I can remember when I was younger (THAT, by itself, is a good thing!) that a major catalog company used to simplify their product selections into three categories … good, better, and best. Simple, huh? I like simple … but I also like choices. In fact, simple choices is the best of both worlds, kind of like “would you like fries or onion rings with that burger?”. With Medicare Supplement plans, also known as “Medigap” plans, you have lots of choices, but the simple part got lost in the shuffle. I have seen agents make it too simple (by steering someone into their plan of choice). As an Independent Agent, my goal is to make it “simpler”.
The good news is that “Medigap” plans, those private insurance plans designed to fill the gaps left unpaid by original Medicare, are standardized, however, there are many choices of plans available today (defined as Plans A, B, C, D, F, High-Deductible F, G, K, L, M, and N). In case you were wondering, there used to be Plans E, H, I, and J but they were discontinued in 2010. If you have one of these plans, you can keep it, however, in many cases it may no longer make sense. Remember, insurance is based upon economies of scale to be profitable. No one has been able to enroll in those discontinued plans for four years and the existing policyholders are getting older with the potential for more health challenges. Rates for those plans, in theory, should continue to escalate disproportionately compared to other plans where young, healthy 65 year olds are enrolling daily.
So Plan A offers the least benefits and Plan N offers the most, right? NO, not all all! The other way around? NOPE, sorry!! Plan A is the least expensive and Plan N the most? NAH, doesn’t work that way!!! The other way around? HA, HA or LOL for those of you who prefer that phrase)!!!! Clearly, you have choices, just not simple choices. So I will continue my quest for “simpler”.
Medicare, in their booklet entitled Choosing A Medigap Plan, advises that “Cost is usually the only difference between Medigap policies with the same letter sold by different insurance companies.” I would add that support is equally important. Every company does not have to offer every plan. There are simply too many options, too many different types of pricing structures with different companies (some offer household discounts, some have gender-based pricing, some differentiate based upon tobacco use, some have more lenient underwriting questions, etc.) to blindly “do it yourself” or to blindly do what your friend or neighbor did. The old saying that “what is good for the goose is good for the gander” does NOT apply to selecting Medigap insurance.
So should you talk with an agent? Why shouldn’t you? It doesn’t cost you anything extra to work with an agent. Any agent can ask the right questions to help you decide which plan (A through N) might be right for you. An Independent Agent, however, can take it one step further and help you to decide the most suitable plan and company. Remember, not all plans are offered by all companies. In addition, because of pricing differences, a particular plan might not be suitable with one company, yet completely suitable with another. You may not be advised properly if the agent you are talking to works for one company that doesn’t offer the most appropriate plan for you.
What plan is right for you? There is no one size fits all answer here, although I do not think that you need to check every plan from Plan A to N. In a recent post, I referred to the phrase Can’t Fathom Gibberish Nonsense. From my perspective, narrowing your search to plans C, F, G, and N will probably make life a bit simpler.
So let’s begin to understand these plans. If you look at any chart of Medicare Supplement plans (here’s a link if you want one), you will see that Plan F pays all Medicare-approved costs that are not fully paid by Medicare. I like to refer to this plan as a budget. You simply pay a monthly premium. Any Medicare approved expense that is not fully paid by Medicare is then paid by the plan. Well, now that is simple, huh? Is this then usually the most expensive plan? Surprisingly, not always, although you do pay a premium (no pun intended) to have every dollar covered. For someone who does not want to be further aggravated receiving bills from various medical providers and/or writing periodic checks, this can be a good solution.
Sometimes, a better (starting to sound like that catalog company) solution could be Plan G. With this plan, you are responsible for a $147 deductible (for calendar year 2014) for Medicare Part B expenses (primarily physicians but can also include items such as durable medical equipment, diagnostic tests, etc). After that, all Medicare approved expenses not fully paid by Medicare are paid in full, just as they are with Plan F.
Let’s look at an example. With one company in my home state of New Jersey, a 70 y/o female could be fully covered with Plan F for roughly $183 per month. She could alternatively be covered with Plan G from the same company for roughly $158 monthly. If she does not need to visit a doctor that year, she would save roughly $300 with Plan G. If she ends up having some doctor visits and needs to pay the $147 deductible, she would still be saving $153 with Plan G. We could tweak this a little more by simply looking at a few different companies. Are you OK with a few small bills while you cover your nominal deductible? Consider Plan G.
Now will we move on to the best solution? No, I don’t believe there ever is a best solution, simply the most suitable solution for a particular person at a particular time within a particular budget. Next time, however, we will explain Plans C and N. Both are good or better solutions, depending upon your circumstances. Simple, huh? Simpler, maybe? It could be worse. You could be doing this for a living and having to explain it over and over daily!
Have a question or comment? Feel free to email me at david.tirpak@msn.com or click on the link on this page. Till next time …
Tags: Medicare, Medicare Supplement, Medigap, Original Medicare, Tirpak
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