a plan’s premium is another important factor to keep in mind. Individual policy costs for Plan G — or any Medigap plan, for that matter — are determined by a number of factors and will vary widely from person to person. In addition to adjusting rates based on your age, gender and tobacco use, the largest cost factor is your location. To get a better sense of what Medigap plan rates are in your area, you can use the Medigap policy tool.
While monthly premiums vary a great deal, there are three main ways insurance providers set monthly premiums:
• Community Rated: Your premium rate is based on the community rating, which “prevents health insurers from varying premiums within a geographic area based on age, gender, health status or other factors.”
• Issue-Age Rated: Your premium rate depends on your age when you purchase the policy. As you get older, your premium will not go up based on any age-related factors. Issue-age policies do go up over time, but they do not use “age” as a factor to their increases. Also, issue-age rated policies cost more from the start than attained-age rated policies.
• Attained-Age Rated: Premiums are based on your age when you purchase the policy, and as you get older, your premiums will go up.
As a point of summary here, most states do not dictate a certain type of demographic-related rating, but a few do require community rating or issue-age rating. In my experience, I have seen that the best plan as far as these factors are concerned is the one that is most common in the state in which you’re enrolling. In most states, that would be an attained-age policy.
Medicare supplement plans are standardized. The only difference in plans can be the cost. So while Medicare Plan G may cost more in San Francisco than it costs in Tupelo, Mississippi, the benefits and coverage of the plan are the exact same.
This holds true for high-deductible plans, as well. Though the cost structures of high-deductible and standard plans differ, there is no difference in the coverage.
Know Your Options
While Medicare Plan G does have higher premium costs than other Medigap plans, that is because it has such comprehensive benefits. As you have read here, there are almost no out-of-pocket costs associated with Plan G outside the deductible. If you have serious or chronic health issues that wind up giving you high medical bills every year, Plan G could be a good option for you. It’s always best to explore your options when it comes to Medicare coverage policies.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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