Comparing Medigap Plans
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- Опубліковано 7 жов 2021
- I’m going to share a spreadsheet comparison of some Medigap options: Plan G, a High-Deductible Plan G, and Plan N. I’m discovering that the lowest premium is not always the best buy.
In my last video, I showed you this chart from the Medicare’s Guide to Shopping for a Medigap Policy, which outlines the standardized plans. I’m most interested in Plans “G” or “N.” But then I started to look at the very low premiums for the high-deductible version of Plan “G.” As this footnote shows, it will pay everything that Plan G pays - after you meet an annual deductible of $2,370 in 2021. That number will go up to $2,490 in 2022.
Plan G HD might cost less if you never go into the hospital, but if you do reach the high deductible limits a few years, it will surpass the Plan N option. Plus, Plan N copays for office visits are hard-coded into law and not subject to the inflation factors of the Part B and high deductible limits.
That means Plan G HD has more inflation risk than the other two options. For that reason, I’m going to stick with Plan N. It will save me money compared to Plan G, but without the inflation risk of the high-deductible option.
I’ll conclude with my standard warning: I am not an accountant, or a financial planner. I don’t have any special initials after my name. So take this as entertaining ideas from one educated consumer to another. Always do your own due diligence and seek out professional advisor if you need one. - Навчання та стиль
Thanks! I appreciate your analysis and the logic behind it. Plan GHD is best if you are not a user of healthcare but want all the benefits of Plan G with the lowest cost.
Jim another great video. Keep them coming!!!!
Excellent. You saved me hours of work AND made a clear case.
You're welcome!
You really had my attention from the beginning to end. Thanks for the in-depth true cost analysis.
Glad it was helpful!
Wow! What a comprehensive video. Thank you so much for this information.
You're very welcome! It was about 3 or 4 minutes too "comprehensive" but couldn't figure out what else to trim.
Wonderful. I was looking for someone to do these comparisons. I am considering plan N now
Great video! I came to the same conclusion, but I'm glad to have your graphs to reassure myself.
Glad it was helpful!
Good analysis and details. I’d be interested in seeing an update based upon the higher inflation rates we are currently seeing and expect to see during the near future.
My recommendation for when to take GHD is if Plan G premium is more than $180. There are also a handful of states that have year round open enrollment so you can take the lower cost plan and upgrade the 1st of any month without medical questions.
I'm on year two of Plan N. I liked the more limited risk sharing with modest copays. It's still too soon to see if Plan N will deliver cost savings to Plan G, but I think it will.
Great video. Love the compulsive spreadsheet! Looks like pretty good assumptions. We are at the deciding stage also. Agree that Plan N would be best choice for many.
As a physician, just a couple points. Plan N copay’s apply to most office visits for most providers, so likely would average a little more per year for most people, especially as you get older.
Next, your assumptions apply to relatively healthy persons. If you are, or become significantly less healthy, Plan G is your better choice. In Florida Plan GHD plans have had minimal rate increases with some companies, and the spread vs other plans is larger. Also it is possible to switch plans with the same company without underwriting in some cases.
So for Florida if you are not that healthy, go with Plan G. If you are healthy Plan N. Plan GHD is for healthy persons with a little more risk tolerance, and the ability to navigate the system.
BTW Medicare Advantage plans are likely MORE expensive and way more complicated to navigate than some Medigap plans if you are not healthy.
Good viewpoints. For those younger who have set up HSAs in working career, options are different. I never had that option. For that reason alone, HD plans were more of a challenge for me. I'll find out if Plan N was the right choice for me in years ahead. My Catch-22 video points out another issue. Plan ahead for the younger spouse who will remain on ACA plan! We are spending more on health care insurance this year, with one on ACA and one on Medicare. Plan to limit MAGI for that!
@@IwasRetired Exactly! I’m on ACA now for 2 more years and my wife starts Medicare in 3 months. We lowered our MAGI through deductions and post tax funds(I’m still bringing in a small amount of SE income). That makes ACA much more affordable than COBRA. We also do have significant HSA funds we can use to pay deductible and Part B premium( but can’t pay supplemental premium). Also you probably know, but I just found out that one can apply to have the Part B premium look back reduced from 2 years ago to 1 year or less, which will help us a lot on reducing IRMAA penalties
Dr, thanks for the Florida specific information. I am wondering as I have a significant balance in an HSA, and I am trying to decide between GHD and N where they seem to be a toss-up, is GHD the better choice as I can fund the deductible with the HSA and minimize out-of-pocket expenses.
@@robertjohnson4401 in my opinion if you are healthy and expect to stay healthy HDG is the best. That means you only expect to see a doctor 2-3 times per year. Plan N has the every time you see a doc fee, so much the same with less risk, but higher cost. If you can stomach a little risk Plan GHD will save the most on average, but no guarantees.
Remember you can’t pay for Supplemental insurance from HSA, only the actual copays/deductible. You can use HSA to pay Part B and D premiums, as well as any unreimbursed medical costs from the past while you had HDHP coverage. Also go look at IRS rules on what is deductible, the list is long and generous
Thanks for this great video with the spreadsheet work. I notice that Plan N and GHD came out pretty close in the end at age 80. But N won out by a small margin, mostly because there are 2 inflation risks IMO on the GHD vs N - the premium and the deductible both going up every year - thus the value of the plan goes down every year. Plus the more sick you get (with more and bigger claims), the less good and financially beneficial the GHD is. Plus since you did this video, inflation is raging out of control making the GHD even less attractive.
Yes, when I made the call, I noted that the deductibles increase with inflation by a regulation, whereas the modest copays of a Plan N are hard-wired into the legislation. The $20 copay doesn't go up with inflation! In 2022, the deductible for GHD was $2,490, and in 2023 it will be $2,700. I did use CPI-U averages for future years, but 2023 shows that high inflation makes high deductible plans less attractive!
I’m going with plan G. I don’t want to worry about looking up if a doctor charges excess. I just want to select the best care possible. I think there is a good chance that later in life you will have more office visits than four a year. I also wonder if co-pays would increase over time to share the cost burden. Anyway the cost difference of about 8K over 15 years is not concerning to me. I love the analysis you do.
Thanks. Everyone will come to the right conclusion for their plan. Do note though the Plan N copays are hard coded into legislation. The Part B deductible charges each year. And premiums will go up as insurers file rates each year.
I found out that the excess charges are very rare. Only 3 percent of doctors charge it and they are mostly psychiatrists. Plus you can avoid those rare cases by simply asking if the doctor charges excess charges.
This is an excellent analysis that projects costs using reasonable real world experience. The take away here is to avoid standard Plan G. I am also leaning toward Plan N. It takes away the occasional high out-of-pocket expense compared to high deductible Plan G. The outcome in plan choice could be different based on the premiums for the plans in different areas; such as between Plan G high deductible vs N
Thank you. I am now in my second year of Plan N. It may take a few years to figure out if it was the right choice compared to Plan G. HDG is just too much "self-insurance" for my retirement!
This is really helpful. I’ve been agonizing over the choice of N vs HDG and hardly slept for weeks. I tried building a spreadsheet, but didn’t take the time to try to factor in inflation. I hate doctors and maybe shouldn’t have the additional disincentive of having to pay up to the high deductible amount. Your more-detailed, longer-term analysis shows that there’s likely to be little difference over 15 years, so now I’m leaning toward N as the one that’ll be less annoying in that the doctors’ bills will not be anything to fear.
I do worry, though, that Plan G will be phased out as F was, and then N will then be the one with the most coverage, causing premiums to rise at a higher rate than HD-G as people who are unwell choose N. Does anyone know what the likelihood of that is?
Well done!
Thanks for watching! The best part of Medigap is if you do it right, you're done. But be sure to shop for your Part D prescription plan each year. See this video: ua-cam.com/video/hBH-GwbCvuE/v-deo.html
Love your analysis. I did go with Plan G Supplemental almost 5 years ago.
Thanks. I'm interested in comparing what kind of increases you have seen in last few years to compare what I've seen with Plan N. My theory was Plan N would see smaller increases because G is guaranteed issue, but I'm not sure it is borne out or not. There was a difference in monthly premiums and if I don't go to a lot of doctors, most years, I should be ahead.
@@IwasRetired I will gather that info for you soon.
@@IwasRetired Over 5 years (started in 2019) my Plan G went from $135.50 to $190.36 (40.5% increase) and the husband’s went from $137.24 to $223.34 (62.7% increase). We started with Transamerica but the last 2 years they increased the premiums TWICE, both on our start dates AND birthdays. When looking for another insurer (switched to Cigna which brought my rate down to $160.75) I learned Transamerica left the supplemental insurance market. Probably why they got more aggressive with rate increases. Once husband can switch at his birthday we will save further, getting additional discount for both being with Cigna. So how does this compare to your increases?
@@IwasRetired Specifically over the last 2 years (since June 2021) it looks like the increases were 27% and 37% respectively.
@@kristentheologus-KTechnogal my 4% increase looks Ok! Boomer did suggest MOO as having reasonable rate increases for plan N
Interesting approach. Would be helpful if you could post a PDF with your examples. Great stuff, thanks.
I'm not sure how to post PDFs in details of the video. I'll look into it. I also don't post the spreadsheet templates because I do it in Numbers. I use simple formulas that should duplicate in Excel or Google Sheets, but it would take work. I've found that it is usually better to crunch your own numbers.
@@IwasRetired yup not your actual spreadsheets, just enough to see the structure of what your analysis is. I'd want to do something similar though I think difficult to project out more than 3-5 years with much accuracy. What IS IMPORTANT is to understand the TRENDS and the structure of possible increases, although that can change with a vote of Congress that is very volatile. Still, worth thinking about it and being flexible.
@@butopiatoo I tried to explain in the video, but yes, I'm guessing about 15 years total and assuming a few hospitalizations over that time. and thus GHD will end up more expensive than Plan N. Keep in mind with G or N, you will have much lower OOPs than GHD if you do have hospitalizations. You have planted a seed and I may figure a way to do a blogpost, where I can attach PDFs and then link to it from UA-cam. I'm still learning this craft.
Give this a try: sites.google.com/view/iwasretired/home
@@IwasRetired awesome thanks!!!!!
I'm considering planning because Ohio my my state does not have the excess charges allowed. Does anyone know if I needed to go to a to a specialist in another state that charged access charges If I would need to pay those?
Correction; plan N
My advice would be to check Medicare.gov to confirm the specialist accepts assignment.
Thanks Jim for the good leg-work on setting up the spreadsheet. I am currently deciding between Plan N and High Deductible Plan G and believe either is the way to go. Not knowing the future premium and deductible increases would sway me to Plan N.
One question on your High Deductible plan G out-of-pockets. Are you assuming you have $4,000 in annual medical bills and you will be liable for $800 (20%, Part B will pay 80%) or if you’re assuming only $800 in annual medical bills where you would then be liable for $160? Thanks, Art
Holy Transitory Inflation, Batman! I look at those assumptions I made last year and wonder what I will conclude when I review my first year of Plan N experience in the coming months. My assumption was that in most years OOPs ($800) would track medical inflation and therefore you would not hit the Plan G HD high deductible limit. So in fact, Plan G HD has charged you a premium and you pay that 20% of medical care. I allowed three years in retirement where you do in fact hit the deductible, after which the Medigap plan would pay all the costs that Medicare doesn't cover. Under Plan G, you would only need to hit the manditory Part B deductible and then the policy pays everything else. Under Plan N, you would pay the modest $20/$50 copays, the manditory Part B deductible, and then the policy pays everthing else. Now, keep in mind, my estimates for Part B costs were before CMS socked us with $170/month Part B premiums. August CPI-U numbers will be out in a few weeks and I will do an update of these assumptions. I bet the 10-year average CPI-U reading will be higher! So, the answer to your final sentence is you are missing the way HD will work compared to Plans G and N. GHD will require you meet the plan deductible before it pays the 20% of medical costs that Medicare pays the 80%. Plans G and N will only require you to meet Part B manditory deductible, often lower than that hypothetical $800 OOP that inflates. Plan GHD will require you to hit the much higher high deductible before the plan starts picking up the 20% that Medicare did not cover. Does that help?
@@IwasRetired Thanks for your reply. Please let me better detail my question. Let’s assume my first bill of the year is $1,000. Using the values from your table at age 65, I would first pay the $203 Part B deductible and after that, Part B would pay 80% on the remaining $797 ($638) and I would pay 20% ($159). I believe my $203 and $159 payments would be applied towards the $2370 GHD deductible and reduce it to $2,008 [I have received mixed input if the $203 would be applied to the $2370 GHD deductible or not].
In your spreadsheet for you show $800 for “What’s my average out of pocket medical costs?”. Does the $800 reflect only your 20% of the billing (which would be $4,000 of annual bills), or should the input be $160 (20% of $800)?
Also, it doesn’t appear that you are including the $233 Part B deductible in your tally for “Total Healthcare costs for Plan G- HD assuming OOPs” which I believe, and are hoping, is to be included.
Please do not take my comments as a negative, you are the only resource I found that provides a useful and complete analysis of future Plan cost estimates and your efforts are valued and appreciated.
@@artmag8467 Thanks, no problem. Let me try again. The 80/20 is the split for Medicare Parts A and B, and what you or your Medigap plan G, N, or G HD would be responsible for covering. G would require you to pay the Part B deductible. It covers the Part A deductible. Everything after that is covered by the Medigap plan. N is the same, except it requires small co-pays for office visits, for slightly lower premiums. G HD adds a new twist. It uses a much higher plan deductible before it covers the 20% Part A and Part B Medicare doesn't cover. The Part B deductible is included toward the HD plan limit. The graphics in the middle of my video meant to convey, the portions that fill up the medical bag toward the deductible. In truth, most years medical care will not hit the HD plan limit. But one multi-day observation, outpatient surgery, accident, could easily wipe out a couple years of cost savings. In my full spreadsheet and the video graphics, I show premium only at age 80, which shows how much the premium savings add up, but then add medical costs to show that three hospitalizations would make N the winner. In the compare tab of the spreadsheet I am adding the premiums and OOPs for each choice. For Plans G and N, it is just the Part B deductible and N's small copays. For Plan GHD I assumed OOPs would be medical expenses $800 + inflation. But for three years, I simply assumed you would hit the plan limit. After that, expenses would be covered by the Medigap insurance.
It looks like if you end up in hospital, you quickly hit the $1,500 medicare deductible. However, if you are not hospitalized incurring $800 out of pocket costs seems unlikely. You would have to incur $4000 in doctor visits ($4000 * 20% = $800).
I've developed a similar spreadsheet and HDG and Plan N are VERY close. Right now leaning towards Plan N since it's more predictable. Plan G is out of the question. Any idea on difference in premium increases between N and HDG going forward? I would imagine HDG increases should be minimal.
Too soon to tell but I imagine premiums hikes will track with inflation but so will the high deductible levels, whereas Plan N copays are hard coded in legislation.
@@IwasRetired My research indicates that the HDG premium increases tend to be lower than both G and N since the insurance companies almost always wind up paying claims yearly on the G and N.
Is a community rated medigap plan a good way to go if you figure to live a long time?
I'm in a state with very few community rated plans and mostly attained age plans. In the end, I went with the best price and history of rate increases. Keep in mind, all three forms of rating allow inflation increases. Here is more on the subject: boomerbenefits.com/attained-age-vs-issue-age-medigap-policies/?fbclid=IwAR0RshO9G9ol8pqwZG1sdJhY9zMxz1oakypZjNuCk8g8FfGG-p9gWFiyQBg
@abc68099 For your Medigap plans, you will want to select one in your initial enrollment period without medical underwriting. And I've mentioned you want to select the plan that has a fair record of rate increases in your state. Asking your broker, who sees these rate increases yearly, is the easiest way to check history. You could contact your SHIP counselor too. Or contact your state's insurance regulator, who must approve rate increases. I used Boomer Benefits for my Medigap coverage and went with a Mutual of Omaha Plan N in New Jersey. We will see in future years whether I made the right choice.
I think you over estimated your costs of HDG. I just turned 65 in March and have had a lot of medical tests and am not near $800 towards my deductible. Remember the 20% you pay is the medicare approved amounts of each service. With United American after 2 years if I decide the HDG is somehow costing me more I can always switch the plan N with no underwriting and at age 65 rates. Also, Plan N and Plan G will most likely have higher rate increases due to inflation than HDG because the insurance has to pay more.
I think in my comparison, I used $800 as a typical year's out of pocket based on my past pre-Medicare spending and assumed that would go up with inflation. I also only assumed there would be a few years where you would go over the HD, which goes up with inflation each year too, in those cases of a hospitalization. The other point I made in the video is that the HD is indexed with inflation whereas Plan N copay of $20 is hardwired into legislation. If the underwriter offers ability to switch after 2 years, then that sounds like a plan that would work for you. Plan N is working for me and we'll see if its premium increases are less than Plan G plans.
I’m leaning towards the GHD plan. I am curious about your statement to switch to plan N with no underwriting. I thought that if after you selected a gap plan, you had to go through underwriting if you decided to switch to another gap plan. Could you advise further. Thanks
@@luisasheldon2010 the other poster mentioned an insurer made that offer. Generally the is underwriting when you switch after IEP.
@@luisasheldon2010 Look into United American. For me it was the lowest rate and they offer the ability to switch to either plan N or G in 2 years with no underwriting and at the 65 age rate because I'm in an attained age state (I think its called). Depends what the rates are in your area and your state as to which is the better deal. I'm in Florida.
@@IwasRetired I’m still employed and will be retiring next year. I’m a Benefits Manager, and Plan G High Deductible appeals to me. Lower rate, I pan on having a medical fund where I would contribute the amount that I would have paid in premiums. Thank you for the chart, I plan on studying it in-depth.
If you have a hsa from before medicare, medigap premiums are the only expense that can not be paid with the hsa. The other issue you did not account for is attained age. Premiums go up both for inflation and the structure of each state's rates. Maine has community rating so at 65 or 85 the rate is the same. In that case your spreadsheet would be a good model. In my case the difference between g and hd-g is $1800/yr as I live in Maine.
While you cannot use HSA funds to pay Medigap premiums, you can use them to pay for Part B and Part D premiums. Since I never had an HSA, I'm not as familiar with the accounts. I also believe that unlike a high-deductible health plan on the ACA Marketplace, which requires you to have an HSA, there is no requirement to use these Medigap High Deductible plans, just the willingness to swallow the first chunk of expenses when they occur. In NJ, most plans are attained age and you need to select a plan that is realistic about premium increases due to age, vs. those who are forcing you to switch and go through medical underwriting or pay the higher premium.
Hey, in case you didn't see this week's video: ua-cam.com/video/GRLgcxTEKs4/v-deo.html
@@IwasRetired Agreed that was what I was saying out of pocket, part b and part d can be paid out of HSA funds. Maybe I am a glass helf full person. if I have 50 K in an HSA I would rather be in the In the G HD with a 600 down side if I max out. It does depend on health, rates, and pricing structure. N is better than G for inflation because G is the guarentee Issue plan and will have sicker people/higher costs->higher rates. G-HD is also a lower rate risk than G.
These are undiscounted dollars. You are comparing apples to oranges to grapes.
How so? I apply consistent inflation factors and usage esitmates to each scenario.
I’m convinced that the difficulty to compare is deliberate in the part of insurance companies. It’s all a huge gamble that we consumers are almost sure to lose. Unfortunately, in this casino, we stand to lose more than money.