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  • Wiser Medicare

How Medigap Plans Make Original Medicare Look More Like Medicare Advantage

Deciding between Original Medicare and Medicare Advantage is difficult enough, but adding supplemental insurance to Original Medicare can make the decision even harder. Here's why:

Original Medicare covers many of the expenses you might incur through Medicare Part A (hospital coverage) and Part B (medical coverage). However, only 80% of any Medicare-approved expenses are covered, leaving you with an open-ended exposure to payments you would be responsible for, as there is no cap.

This exposure is one reason about 42% of the U.S. Medicare population opts for Medicare Advantage (Part C) instead of Original Medicare and why its enrollment has more than doubled over the past decade. But Medicare Advantage has its downsides, too, such as requiring referrals and prior authorizations from a primary care physician to see specialists and being limited to doctors and hospitals within your plan's local network.

But Original Medicare has a solution to the 20% exposure left by its basic format: Medicare supplement health insurance plans, or Medigap. These plans help fill in some of the gaps left by Original Medicare and help pay certain copays, coinsurance, deductibles and other costs.

What is Medigap, and how does it work?

Medigap plans are offered by private insurers who must follow specific Medicare guidelines. Ten different standardized plans are available in most states. Each lettered plan must offer the exact same benefits, regardless of what insurer offers it, but each insurer is free to set the premiums it charges. This premium is in addition to the monthly Part B premium ($170.10 in 2022) everyone pays to Medicare.

How do Medigap plans work? Medicare pays its share of the Medicare-approved expenses. Then your Medigap plan kicks in its share of the balance. What each lettered plan pays is shown in this Medigap Plan Comparison.

Two very popular Medigap plans are Plan F (over half the plans) and Plan G (a rapidly growing percentage). These are the "gold standard" of supplement insurance and cover virtually everything beyond Original Medicare's coverage. The premiums may be higher than for other plans, but there is comfort in knowing that – if your budget can handle the premiums – you will not face any surprise curveballs beyond them for your health care needs.

How are Plan F and Plan G similar?

Like all other Medigap plans, both require you to have Medicare Part A and Part B coverage. And the plans' coverage is virtually identical. Both cover:

  • Part A coinsurance and hospital costs

  • Part B coinsurance or copayment

  • First three pints of blood (for transfusions)

  • Part A hospice care coinsurance or copayment

  • Skilled nursing facility care coinsurance

  • Medicare Part A deductible

  • Part B excess charge

  • Up to 80% of medically necessary costs during foreign travel

How are Plan F and Plan G different?

The plans differ because Plan F covers the Medicare Part B annual deductible ($233 in 2022), and Plan G does not. However, the premiums for Plan G are slightly lower, which may add up to more savings during the year than the $233 benefit that Plan F users enjoy.

Also, since January 1, 2020, new Medigap plans can no longer cover the cost of deductibles. (The only plans affected by this legislative change are Plan C and Plan F.) So, if you were eligible for Medicare before January 1, 2020, you can still sign up for Plan F if it is available in your state. But, if your eligibility came on or after that date, you can no longer sign up for Plan F.

Anyone already enrolled in Plan F can keep it. And anyone can apply for Plan G regardless of when you became eligible for Medicare, so you still have access to its exceptional coverage.

How does Medicare Advantage Compare with Original Medicare with Medigap Plan G?

Medicare Advantage is a private replacement for the government's Original Medicare, while Medigap Plan G is a way to make Original Medicare work better.

Original Medicare with Medigap Plan G: While this combination covers virtually all costs for hospitals, doctors and medical procedures, it does not cover prescription drugs or additional benefits such as dental or vision care.

So, in addition to your Medicare Part B monthly premium ($170.10 in 2022), you will have the annual Part B deductible ($233 in 2022), a Medigap monthly premium and a monthly premium for a private Medicare Part D prescription drug plan. These prices vary state by state, so you will need to research them. But you can go to any hospital or doctor that accepts Medicare anywhere in the country without having a primary care physician as a gatekeeper.

Takeaway action step: Use the Medicare website to find the cost in your zip code for Medigap Plan G policies and Part D prescription drug plans that cover your existing medications.

Medicare Advantage: These plans cover everything Original Medicare does. And they are almost always bundled with prescription drug coverage and extra benefits. These include vision (in 99% of plans), hearing (97%), dental (94%), telehealth services (94%) and fitness (93%), although what actually gets covered can vary greatly.

However, these plans have inconveniences. Insurers negotiate contracts with the specific doctors and hospitals that will be included in their plans' networks. Therefore, for your medical expenses to be covered, they may have to be incurred with in-network health care providers. Some plans allow for out-of-network coverage but at a higher cost unless related to an emergency.

As for payments, you will have the monthly Part B premium ($170.10 in 2022) that all Medicare beneficiaries pay. You may be part of the one-third of Medicare Advantage enrollees who pay a premium for their plan (averaging $60 per month), although nearly two-thirds pay no premium at all for the plan itself. Nine of ten individual Medicare Advantage plans include prescription drug coverage, so that premium is also avoided.

On the other hand, Medicare Advantage plans have copays and coinsurance for most services, which can add up quickly. And plans can have high out-of-pocket maximums in exchange for low premiums. It's up to the insurer. The government-defined maximum for Part A (hospital) and Part B (medical) expenses in 2022 is $7,550 for in-network services. Maximums can go to $11,300 if out-of-network services are also covered. The maximum out-of-pocket for Part D prescription drugs is $7,050 in 2022, which includes that year's $480 annual deductible before coverage begins.

Takeaway action step: Use the Medicare website to find the cost of a Medicare Advantage plan in your zip code, including your existing prescription drugs, and with out-of-pocket maximums you can afford.

In summary, there is no cut-and-dry decision between the two options: Original Medicare with Medigap Plan G versus Medicare Advantage. However, as you decide, it is essential to know that after you first enroll in Medicare, you can transfer from Medicare Advantage to Original Medicare. But it is very difficult to add any Medigap plan. You can also easily transfer from Original Medicare to a Medicare Advantage plan during the annual enrollment period. (But you will have to give up your Medigap plan.)

Takeaway action step: Because no one knows in advance what medical bills will look like throughout retirement, it is worthwhile to explore the cost of the two options in your zip code. Once you have the two cost calculations, consider the conveniences and inconveniences of each system before making your decision.



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