Selecting a Medicare Supplement Plan
Selecting a Medicare Supplement involves selecting the specific product AND the company from which you will purchase that Plan. Both decisions are extremely important because they often cannot be undone. Please watch today’s video.
As mentioned in our previous video on Medicare Supplement Basics, 47 states use a standardized system so the benefits in a given Plan such as Plan A, B, C, D, etc., are identical regardless of which of the 47 states you reside. Massachusetts, Minnesota and Wisconsin have different, simpler approaches. For illustration purposes, the chart outlining the standardized benefits follows this copy. We will focus the discussion on the federally standardized approach because the vast majority of states use it.
As with any important financial decision, one must weigh the pros and cons of various Plan options. For those new to Medicare, Plan G is the richest Plan so one would expect Plan G to have a higher premium than a Plan offering fewer benefits. Plan G supplements cover all Medicare-approved expenses at 100% after one pays the annual Part B deductible which this year is $203. Plan N is the second-richest supplement so one would expect Plan N to also have a higher relative premium to other alternatives. Plan N was new to the “field” in 2010. Prior to that time, supplements all paid coinsurance associated with Medicare Part B. Plan N’s structure is different in that it involves a copayment for services associated with physician visits when the physician accepts Medicare assignment. Plan N does not pay the additional 15% surcharge for services associated with physicians who do NOT accept Medicare assignment.
High-deductible G is an attractive option to those who want to minimize premium expense and/or prefer more catastrophic coverage. Plan G pays 100% of member responsibility associated with Medicare Part A and B services after a deductible of $2370 is met in 2021. We feel most people are well-served by evaluating Plan G, Plan N and high-deductible G. We have seen a good deal of buyer’s remorse from clients who came to us having already enrolled in Plans A and B which lack skilled nursing facility coinsurance and foreign travel emergency coverage.
Also, please note that the six-month federal guaranteed issue period for purchasing a supplement only applies to people going on to Medicare at age 65 or older. Some states allow Plans A and B to be offered on a guaranteed issue basis to those who go on to Medicare prior to age 65 due to disability or other serious illness. As a result, in those states the premiums for Plans A and B may reflect the higher utilization of services of this population so are rarely a wise choice for someone 65 or older who is new to Medicare. Again, please be aware of your state environment.
Frankly, we don’t see any reason for Plans D or M to be offered. They are very similar in benefit design to Plan G and, in general, far fewer companies offer those products. Plans K and L are often not attractive both due to premium and the lack of companies offering those products. When you buy an insurance product, which may be a life-time decision, you want many people buying the same product to spread the risk and maintain stable premium increases.
Plans C and F and high-deductible F are currently only available to those who already were enrolled in Medicare Part A prior to January 2020. It is generally not advisable to enroll in an insurance product that is closed to new enrollment because the population covered will continue to become older and sicker and premiums over time will reflect that fact. Congress passed legislation creating this bifurcation out of concern that people who could buy such comprehensive coverage would excessively use medical services. A more intelligent approach to a concern about overutilization might have been to consider increasing the Part B deductible. Some might consider changing from Plan C or Plan F to Plan G or high-deductible F to high-deductible G but remember, most states allow medical underwriting after the six-month federal guaranteed issue period so the decision to change is not yours alone in which case, you can remain grandfathered in your original Plan C, Plan F or high-deductible Plan F.
You want to buy from a well-known company that has been in this business for many years and has competitive premiums. In my home state of Connecticut, one can buy a Plan G from Anthem for $211.75/month or a Plan G from Colonial Penn for $617.66/month. Remember, the benefits in Plan G or any other Plan identified with the same letter are identical in the 47 states that use the standardized plans. Often, the state insurance department website has compiled information for consumers but unfortunately in many states that website only lists the companies that offer supplements. Again, be aware of your state environment.
Many supplements are portable so you can take them with you should you move to another area. Some supplements are not portable so if you relocate you might be subjected to medical underwriting should you apply in another area. We recommend always buying a portable plan.
In summary, take the time to make a sound decision about a supplement and the company you purchase it from and always verify that the product is portable.
Thanks for joining us to learn more about Medicare supplements.