Why Plan G? Doesn’t everyone else get Plan F?
It’s easy. Plan G is a great value and Plan F costs you more money for basically the same coverage. Most people get Plan F because their agent didn’t take the time to explain the other 9 Medigap Plans.
Some agents will quickly tell you that everyone gets Plan F because it “pays for everything”. However, Plan G can be a much better value.
If your agent is pushing Plan F, then chances are they’re looking for a big commission. It’s no secret in the insurance industry, the higher the premium the higher the commission.
There is only 1 difference between the plans.
This one difference is what can save you hundreds of dollars now and potentially thousands over time. Looking at the chart below, you can see the Part B deductible is not a Plan G benefit.
Although Plan F covers the Part B deductible, you’re still paying for it. It’s just added into your premium.
Why is Plan F so much more than Plan G?
There are several reasons. It costs money for the insurance company to manage, handle, and pay the Part B deductible payment for you. They have to hire extra people to manage this. This is factored into your premium dollar. You are paying for this so called “convenience” with Plan F.
Plan F can also be more susceptible to rate increases. Plan F typically has more unhealthy people enrolled which equates to more claims. More claims means higher rates. The belief is that Plan F rates will continue to increase quicker and higher than Plan G.
This may become very apparent when Plan F is obsolete. As of 2020, insurance companies will no longer be able to sell Plan F. Congress passed legislation (in 2015), prohibiting the sale of plans offering Part B deductible coverage. However, current Plan F policy holders and anyone purchasing Plan F before 2020 will still be able to keep their plan.
How about a quick example of how you can save?
Sometimes our clients like to see a comparison example. It gets to be a bit confusing with all of these plan letters and terminology.
Here is an example.
Mrs. Smith is a 70 year old woman who does not smoke. Mrs. Smith is currently on a Plan F and pays $1,800 a year in premiums.
Let’s compare a Plan F to Plan G and calculate the savings.
1. Plan F with Company ABC charges a yearly premium of $1,800.
2. Plan G with Company XYZ charges a yearly premium of $1,400.
Remember, the only difference with Plan G is that Mrs. Smith has to pay the Medicare Part B deductible ($166) instead of her insurance company incorporating it into the premium.
Mrs. Smith is simply spending too much money on Plan F.
This is because the yearly premium of Medigap Plan G plus the Part B deductible ($1,400 + $166 = $1,566) is less than the Plan F annual premium ($1,800).
Mrs. Smith would save $234 a year for Plan G. Including the Part B deductible…which is usually paid over several office visits.
Let’s also consider the long term effect of Plan G vs. Plan F. Market history has shown that Plan G has stable rate increases. Insurance companies like Plan G and some have even REDUCED Plan G premiums to get your business.
Comparing premium rate increases over five years, we see the true value of Plan G.
Plan F is the most popular plan, however it is also the most expensive.
Plan F is the most comprehensive Medicare supplement plan. But as it’s been explained, Plan F is not necessarily the best value for your premium dollar.
As always, our goal is to show you how to save significant amounts of money by choosing the best plan for your premium dollar. If you have any questions about Medigap Plan F or Plan G, please contact me.