Can you answer “yes” to the following questions? If so, then Medicare Supplement Plan G may be the plan for you!
- Did you become eligible for Medicare after January 1, 2020 and want the plan with the most benefits?
- Are you looking for a plan that is “in the middle” – not as expensive as Plan F, but more benefits than Plan N?
- Would you prefer no copays?
Plan G strikes a good balance between coverage and budget!
Medicare Supplement Plan G Overview
Medigap Plan G is the second most popular plan. Around 13% of all Medicare Supplement enrollees are in Plan G. The most popular plan is Plan F at 55%. Plan N is a close third place at 10% of all enrollments and gaining quickly on Plan G.
Plan G is the second most popular because it offers benefits very close to Plan F, but is more affordable. After you pay an annual deductible it offers full coverage…just like a Plan F. Budget conscious Medicare beneficiaries who like the sound of “full coverage” are often drawn to Plan G.
The only difference between Plan G and Plan F relates to the Part B annual deductible ($203 in 2021). Plan G enrollees have to pay the Part B deductible if they use any Part B services. Because of this cost sharing, Plan G monthly premiums are lower than Plan F. The lower monthly premiums can add up to a nice annual savings.
Let’s look at three components to evaluate the merits of Plan G. Those components are 1) monthly premium, 2) coverage and 3) historic rate increases.
Medicare Supplement Plan G monthly premium
Plan G generally has the second highest monthly premium among the most popular Medigap plans. The most popular plans are F, G and N.
For example, a Plan G for a 70 year old female, non-smoker, in Kansas, is approximately $22 less per month than a Plan F. That equates to a $264 annual savings. In contrast, Plan G is $23 more per month than a Plan N, which equates to $276 more per year.
Plan G’s coverage
Plan G has excellent coverage. If you land in the hospital, all of your hospital related expenses are covered. This includes the large Part A deductible ($1,480 in 2021).
Your doctor and outpatient care is covered at 100% after you pay the first $203 in expenses (Part B deductible). A Plan G acts just like a Plan F after you pay the first $203 in outpatient costs! This means no copays or coinsurance or any other deductibles. It fills in ALL of the gaps of Medicare Part A and B after the Part B deductible is paid.
One of the benefits of having a Medigap Plan G is that your health care budget is easy to understand. Simply add the annual premium for Plan G to the Part B annual deductible and you have the total annual cost of your supplement. Keep in mind that Medicare raises the Part B deductible each year. The increase from 2020 to 2021 was 2.5%, or $5, from $198 to $203.
Plan G pays 100% of Part A hospital costs
Rate increases for Medicare Supplement Plan G
Medigap Plan G has historically had the second highest annual rate increase among the most popular plans. Rate increases for Plan G have averaged approximately 2% below Plan F, but 2% above Plan N.
Plan G’s rate increase ranking falls between Plan F and Plan N – not as good as N, but better than F . The main reason is because of the different cost sharing of the plans . Cost sharing is when you pay some of your health care costs and the insurance company pays some of the costs. The cost sharing for Plan G is higher than Plan F because you pay the Part B deductible on Plan G but you don’t have to on Plan F. Higher cost sharing generally equates to lower usage of medical services, which leads to less Medicare claims for the insurance carrier. This helps to keep rate increases in check.
In contrast, the cost sharing for Plan G is less than Plan N. This is because Plan N requires a doctor copay that Plan G doesn’t require. Because Plan G enrollees have less “skin in the game” than Plan N enrollees, they tend to use medical services more often. These additional claims put upward pressure on Plan G’s rate increases relative to Plan N.
The rates for a Plan G will remain unchanged for the first 12 months of your enrollment. Thereafter, you can expect your rates to increase. This rate increase after the first year happens to all Medigap plans. Rate increases are a result of several variables, but the main reasons are medical inflation and claims experience.
Medigap Plan G Benefits
| Gaps in Original Medicare | Plan G coverage |
|---|---|
| Medicare Part A coinsurance and hospital costs (up to an additional 365 days after Medicare benefits are used) | 100% |
| Medicare Part B coinsurance or copayment | 100% |
| Blood (first 3 pints) | 100% |
| Part A hospice care coinsurance or copayment | 100% |
| Skilled nursing facility care coinsurance | 100% |
| Part A deductible | 100% |
| Part B deductible |  |
| Part B excess charges | 100% |
| Foreign travel emergency (up to plan limits) | 80% |
Does Medigap Plan G have any out of pocket expenses?
If you don’t receive any doctor or outpatient service or any other Part B billable service during the year, then the answer is NO! Remember, 100% of all services billed to Part A, which is your hospital insurance, are covered completely by Plan G
Of course, most people will receive some sort of medical service from a doctor each year. When this happens, you will be responsible for the Part B deductible ($203 in 2021).
Does this mean you have to pay the $203 on your initial visit to the doctor?
The short answer is NO…
Here is how it works…
- After you see your provider, they will bill Medicare.
- Medicare pays their part, 80%, and sends the remaining bill to you Medigap provider.
- Medigap will pay the remaining 20% MINUS the Part B deductible and send the bill back to your provider (Note that if the 20% is less than the Part B deductible, you will pay the entire amount and your Plan G will apply the amount towards your deductible).
- Your provider will then bill you for the Part B deductible.
- You pay your provider.
How did MACRA affect Plan G?
MACRA (The Medicare Access and CHIP Reauthorization Act of 2015) didn’t affect Plan G directly, but rather had an indirect affect on Plan G.
Plan G is now the plan that offers the most benefits for people who become eligible for Medicare after January 1, 2020. It used to be Plan F. Plan F has been the overwhelmingly most popular Medigap plan prior to this change because it offered the most benefits. Will Plan G now become the most popular for the very same reason Plan F was the most popular?
To be sure, many people new to Medicare will choose Plan G for the very same reason their older counterparts chose Plan F. These enrollees will not have to pass medical underwriting because they are in their open enrollment period. This will increase the risk that a greater proportion of Plan G enrollees will be unhealthy. This could mean relatively higher rate increases for Plan G going forward.