Ask the Medicare Specialist

QUESTION:

My husband is turning 65 in March and we’re studying Medicare choices. We live in Pittsburgh, zip code 15208. We’re planning on getting a Supplement, not an Advantage Plan. We’re looking at Plans G, N, or High Deductible G. I’m now aware that all coverage is the same so all I need to look at is price. Right?

Also, can you tell me what companies are rated the best based on data for yearly increases in premium?

In addition, I wonder if someone were to change their Supplement to another company after their Initial Election Period, but didn’t change the plan letter, would they still have to go through underwriting?

Lastly, you said in your last column that Plans C and F are a rip off. I was just curious as to the reasoning behind this and any examples you could provide?

ANSWER:

Some great questions here and all very important for those who are turning 65 or going on Medicare Part B for the first time. The last one came from another reader, but it’s relevant to the others, so I wanted to include it.

Plans G and N are the only plans we quote those who want to go with a Supplement, which are also referred to as Medigap policies. I will get into why I’m not a fan of High Deductible G momentarily.

You are correct that there’s no difference in what’s covered or what doctors or hospitals one can use from company to company. G is G is G and N is N is N regardless of who sells it. To quote the Centers for Medicare and Medicaid (CMS), “All Medigap policies must follow federal and state laws designed to protect you, and policies must be clearly identified as ‘Medicare Supplement Insurance.’ Each standardized Medigap policy must offer the same basic benefits, no matter which insurance company sells it. Cost is usually the only difference between Medigap policies with the same letter sold by different insurance companies.”

And the font of the last sentence does appear in bold on page 9 of CMS’s “Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare.”

There are only four factors that go into what company we enroll our clients, the first of which is zip code. We use one company almost exclusively for those who live in zips that start with 150 to 152 or 160 and above, and another for those who reside in 153 to 156.

Marital status is also a component and there’s a new offering that provides a significant discount to those who are married, even if the spouse isn’t going to be on the plan. The most important two considerations are a) who has the lowest, or close to, initial premiums and b) a good history of keeping inevitable rate increases to a minimum.

There’s no published data on companies’ premium histories or how much they’ve increased them over the past five to ten years unfortunately. However, I pay very close attention to the market. What I can tell you is 95% of people we talk to who already have a Supplement with a company other than our two favorites, are paying more, often significantly more, for the same letter plan. In addition, since I’ve been placing clients with them, the most popular companies have never had a double digit “across the board” rate increase as I refer to those that are in addition to the small increases one gets each year as they age.

As far as moving from one company to another, one letter plan to another, or the same letter plan with a different company, etc., underwriting will always be involved. If you can’t pass, you can’t change companies or plan letters. It’s why I tell my clients who are new to Medicare to make their choice like it’s the last one they’ll ever have.

And that brings me to why I don’t like High Deductible G or F. The deductible on both is now up to $2,370 it increases almost every year at five to 10 times the rate of the Part B deductible. Those who choose High Deductible Supplements must pay the entire $2,370 before Medicare begins to cover any claims. This may sound fine to someone who is currently healthy. And yes, the premiums are significantly lower than Plans N or G. But as one gets older it’s very likely that some or all the deductible will be met each year, effectively making premiums as much as $250/month, more double the average for a 70-yearold on Plan N. I’m personally much more likely to advise someone to take an Advantage Plan than a high deductible Supplement.

Lastly, regarding my statement that Plans F and C are a rip off, it’s 100% true. The only difference between Plan F and G is that F pays the Medicare Part B deductible of $203. Once the deductible is met on G, the plan works exactly the same as F, with all Medicare covered service being paid at 100%.

Plan N works the same as G, except for a $20 co-pay for physician’s office visits and $50 for a trip to the Emergency Room. The average 70-year-old is paying close to $600 more per year for F than plan G and as much as $1,000 than N. Those in their mid 70’s to early 80’s are paying as much as $1,000 more for G and usually over $1,500 for N.

Why would anyone want to pay $600 to $1,000/year to get rid of $200 in medical bills? I have no idea. But that’s exactly what thousands of Western Pennsylvanians are doing. No one who can pass underwriting should be on Plans F, C, or other antiquated plans such as I and J that have also been eliminated for purchase.

Supplements are not subject to enrollment periods and can be changed at any time. If you would like to see about moving from your current Supplement plan to another, give us a call or email me personally. Don’t assume you can’t pass medical underwriting either. The three companies we use have different criteria. Even if you have been denied in the past, it’s still possible to get a less expensive plan without giving up any significant benefits.