One of the most common questions people ask about Medigap insurance is, “Which Medicare supplement is the best?”
It’s a great question, but the answer is different for everyone. The reason this is true is that there are so many different factors, including:
- Where you live
- Your age
- Your health
- Your finances and financial goals
- Your use of tobacco
Let’s talk about some plans and the reasons you might choose one over another.
When “Best” = “Most Coverage”
For some, the question of best means getting the most coverage. Medigap Plan F offers the most coverage possible. It covers ALL the cost gaps in Original Medicare (Part A and Part B).
Unfortunately, Plan F is no longer available (Congress put the kibosh on Part B deductible coverage) for new seniors. As a result, Medigap Plan G is the next best (most coverage) available.
The good news is that the overall cost of a Plan G policy + the annual Part B deductible generally makes Plan G a better deal anyway. The following chart gives you a visual way to compare what each lettered plan covers:
When “Best” = “Good Coverage with Some Out-of-Pocket Costs”
As retirees (or approaching retirement), many of us find ourselves on a fixed budget. At the same time, we may be super healthy or have a chronic condition that’s easily managed through medications and does not require a specialist.
If this is your situation, a Plan F or G policy might be too expensive or simply wasteful. In this case, a Medigap Plan N policy could be an excellent option to consider. Here’s why.
In most areas, a Plan N policy can run 20-30% less than a Plan G. Even more when compared to a Plan F. If you are a healthy senior, the monthly premium difference really adds up.
Plan N is so much lower than Plan F and G because you take on some of the costs. For example, with a Plan N policy, you pay up to $20 when you see your doctor and up to $50 to use the emergency room.
But… because you’re healthy, these are rare occurrences. And, your annual wellness exam is excluded. This doctor visit is covered 100% by Medicare.
If you have a chronic condition that you and your primary care physician are managing through medication, without involving a specialist, Plan N could be a cost-saving option for you, as well. It all depends on how frequently you need to see your doctor and whether you pay Excess Charges to see your doctor(s).
Part B Excess Charges are additional fees (up to 15%) that doctors may charge if they do not accept Medicare-assignment (Medicare’s standard rates). Medigap Plan N does not cover Excess Charges, whereas Plan G does. If you are not in this situation with your doctor, that’s another plus in the Plan N column.
And that’s it. If paying a small copay to see your doctor and not having coverage for Excess Charges works for you, add Plan N to your shortlist.
When “Best” = “Lowest Monthly Cost + Risk Protection”
One aspect of Medigap coverage that I like to point out is how it compares to Medicare Advantage. Many people ask me why they should consider a Medigap plan when some Medicare Advantage plans have a zero-dollar monthly premium.
To truly understand this question, you need to look at total cost vs. risk. With a Medigap policy, you pay most costs in advance via monthly premiums. With a Medicare Advantage plan, you pay most costs at the point of service via copays.
This fundamental difference lulls some people into a false sense of lower cost with a Medicare Advantage plan. The reality is that the only people who experience lower costs in a Medicare Advantage plan vs. a Medigap plan are healthy people who rarely need healthcare services.
However, there is one aspect of Medicare Advantage that is very beneficial. It’s called MOOP (Maximum Out-of-Pocket), and it applies to Medicare Advantage copays and coinsurance costs. With these plans, you are protected by an annual MOOP, which is currently no more than $6,700 per year, in-network, or $10,000 if you use out-of-network providers.
Those are scary numbers, but you need to consider that with Original Medicare, there are no limits or out-of-pocket protections. None. Nada. Zip!
So, that brings me to Medigap Plan K.
Like Plan N, with Plan K you share some of the costs (see the chart on page 2). But, unlike Plan N, there’s an annual limit on your out-of-pocket costs with Plan K (currently $5,880). When you hit the MOOP with Plan K, all Medicare Part A and B charges are paid for you at 100% for the remainder of the year.
This is a plan option for people who need to manage their budget and can take a little risk because they have good health, or their health condition(s) do not necessitate frequent health services.
Here are some recent examples:
- 65 year-old woman, Naples, FL:
- Plan G: $169.23/mo
- Plan K: $60.65/mo
- 65 year-old man, Phoenix, AZ:
- Plan G: $113.50/mo
- Plan K: $41.15/mo
Your rates will be based on your location, age, gender, etc. These are two examples for comparison purposes.
If you didn’t get a Plan K quote from me and want one, reply back and I will get it right out to you.
Next Steps
Now that you have a better understanding of the best Medigap plan for you, the next step is to speak with an insurance agent who can assist you with more information.
There are many factors to consider. Health insurance agents are trained to listen and present options based on your goals.
Call 1-855-266-4865 to speak with a HealthPlanOne agent now.
Frequently Asked Questions Related to the Best Medicare Supplement Insurance
Medicare Supplement Plan F and Plan G are nearly identical. Technically, Plan F is better because it offers first-dollar coverage. However, the one cost that Plan G does not cover, the Part B deductible, is often less than the annualized premium difference between the two plans. As a result, Plan G holders generally save a little money. Read Medicare Plan F vs Plan G to learn more.
Are Medicare supplements worth it? It might seem as if Medigap plans are expensive. But, going with Original Medicare alone is not wise. The coverage gaps in Medicare add up fast, particularly if you have an emergency. Paying 20% of all your outpatient coverage might not seem so bad, but getting slapped with a $1,400 hospital bill really smarts. And that's just for the deductible! We answer this question in more detail here.
For some, the best means getting the most coverage. Medigap Plan F offers the most coverage possible. It covers ALL the cost gaps in Original Medicare. But, many of us have a fixed budget. At the same time, we may be healthy or have a chronic condition that’s easily managed through medications and does not require a specialist. If this is your situation, a Plan F or G policy might be too expensive or simply wasteful. In this case, a Medigap Plan N policy might be a better option. Read What is the Best Medicare Supplement Insurance Plan to learn more.
According to MedicareWire research, the average Medicare Supplement premium in 2020 was just over $158 per month. However, cost varies widely by area, coverage, and age. For more information, read What is the Average Cost of Supplemental Insurance for Medicare?.
