Ask the Medicare Specialist
QUESTION:
Andy: I’m 71 years old and my wife 69. We have Medicare and Supplement Plan F that we’ve been extremely happy with. I’ve read in your articles that maybe we shouldn’t have chosen F. They do have expensive premiums that rise yearly. Are Plans G and Plan N significantly less expensive than Plan F? Based on one of your columns, I don’t believe we can switch to another supplemental plan now anyway. We want portable policies at this point our lives, so we don’t wish to get a Medicare Advantage plan with the accompanying network restrictions. Are we able to switch to a less expensive Supplemental plan like G or N without a physical, and how much of a savings would there be? I’m afraid that my ongoing medical issues may make changing cost prohibitive.
ANSWER:
I’m going to start by addressing the last sentence of Andy’s inquiry. Being “afraid” costs seniors thousands upon thousands of dollars every year. Fear without facts or details, or simply fear of change itself, may be the biggest mistake people on Medicare can make. Insurance companies profit and often take advantage of it. Lack of full understanding of Medicare’s intricacies and regulations can also result in overpayment of premiums. As I’m going to address shortly, and as I’ve explained in prior columns, the differences in benefits between Plans F, G, and N are minimal, while the savings substantial.
An example of the confusion for seniors is Andy’s misunderstanding of when one can change Supplement plans. Unlike Advantage Plans that have specific enrollment periods, Supplements can be changed at any time during the year. You don’t need to wait until the Annual Election Period in October to do so. Many others are unaware that Plan F is F is F, Plan G is G is G, Plan N is N is N regardless of the company you buy it from. In other words, what you’re covered for is identical and access to doctors and hospitals is the same regardless of the name and logo on your card. The only difference between Supplement companies selling the same letter plan is cost. Supplements are highly federally regulated and as I discussed last week, the insurance companies have no say in what’s covered or paid for. That’s up to Medicare. If Medicare pays, the insurance company must pay their share, no questions asked! The name of the company means absolutely nothing and need not go into the decision making process. The company the majority of our clients have their Supplements is not one most people would recognize, but we’ve been extremely happy doing business with for 13 years. Supplements are portable in two ways. One, there are no networks. Any doctor or hospital in the country who accepts Medicare and agrees to take you as a patient will accept your Supplement. The other way Supplements are portable is if you decide to move out of state. In that event, you can keep your Supplement without any increase in premium. This is important because Western Pennsylvania has some of the lowest Supplement prices in the country. In parts of Florida, for instance, they cost almost twice as much.
Let’s answer Andy’s questions. Supplements can deny your application for certain pre-existing or current health conditions, but do not require a physical. You’re required to answer a series of medical questions and companies also review your Medical Information Bureau to determine eligibility. Don’t assume you will be denied either. We work with several companies and they all have different underwriting criteria. If you’ve been denied before or told you won’t qualify, give us a call.
Premiums for Plan G and N are much lower than F, not as much at age 65, but surprisingly less expensive as rates increase over time. Let’s take Andy and his wife for example. The average combined premiums for a male and female ages 71 and 69, who bought plan F when they turned 65, is around $400/month or $4800/year. Plan G, with the least expensive company in the area, would cost $265/month, or $3,168 annually. The only difference in benefits between F and G is Andy and his wife would each be responsible for the Medicare Part B deductible of $203. Once that’s met, they wouldn’t pay a dime for any other Medicare covered services. Considering what they would pay in deductibles, their annual savings would be $1,226.
The only difference between G and N are two small co-pays those on N pay, $20 at a physician office visit, be that a PCP or a Specialist, and $50 at the Emergency Room. And keep in mind services like physical therapy or allergy injections are not subject to the co-pay. Nor are tests or other procedures. I estimate that 95% of our new clients are best financially served with Plan N.
Plan N would cost a combined $190/month with the least expensive company and save $1,714/year, taking into account the cost of both deductibles and assuming they would visit the doctor 10 times each, which is probably more than the average person.
To revisit the fear and lack of understanding of how plans work, I had a client I spoke with recently who thought Plan N would expose her to thousands of dollars in bills compared to F in the event she would be diagnosed with Cancer as her husband was a few years ago. He had multiple CT’s and MRI’s, surgery, chemo, and radiation. “He never got a bill for any of it,” she told me. My response was, “Nor would he have with Plan G or N once the deductible had been met.”
Keep in mind this is Andy and his wife’s savings today. I predict the difference in premiums between F and N in 10 years for married couples in their early 80’s will be close to $4,000. F is going to increase at much higher rate year to year as more healthy seniors escape to less expensive plans. In addition, those turning 65 for the first time can no longer choose F. Without the influx of younger and healthier people, what will be left are pools of those who are going to be high utilizers of medical services, forcing insurance companies to pay larger claims and leaving them no choice but to hike rates significantly. I’m adamant that anyone who’s currently on Plans F or C, the twin to F, move to another plan immediately if possible.
If you would like a quote for Plans G and N, you can call one of our office locations or make a request from our website. You’re also welcome to make an appointment for a no cost consultation.