Learn about Medigap Plan G coverage and costs and how to figure out if Plan G is the best Medicare Supplement option for you. We go through the pros, cons, and alternatives to this popular Medicare Supplement plan.
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Medicare Supplement Plan G Coverage
Medicare Supplement, also known as Medigap, coverage is standardized by law. So a Plan G from any company will have exactly the same benefits.
Medicare Parts A and B are your primary health insurance. Medicare Supplements are secondary insurance.
With standard Medicare Supplements, there are no networks, so you can use any doctor or medical provider who accepts Medicare.
Plan G is the most comprehensive Medicare Supplement plan that can be purchased by anyone who enrolled in Medicare on or after January 1, 2020.
For all medical care covered by Medicare Parts A and B, your out-of-pocket risk with a Plan G is limited to the Part B outpatient annual deductible. In 2022, this deductible is $233.
If you reach that deductible, all covered outpatient expenses beyond that are covered at no cost to you between Medicare Part B and Plan G. This includes things like office visits, diagnostic testing, outpatient surgery, chemotherapy, and all other outpatient treatment.
On the inpatient side, all covered expenses are split between Medicare Part A and Medigap Plan G. You have no out-of-pocket costs for inpatient care.
This is one of the reasons why Plan G gets advertised as the best. It’s the most comprehensive. It has the most coverage and the lowest out-of-pocket risk to you. But there are trade-offs for that high level of coverage.
Medigap Plan G Premium Costs and Rate Increases
Because Plan G is the most comprehensive coverage with the least risk of out-of-pocket spending for you, it is the most expensive of the Medicare Supplement options in terms of monthly premiums.
Since Medicare Supplement prices generally go up once a year as you age, we need to think about future costs in addition to the initial cost when you first apply.
Plan G is more expensive when you first enroll, and you can expect yearly increases in the premium to be larger than what, say, a Plan N or High Deductible Plan G would have.
Rate increases are partly based on aging and partly based on how much the insurance company pays out in claims. Every insurance company will pay out more in claims on Plan G than on less comprehensive Medicare Supplements, so Plan G rates will have higher percentage increases.
For 65 year olds, Plan G is somewhere between $100 and $150 per month in most states. Every state has slightly different laws for Medigap plans. We’re going to look at the averages. If you live in a state that is a real outlier and has unique Medicare Supplement laws, your numbers could be significantly higher.
Let’s also look at Plan N, which is one step down from Plan G in terms of comprehensive coverage. Plan N monthly premiums at age 65 are in the range of $75 to $130 per month. Not too much difference.
However, you have to look at rate increases. In the past five years, Plan N rates have risen by about 2% per year. Plan G rates have risen by 6% per year.
You can expect a small age increase every year and a percentage increase based on how much the insurance company paid in claims for people in your area in the same plan.
Rate increases for usage are always based on a group of people, never on your individual medical claims. You can’t be singled out by the Medigap company for a rate increase.
Once you’ve been on Medicare for several years, the difference in cost between Plan G and Plan N becomes significant due to those rate increases. Plan G still might be the better choice for you, but it’s important to be aware that those rate increases are coming.
Is Plan G a good choice for you?
If you have very expensive, ongoing treatments like chemotherapy, treatment for rheumatoid arthritis, diabetes, or any other medical condition that needs regular or costly treatment, a Plan G can be a good choice for you.
That higher Plan G monthly premium is balanced out by the savings in out-of-pocket costs because you don’t have a big deductible to meet or any copays.
If you want the peace of mind that your out-of-pocket risk is capped at the very low level of that Part B annual deductible of $233 and your budget can handle the Plan G monthly premium costs and rate increases, Plan G can be a good choice for you.
If you are pretty healthy and don’t make many office visits in a typical year, it’s worth taking a look at Plan N or even High Deductible Plan G in addition to Plan G.
Enrolling in Plan N or High Deductible Plan G can save you thousands in premium payments through your time on Medicare.
More details on the differences in coverage and cost among Plans G, N, and High Deductible Plan G can be found here.
Changing Medicare Supplement Plans
You aren’t locked into a Medicare plan forever, so if you decide to change to or from a Medigap Plan G down the road, you usually can.
Medicare Supplements generally require you to answer health questions to purchase a new Medicare Supplement once you’ve been on Medicare Part B for over 6 months, but there are exceptions to that rule.
Medicare Advantage plans never require health questions to enroll.
As your health or life changes, it’s a good idea to reevaluate your health insurance coverage to see if something else might be a better option.
Why is Plan G marketed so much?
Plan G is an emotionally reassuring option since it has such a small out-of-pocket risk, and the premium cost isn’t terribly high when a person is first looking for Medicare Supplement coverage at age 65.
If an agent or broker never tells you about the future premium cost increases or calculates how much the insurance company is likely to pay out for your care compared to how much you will pay over the years in premiums, Plan G can seem like the best deal around.
There are a couple other issues that play into some of the marketing push for Plan G.
Because Plan G is the most comprehensive, it’s very easy to explain to clients and to new agents.
Some agents, especially in big call centers, are trained to only sell Plan G because it’s a quick way to get a brand new agent selling. They learn one plan instead of dozens. Of course, that’s not in your best interest because one of those other plans the agent doesn’t know about could be the best coverage for your situation.
Also, agent commissions are a percentage of the premium you pay. If you are paying a higher monthly premium, the agent makes more in commissions. This doesn’t necessarily mean an agent is trying to sell you something that isn’t a good choice for you, but always keep in mind that the more expensive plans benefit agents more.
When you are looking for a Medicare plan agent or broker, you want to find someone who can explain and compare all plans that are available, not just the easiest to explain or the one that benefits the agent most.
Questions? We Can Help!
If you have questions about your Medicare coverage, please feel free to give our office a call at 877-312-1414 or schedule a free, no obligation Medicare Plan Consultation. .
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