FREE NEWSLETTER

Mind the Gap

Michael Flack, 2:53 am ET

MY WIFE WILL BE eligible for Medicare in March 2022. To better understand the process, we signed up for a webinar given by Matt, a Medigap insurance broker. Matt did a good job explaining the issues we faced, so we made an appointment to talk with him on the phone—even though he gave off a used car salesman vibe when, at the end of his presentation, he exhorted us to make an appointment before they all filled up. “Only 20 left… wait… now only 19 appointments are available,” he said at one point.

Medicare only pays about 80% of medical care. We thought it would be complicated deciding how to cover the other 20%, but we may have been too pessimistic. After viewing Matt’s presentation and doing some research on our own, we quickly came to two conclusions.

First, traditional Medicare plus a Medigap policy was preferable to Medicare Advantage. My wife had grown used to going to any doctor she wanted, without referrals or concerns about which tests were and weren’t covered. We were also concerned that, if she went with Medicare Advantage and her health deteriorated, she might not be able to swap back to traditional Medicare because she wouldn’t be able to obtain Medigap coverage. Quite simply, traditional Medicare plus Medigap coverage offers more complete coverage and more options. The higher cost seems worth it.

Second, while there are numerous Medigap plans, only two seem to make any sense: Plans G and N. They’re almost identical, but G comes with no copays and coverage for Medicare B excess charges. I think we all understand the benefit of no copays, but the whole excess charge coverage is a little confusing.

Our subsequent 30-minute appointment with Matt covered much of the above, including how you need to factor in the insurance company’s potential rate increases when making your selection. Matt then mentioned that Plan G would cost “about $100 a month and Plan N about $70 a month.” At the end, he asked if we wanted to move forward with him and “lock in a rate.”

I responded that, before we move forward, could he provide quotes for Plan G and Plan N? To that, he replied, “I just did, about $70 for N and $100 for G.” I then became confused. My wife very reluctantly said we needed some time to think about it.

When we got off the phone, we had a “heated discussion” about my lack of listening skills and the fact I was dragging my feet. I replied that when insurance agents provide an auto or home insurance quote, they don’t preface it with “about.” Why should Medigap insurance be any different? Thankfully, a little while later, Matt’s assistant called us back to get some more details and then provided the exact quote for Plan G, which was… $147.51 a month.

Apparently, there was a miscommunication about our zip code. While I was a little disappointed with having to pay “about” $50 more a month, I was ecstatic to realize that my listening skills were just fine. The afterglow lasted all day, which at one point had me running up some stairs two at a time à la Rocky, while singing, “We are the champions.”

It looks like the winner is Medicare Plan G purchased from Aetna at $147.51 a month. But we haven’t yet signed up. My wife is holding off until we find out if her former employer, Ernst & Young, provides any health insurance benefits to retirees. In the end, that appears to be the hardest part of the process.

Browse the Blog

Subscribe
Notify of
41 Comments
Inline Feedbacks
View all comments
Kevin Knox
Kevin Knox
15 days ago

Here in Arizona I’ll be paying $47.65 a month for high-deductible Part G and another $6 for a basic Part D plan. This article by the legendary (in early retirement circles anyway) John Greaney gets to the heart of the “follow the money” realities of supplement vs. Advantage plans:

https://retireearlyhomepage.com/medicare2020.html

He also has a great post on what he refers to as the Part D Cesspool.

I used Boomers Benefits (.com) to shop and buy my plans after many people recommended them on finance forums and they saved me a lot of time and money.

mytimetotravel
mytimetotravel
21 days ago

My post below about the three steps to take was incomplete. The actual first step, before meeting with a SHIIP counselor, and certanly before meeting with an insurance agent (especially one giving free seminars!), is to read “Medicare For Dummies” by Patricia Barry. Make sure it is the latest edition, currently the fourth. It is comprehensive and clear. “Social Security For Dummies” isn’t bad, either.

William Perry
William Perry
20 days ago
Reply to  mytimetotravel

When I was making my initial Medicare decision about three years ago I bought & read Get What’s Yours – for Medicare by PBS author Philip Moeller which was very helpful to me. I chose traditional Medicare with a plan G supplement. For my part D choice I intentionally chose a premium UHC plan with no deductible with a much higher monthly premium cost because I take one tier 4 Rx and my total cost of premiums and co-pays with this plan is much less than the combined drug cost, deductible & insurance premium cost if I had gone with a more traditional Part D plan. If I was only taking generic Rx’s I would have gone with a more standard plan D drug plan.

mjflack
mjflack
20 days ago
Reply to  mytimetotravel

mytimetotravel, thanks for the recommendations.

Last edited 20 days ago by mjflack
An
An
21 days ago

She can’t apply for Medicare coverage until Dec 1 since her 65th birthday is in March. 7 month window to apply – 3 months prior to month turning 65 and 3 months after her 65 birthday month. Though if she waits until her birthday month to apply, Medicare delays 1 month, 2 months or 3 months after the actual month she applies for Medicare.
And she cannot get supplemental (medigap) insurance until she has her Medicare number. It is no longer a person’s SSN.

mjflack
mjflack
20 days ago
Reply to  An

An, appreciate you providing a timeline.

Sharon Edwards
Sharon Edwards
22 days ago

The variety of options available, varies by state, medigap vs advantage, D or not, providers dropping into and out of states. It is next to impossible to make a semi intelligent decision, much less plan ahead.
When my husband went on Medicare 3 years ago we finally paid a firm to investigate/explain our options as my husband has a condition requiring a very expensive medication. (Which with mfg. subsidy cost $5 per month before Medicare. But the subsidy was claimed by Medicare and with Part D we entered and exited the donut hole by February. If we had gone with an advantage plan we would have had a cap on drug costs that would have severely impacted our finances. )
I turned 65 this past July and was able to acquire coverage for us both thru the state public employees retirement association. The monthly cost is a fraction of what we paid for him, there is no out of network, his drugs are very reasonable. It is an advantage plan.
It seems to be working well for us, however, being a very specific government plan it is not on the Medicare site to compare and the local SHIP volunteer had no info to guide with.
We are now in the annual re-enrollment, so I am once again concerned about whether we have made the correct decisions.
The columns re Medicare coverage have been thought provoking yet fail to cover the fact that everyone’s situation requires a different solution and the resources are slim. Frankly, the whole system is criminally complicated and confusing. It is a burden we inflict on our aging population in the name of providing care. To be subjected to going thru this process annually adds a level of stress that is cruel.

mjflack
mjflack
20 days ago
Reply to  Sharon Edwards

Sharon Edwards, I agree regarding “complicated and confusing”. I agree “that everyone’s situation requires a different solution”, though I find the most interesting articles on HD are the ones that provide details about an author’s exact situation and their exact solution.  

Harry Crawford
Harry Crawford
22 days ago

You should get a quote from AARP. In my state, AARP is cheaper than any other insurance quote for Plan G that we got. At age 65, $147.51 seems high to me.

mjflack
mjflack
20 days ago
Reply to  Harry Crawford

Harry Crawford, Just did and AARP quoted 146.75/mo. Appreciate it if you could reply with your age, zip code, Plan, and how much you are paying. Thanks for your feedback,

William Perry
William Perry
22 days ago

In thinking about and planning for your costs I recommend considering the IRC 162(l) above the line self-employment health insurance deduction if you are eligible. The IRS issued a Memorandum on 7/13/2012 which is a good summary and can be found at https://www.irs.gov/pub/irs-wd/1228037.pdf.

mjflack
mjflack
20 days ago
Reply to  William Perry

William Perry, thanks. My wife and I are retired so this isn’t an option.

Andrew Forsythe
Andrew Forsythe
22 days ago

Michael, the $147.51 Plan G quote for your wife does seem high, but I guess rates vary quite a bit by state. We’re in Texas and my wife just turned 65 this year. We got her a Plan G Supplemental policy from Mutual of Omaha (their Omaha Supplemental Insurance Co. subsidiary) for $96.41/mo.

I’m 69 and my Plan G Supplement had been with a different Mutual of Omaha subsidiary (United World Life) and had increased to $148.02/mo. I was able to switch to the same subsidiary we chose for my wife and thereby qualify as “new business”, after passing medical underwriting, which thankfully was a breeze. My new premium is $115.18/mo.

mjflack
mjflack
20 days ago

Andrew Forsythe, appreciate you providing the details. I think Texas offers some good rates.

R Quinn
R Quinn
22 days ago

Varies greatly by location and age, I pay $243 for Plan G, my older wife pays more. People who have employer coverage at age 65 and later lose it, pay more for Medigap because they will be older than age 65 and they can use underwriting as well.

mytimetotravel
mytimetotravel
21 days ago
Reply to  R Quinn

If you lose creditable coverage from an employer after age 65 there is a grace period during which you are not subject to medical underwriting for Medigap plans. Nothing to be done about age. Similarly, you will not incur a penalty for not having drug coverage if you lose creditable coverage. HR departments should provide documentation of creditable coverage annually. (Didn’t you do that when you were administering plans?)

An
An
21 days ago
Reply to  mytimetotravel

I believe it is a grace period of 63 calendar days.

mytimetotravel
mytimetotravel
22 days ago

Rather than buying from an agent, who will earn a commission, I suggest that you do some independent research. First, make an appointment with a SHIIP counsellor (may be called something else in your state, I think they are SHINE in Florida). S/he will be a volunteer. Second, research the options for your zip code on medicare.gov. Third, buy direct from the insurance company, if your wife’s former company doesn’t have something in place. (I do agree with your conclusion – I started with Medigap Plan F and now have Plan G thanks to Humana waiving medical underwriting at the time I checked.)

mjflack
mjflack
20 days ago
Reply to  mytimetotravel

mytimetotravel, His commission isn’t paid by me, so I’m unsure what the upside is buying direct. I have independently checked, and the quote he has provided is very competitive. If I’m missing something here, please straighten me out. Thanks for your feedback!

mytimetotravel
mytimetotravel
20 days ago
Reply to  mjflack

The agents’ fees are built into the price of the insurance, so we all pay them. You need to do the research on medicare.gov to know whether he is in fact giving you a good price, so why not go ahead and buy direct?

Ron Sheldon
Ron Sheldon
21 days ago
Reply to  mytimetotravel

Agree very much with using zip code and medicare.gov to learn which insurers offer which Medigap policies for your area. Also, check which method of the insurer uses for pricing; Community, Attained Age or Issue Age. Plan G, with links to the insurer’s websites and their phone numbers. For my zip code Plan G premiums ranged from $88-$337 for a 65 year old Female that doesn’t use tobacco.

Once you go through the process you be presented with a list of insurers providing the Medigap policy of interest to you, Plan G, with a link to the website and phone number of most insurers. The insurer’s link typically lets you enter certain information about yourself — zip code, dates started Medicare Parts A & B, etc. — to get a quote online if you are just starting Medicare at age 65. I just tried for my zip code as if I turned 65 last March and got a $127.94/month cost on the AARP Medigap Plan G from United Healthcare. If older and haven’t previously had the Medigap policy from the insurer, you may have to go through questionairre type underwriting process and based on the outcome the insurer is able to charge you a higher premium or decline insuring you, which I don’t believe they can’t do if you are signing up at age 65.

In 2001 I had to move my father from California to be near me in Virginia. I knew nothing about Medicare, Medigap, etc. at that time. I used Medicare.gov to try to learn, then contacted my state Agency on Aging, referred to my city Agency on Aging, then referred to the consultant my city used to assist with my type inquiries. Long story short, Blue Cross-Blue Shield and AARP offered Medigap Plan G policies for my father’s age then, 86, for just under and just over $180/mo. The consultant suggested I contact USAA, which wasn’t listed on Medicare.gov for my zip code, which I did. The identical USAA Plan G policy for my father then was about $110/mo. When he passed 10 days before he turned 91, the premium was $145/mo. — still less than what we’d have to had paid Blue Cross and United Healthcare almost 4 years earlier.

You can do similar research at Medicare.gov for Medicare Advantage plans which have pros and cons when compared to Medicare Parts A, B and D with a Medigap supplemental policy. In my case, at age 79, I have been very satisfied with the Medicare Advantage plan I have which has a $4,500/year cap on out of pocket costs, includes coverage not included under Medicare with or without a Medigap supplement — dental, eye exams and eye wear, hearing exams and discount hearing aides, $100/qtr for non-prescription medical supplies, etc., etc. etc. I have not yet found any of the insurer’s in-network service providers not to my liking and most if not all are available as in-network via other Medicare Advantage insurers as well as individually via original Medicare. I have yet to incur annual out of pocket costs exceeding $500, which for me much beneficial than paying $150 – $200/month for a Medigap supplement plan so I would otherwise have no additional medical costs and $20 – $35/month for a Medicare Part D drug plan, which my Medicare Advantage plan includes. And with Medicare Part D you pay, although at a discount, the cost of all or most of your drugs. I get my five preferred generic, generic and preferred name plan drugs with my plan for $0 cost via 90 day supplies from the plan’s mail order pharmacy. And my Medicare Advantage plan has similar limits on out of pocket drug costs, if I should ever encounter a costly situation, as do Medicare Part D plans.

As a comment to a separate post stated, “Fear-based anything is the worst” and that is what for me the aversion that some seem to have about Medicare Advantage plans versus original Medicare Parts A, B and D with a Medigap supplement plan. I think a little research in understanding the pros and cons, comparing costs and some simple spreadsheet analysis could pay off with meaningful overall cost savings.

wtfwjtd
wtfwjtd
22 days ago

Yeah, I thought that (“about!?) $100/month for a plan G sounded a little low. My wife and I aren’t to the Medi(s)care decision just yet, won’t be for a few years, but I thought that researching the topic a little early would be beneficial. I’ve been giving the HD plan G a good, hard look, we’ve been using an HD plan for years and have always been comfortable with it. Plus, it seems the potential for rate increases is somewhat less with these, at least this seems to be the case in the past. Of course, it all kinda depends on your current usage, and what you feel comfortable with. As well as trying to project what you might be needing 20-30 years from now (yikes)

Speaking of rate increases, I just saw where Medicare Part B jumped to $170+ per month for 2022, a 14%+ increase. Holy sheep! I guess the only upside to that is, it will make the decision on whether or not to take Part B with my wife’s FEHB easy. At that clip, by the time we are there in another 5 years the cost of Part B will have more than doubled today’s rate, and there’s no way we’ll take that on.

R Quinn
R Quinn
22 days ago
Reply to  wtfwjtd

You can thank Congress for a big part of that increase because last year it artificially held the premium increase to 25% of what it should have been. They forgot to mention that sooner or later their would have to be a catch-up. Sooner or later the real cost of everything will have to come out.

Rick Connor
Rick Connor
22 days ago

Thanks for the article Michael. I’l be 65 in September and I’m starting to go through the same material. My former employer offers two Medigap and 1 Part D policy. The Medigap plans appear to be type G – one is a HDHP and one has no deductibles. Not sure how to evaluate the Part D plan yet, I need to dig into that. The premium is a combined amount for both Medigap and Part D. The HDHP (with a $1500 deductible) is $268 per month – that’s Medigap and Part D. The other plan ($0 deductible) is $363 per month. By combining both premiums together with no breakout it’s a bit hard to compare prices.

I used the Medicare “Find a Medigap Plan” tool for NJ. Plan G is quoted at $128 to $454, and the HDHP Plan G is quoted at $51-67 per month. I haven’t figured out what the large range of the 1st plan represents.

Is the Plan G you reference an HDHP or 0 deductible?

Ron Sheldon
Ron Sheldon
20 days ago
Reply to  Rick Connor

I believe the $128 – $454 range represents the price range of the Plan G options from the different insurers offering Plan G for your area. Since all Plan G have the same benefit coverage, I would look for the insurer that offers the least expense Plan G. However, to do that it may take inquiries to most of the insurers offer Plan G in your area until you hit upon the one that has a $128/mo premium.

mjflack
mjflack
20 days ago
Reply to  Rick Connor

Rick Connor, The Plan G I reference is 0 deductible, 0 copay. From the little I know, all Medigap plans (ex. Plan G) offered by insurance companies are exactly the same.

Ron Sheldon
Ron Sheldon
20 days ago
Reply to  mjflack

I may be mistaken, but I believe Plan G has an annual deductible equal the Medicare Part B annual deductible, $203 for 2021. After that, Plan G picks up the 20% not covered by Medicare Part B and all of Part A hospitalization subject to Medicare limits on number of day covered.

R Quinn
R Quinn
22 days ago
Reply to  Rick Connor

What is the benefit of using the employer plan? It doesn’t’ sound like a bargain price wise. Do they subsidize or add coverage?

R Quinn
R Quinn
22 days ago

MIchael, your article brought out the old benefits guy in me. I spent decades managing and communicating all forms of employee benefits so when I read “until we find out if her former employer provides any health insurance benefits to retirees,” it triggered something. Your wife is only a few months away from Medicare, retired and you guys don’t know if she is eligible for retiree medical benefits? Oh my😰

On a serious note, the premiums you were quoted were a good deal. My former employer dropped our retiree coverage this year and replaced it with an HRA allocation. We were faced with the same choices you are. 5,000 retirees who had employer supplemental benefits for decades were suddenly faced with an array of confusing choices and concerns, many got it wrong. In any case, the Medigap premiums are age based. In my case being forced to pick up the coverage for the first time at 77 my premium is $243 a month for Plan G and will increase every year I am older plus any general premium increases. Some retirees are paying much higher premiums for the same coverage.

Excess charges are a very minimal risk in any case. The provider can only charge you up to 15% over the amount that non-participating providers are paid. Non-participating providers are paid 95% of the Medicare fee schedule amount. Some states prohibit excess charges entirely.

For the reasons you state I agree Plan G is the way to go. Many of my fellow retirees picked MA plans for the costs and seemingly extra benefits, but did not consider the limitations imposed by the networks of providers or the pre-certification for services sometimes required.

HOWEVER, the really critical choice and most confusing and risky when going on Medicare is not supplemental coverage but Part D drug coverage. The choice of deductibles, co-pays and which drugs are covered and how is virtually impossible for the average person to navigate. It’s a mess.

Not only that, but after you make a choice, the plan can change its formulary. Anyone going on Medicare and already taking multiple medications needs to be very careful in evaluating the Part D plans and try and understand how Part D works … which is not easy.

Last edited 22 days ago by R Quinn
Ron Sheldon
Ron Sheldon
20 days ago
Reply to  R Quinn

If the premium for the Plan G you purchased can increase every year based on your older age, it seems that you got a policy from an insurer that prices based on Attained Age. While all policies will typically have a general premium increase, policies from insurers that price based on Community or Issue Age should not factor in your older age each year in their premium decision each year.

When younger, 65, Community based pricing is likely to be a bit higher than Attained Age because all in the insurer’s policy pool are charged the same, including older individuals who are more likely to have more frequent medical situations with higher medical expenses. Issue Age pricing takes into account age when the insured purchases the policy, but thereafter any annual premium increases should be based on medical expenses of the total insured pool, not the age of the insured.

Thus, it is likely that Community and Issue Age purchased at 65 should run neck-n-neck with somewhat higher premiums in the initial years and somewhat lower premiums in older years as compared to Attained Age priced policies for the age of the insured person.

I believe it is to a person’s benefit to consider these difference, decide which type pricing method is most appropriate for their age, and then comparison shop between insurers offering Plan G under the same price methodology.

Since MJFlack has a Medigap broker, I think it would be wise for him to question the broker about the above and how he would account for the different pricing methodologies in future years since changing insurers after obtaining first Medigap policy at age 65 could subject the insured to medical underwriting from prospective different insurers, possible higher premiums because of the insureds then medical condition and history, or denial to insure.

mjflack
mjflack
20 days ago
Reply to  R Quinn

R Quinn, the Medigap broker we are using will shop around for the best Part D plan based on my wife’s current prescription. He then will do this every year, so we can switch to a cheaper one. Agree with you that Medigap appears to be an easy decision, Part D will require some more thought. Thanks for the feedback.

mytimetotravel
mytimetotravel
22 days ago
Reply to  R Quinn

I agree that it is infuriating that a Part D plan can change its formulary during the year, while you can only change plans once a year. And what if your drug needs change mid-year? However, I don’t understand why you keep saying that it is difficult to choose a plan. I find that the comparison tool on medicare.gov works very well. You enter your drugs and your choice of pharmacies, and it gives you not only the top line cost, but month by month details.

mjflack
mjflack
20 days ago
Reply to  mytimetotravel

mytimetotravel, if you have a moment, please reply with the Medicare.gov link. Thanks!

mytimetotravel
mytimetotravel
20 days ago
Reply to  mjflack
R Quinn
R Quinn
22 days ago
Reply to  mytimetotravel

Only because you have to balance premiums with deductibles, coinsurance and co-pays and the various tiers and then try and anticipate your drug use.

mytimetotravel
mytimetotravel
22 days ago
Reply to  R Quinn

The comparison tool gives you the total cost for the year for your current drugs, no need to balance anything. There is, sadly, no way to anticipate your future drug needs, so why waste time trying? Of course, since I go into the donut hole in January and come out in February, I may have a different perspective to someone who just takes a couple of generics.

wtfwjtd
wtfwjtd
22 days ago
Reply to  R Quinn

At least with Part D, if you discover that you’ve gotten a turkey, at least you can hit the reset annually and pick another one without penalty. Whereas, with Advantage or Medigap plans, if you don’t like your initial decision you could be stuck for good–or only be able to swap them out at a much higher rate, if at all.

mjflack
mjflack
20 days ago
Reply to  wtfwjtd

wtfwjtd, I agree. That is a benefit of Plan G, as it gives you the most options. Thanks for the feedback.

An
An
21 days ago
Reply to  wtfwjtd

Advantage can be changed annually just as Part D. The gotcha with initially choosing MA the switch to original Medicare can be done no problem, but getting the supplemental Medigap to cover the other 20% is the challenge in most states.

mjflack
mjflack
20 days ago
Reply to  An

An, I agree that switching to another Medicare Advantage plan can be done annually, but switching from Medicare Advantage to Medigap may be problematic (i.e. if you develop a preexisting condition).

R Quinn
R Quinn
22 days ago
Reply to  wtfwjtd

That’s a very good point, especially with Medigap.

Free Newsletter

SHARE