Medigap (also called ‘Medicare Supplement’) is an insurance policy that helps to supplement Original Medicare (Part A and B) by helping to cover the ‘gaps’ in Original Medicare. Original Medicare is the default option when you enroll in Medicare and is provided directly by the government. While Original Medicare will help to cover health care costs, it does not cover all costs and you are responsible for out-of-pocket costs including deductibles, copays, and coinsurance.
Medigap is a policy that helps pay for these ‘gaps’ or out-of-pocket costs in return for a monthly premium that you pay the private insurance company. This premium is in addition to your standard Medicare Part B premium ($170.10 in 2022). Purchasing a Medigap plan effectively shifts the burden of paying for out-of-pocket costs to the insurance company and for covered services, Medigap will effectively all or most of their out-of-pocket costs.
In total, there are 10 Medigap plans available: Plans A, B, C, D, F, G, K, L, M, and N. You can read more about how Medigap works and the different types of plans in our comprehensive guide to Medigap. Traditionally Plan F has been the most popular and most comprehensive choice for Medicare beneficiaries, however, starting January 1, 2020, anyone who is eligible for Medicare after this date is no longer able to purchase Plan F, making Plan G the most popular choice as it provides the next most comprehensive coverage.
Why should I care about Plan G?
Traditionally, Medigap Plan F was the most comprehensive and most popular Medigap policy (with 53% of those enrolled in Medigap policy choosing Plan F) you could purchase that effectively covered all your out-of-pocket costs under Original Medicare. However, starting in 2020, rules changed so that Medigap plans that pay the Medicare Part B deductible ($233 in 2021) will no longer be sold to those newly eligible for Medicare on or after January 1, 2020. This means Plans F and C cannot be purchased if you are newly eligible.
As a result of this rule change, Medicare Supplement Plan G will now likely be the most popular plan as it provides the next most comprehensive coverage. Plan G has historically also been the second most popular plan with around 17% of those enrolled in Medigap picking Plan G.
What does Plan G cover?
Medigap Plan G covers 100% of the ‘gaps’ or out-of-pocket costs in Medicare with the exception of the Medicare Part B deductible, which is $203 in 2021. This means that once you have paid your Part B deductible each year, Medigap will cover 100% out-of-pocket costs after that, no matter how many times you receive Medicare-approved health care services. In return for paying 100% of the costs, you will be responsible for paying a monthly premium which is in addition to your standard Part B premium ($170.10 in 2022, or more subject to income thresholds).
What does Plan G cost?
Plan G premium costs vary depending on where you live and may also vary based on your age, gender, and health condition.
According to a price analysis conducted by the American Association for Medicare Supplement Insurance, in 2020, the lowest and highest costs of Medigap Plan G for females and males were:
- Lowest For Women (2020): The least expensive cost for a woman turning age 65 was $99 per month in Atlanta (Zip Code 30313), Dallas (75001), and Washington D.C. (20005). Three different insurance companies offered these rates.
- Highest For Women (2020): The most costly Medicare Plan G rates for a woman turning 65 were $476 per month in New York (10012) and $451 in Philadelphia (19050).
- Lowest For Man (2020): For a man turning 65, the least expensive plan was $109 per month in Dallas. It was $115 in San Francisco (94105).
- Highest For Man (2020): The most costly Medicare Plan G for a man turning 65 was $509 in Philadelphia (19050). The next most costly was in New York City (10012) where the monthly high premium was $476.
Should I consider Plan G?
Before you consider what type of Medigap plan you should be on you should always first decide whether you want to receive coverage through Original Medicare or Medicare Advantage. You can read our article on Medicare Advantage vs. Original Medicare to find out more.
Once you have decided you want to receive your Medicare coverage through Original Medicare, you may want to consider a Plan G is you want the most comprehensive coverage. However, to receive this coverage, you must also be able to pay the additional premium for Plan G’s which can range widely based on where you live and your age, gender, and health condition.
Even with higher premiums, a Plan G might be worth it if you expect to use health care services extensively during the year (such as if you have a chronic health condition).
What are some other options?
For Medigap alternatives Plan F and Medicare Supplement Plan N are often chosen instead of Plan G. As mentioned above, Plan F is the most comprehensive plan however, starting January 1, 2020, newly eligible Medicare beneficiaries will not be able to enroll in a Plan F.
Plan N therefore will be the next closest choice but in addition to the Part B deductible, which is not covered under Plan G, you will be responsible for paying:
- Maximum of $20 for doctor visits and $50 for Emergency Room visits
- Part B excess charges (if any)
However, Plan N will also come with lower monthly premium costs, given you are responsible for more costs out-of-pocket.
If you are considering comprehensive Medigap plans because you have a chronic health condition, you may also want to consider a Chronic Special Needs Plan (C-SNP) Medicare Advantage plan, which is a managed care plan from private health insurance providers that are designed to provide integrated care for people with specific chronic conditions.
As of January 1, 2020, Medicare Plan G will offer the most comprehensive coverage for newly eligible Medicare beneficiaries. With the phasing out of Plan F (and C), it is expected that Plan G will become the most popular choice for Medicare beneficiaries looking for a Medigap plan. Plan G covers all Original Medicare out-of-pocket costs with the exception of the Medicare Part B deductible ($233 in 2021). While premiums vary depending on your age, gender, and health condition, you may be able to find the Plan G is affordable depending on your location as prices can vary based on where you live.
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