Medigap In 2022 – Understanding Medigap Plan F, Plan G and Plan N

Have questions about Medigap supplemental plan options for 2022?

All those letters can all be very confusing. First, let’s start by looking at the reasons why Medigap plans exist, and then we can explore why they may or may not be a better fit for your specific needs.

Original Medicare provides low-cost health insurance for more than 63 million people in America, many of them seniors living on fixed incomes. Despite the benefits of the program, it has its shortcomings, namely in uncapped out-of-pocket costs under Part B and lack of coverage for certain things, like vision and dental care. If you’ve got original Medicare and need a way to offset some of these disadvantages, but you don’t want a Medicare Advantage policy, then you may be interested in adding Medigap coverage to your plan. Medigap is a supplemental policy sold by private insurers.

There are 10 plan types, labeled by letters A through N, each with its own set of benefits but all standardized to include the same basic benefits. In all but three states – Massachusetts, Wisconsin and Minnesota – you’ll find the same benefits under each plan type no matter who sells the policy. The difference lies in company reputation, service and cost.

Two Medigap plans offer more benefits than the others and make a good addition to Original Medicare policies for people with greater needs. These are Medigap Plans F and G.

• Unfortunately, Plan F is no longer available to people newly eligible for Medicare on or after January 1, 2020, so you won’t be able to enroll in Plan F if you’re new to Medicare. But people who were eligible before that date may still be able to get Plan F, and if you had Plan F before, you can keep your plan.

For those who can’t get Plan F or those looking for something that costs a bit less, one additional policy, Plan N, offers good coverage for less money than some other types.

Understanding the similarities and differences between these and other Medigap plans can make a big difference in your healthcare budget. Here’s what you need to know about these Medigap supplement plans.

2022 Medigap Plan F Overview

Medigap Plan F offers the most coverage among Medigap supplement plans. If you choose this option, you’re unlikely to have much, if any, out-of-pocket expenses for your medical care, other than the monthly premium for the coverage itself.

Medigap Plan F Covers:

• The deductible for Medicare Part A
• Coinsurance for Medicare Part A
• Hospital coverage for up to 365 days after Medicare benefits end
• Coinsurance or copayments for hospice care
• Coinsurance for skilled nursing facility care
• The deductible for Medicare Part B
• Coinsurance for Medicare Part B
• Medicare Part B excess charges
• The first three pints of blood in a medically necessary treatment
• Foreign travel emergencies up to plan limits

There’s an important benefit under Medigap Plan F, and that’s “Part B excess charges.” Under original Medicare, providers who accept assignment agree to the price that Medicare will pay for services. For example, Medicare might deem $120 an acceptable amount for the cost of a visit to your doctor. If your doctor accepts assignment – agrees to Medicare’s terms – then you’ll be charged $120, 80 percent of which will be covered by Part B. You’ll owe the remaining 20 percent ($24).

But let’s say your doctor doesn’t agree to accept assignment and instead charges $150 for an office visit. That $30 extra is called an “excess charge” – Medicare won’t cover it because they’ve decided that $120 is an acceptable charge for the doctor visit. You would be responsible for 20 percent of $120 (the price that Medicare deems acceptable) plus that extra $30, making your doctor visit $54 instead of $24. Over time, these excess charges can add up if you continue to see a provider who doesn’t accept assignment.

One solution would be to only see doctors who accept assignment. Many providers do, but that’s not always an option for people who live in rural areas or who need specialists who don’t agree to Medicare’s pricing structure. That’s where supplemental coverage comes in. Medigap Plan F covers Medicare Part B excess charges. It also covers the 20 percent coinsurance rate in the first place, along with the Part B deductible. Instead of paying $54 for that office visit, you would pay nothing out of pocket beyond your monthly premium for the Plan F policy.

Of course, there’s a trade-off for the excellent coverage afforded by Plan F policies: the price tag. The cost of Medigap policies will vary based on when you sign up, where you live, your age, sex and sometimes health history. In 2016, the average cost of Medigap Plan F nationwide ranged from $159 to $236 a month. Considering that you would still need to pay your regular Part B premium along with the supplemental policy’s premium, this monthly cost might not be feasible for you.

Plus, since Plan F is no longer available to new enrollees as of 2020, the costs may continue to climb. That’s because there will be fewer people enrolling in these plans going forward.

There is another option for Medigap Plan F. It’s called high-deductible Medigap Plan F, and it gives enrollees the same level of coverage with one substantial difference. As its name suggests, high-deductible Plan F policies include a high deductible that enrollees must meet before benefits pay out. The deductible is set at the federal level. In 2022, Medigap Plan F high-deductible plans require a deductible of $2,490. After that, the plan will pay 100 percent of covered benefits. Monthly premium costs are substantially lower with the high-deductible version than the standard plan.

Medigap Plan F is a popular choice for people who buy supplemental policies. According to trade organization the American Association for Medicare Supplement Insurance, 60 percent of people who buy Medigap plans choose Plan F. It’s not hard to see why.

But, as we said before, Plan F is no longer available to new Medicare members as of January 1, 2020. That’s thanks to the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which eliminated any Medigap plan that covers the Medicare Part B deductible, i.e., Plans C and F.

Lawmakers are hoping to force Medicare beneficiaries to invest more in the cost of their healthcare, which may reduce the number of unnecessary trips to the doctor as well as overall healthcare costs for the program. If you want similar coverage to Plan F but can’t buy it because you’re new to the program, then consider its almost-twin, Medigap Plan G.

2022 Medigap Plan G Overview

Medigap Plan G covers the same benefits as Medicare Plan F with one notable exception: It does not cover the Medicare Part B deductible. In 2022, that deductible is $233, meaning you’ll need to spend this much on healthcare – outside of your monthly premiums – before benefits pay out. In the course of a year, that $233 deductible might seem fairly small, especially if you see the doctor a lot or need more frequent medical care.

Medigap Plan G Covers:

• The deductible for Medicare Part A
• Coinsurance for Medicare Part A
• Hospital coverage for up to 365 days after Medicare benefits end
• Coinsurance or copayments for hospice care
• Coinsurance for skilled nursing facility care
• Coinsurance for Medicare Part B
• Medicare Part B excess charges
• The first three pints of blood in a medically necessary treatment
• Foreign travel emergencies up to plan limits

It’s important to mention that Plans F and G are the only Medigap plans that cover Medicare Part B excess charges, which can be substantial for some people. Since there’s no cap on out-of-pocket spending with original Medicare like there is with Medicare Advantage, you’re responsible for 20 percent of your medical costs all year, no matter how high they get. Having coverage for Part B excess charges as well as the Part B coinsurance can be extremely useful if, say, you end up facing a cancer diagnosis. But if you’re relatively healthy and don’t expect to see your doctor that often, these benefits might not matter to you.

It’s hard to find averages for the cost of Medigap Plan G because, as with any Medigap policy, monthly premiums depend on a variety of factors, including when you sign up and where you live. In 2016, Medigap Plan F cost an average of $321 a month. By comparison, Medigap Plan G cost an average of $262 a month. Keep in mind that these plans are identical, excluding the Part B deductible. But if you add up the $60 difference between the averages for 12 months ($720), you would save more money by paying the deductible and opting for the lower-priced Plan G.

This may not always be the case, though, since these are average prices. And since these averages are based on older data at this point, the cost difference could be even greater. Plus, because Medigap policies are sold by private companies, prices will vary widely among carriers, even among carriers in the same state. That’s why it’s important to determine what kind of coverage you want and price-shop based on your needs.

2022 Medigap Plan N Overview

Medigap Plan N shares common features with Plans F and G, but it covers less, and the price tag often reflects that. It’s also almost identical to Plan D, but there’s a cost-sharing element with Plan N for the coinsurance coverage under Medicare Part B.

Medigap Plan N Covers:

• The deductible for Medicare Part A
• Coinsurance for Medicare Part A
• Hospital coverage for up to 365 days after Medicare benefits end
• Coinsurance or copayments for hospice care
• Coinsurance for skilled nursing facility care
• Coinsurance for Medicare Part B – with an important caveat
• The first three pints of blood in a medically necessary treatment

Plan N covers the Medicare Part B deductible with an important caveat: It requires cost-sharing of up to $20 per doctor’s office visit, and $50 for emergency room visits that don’t lead to hospitalization. Other than these cost-sharing amounts, Plan N pays for 100 percent of covered costs under Medicare Part B. Note, however, that Part N does not cover Part B excess charges. Only Plans F and G do.

As with any Medigap plan, pricing varies. Taking Connecticut as an example, individuals could pay a monthly premium of anywhere from $155.86 to $400.35 for Plan N coverage in 2022 depending on the insurance carrier. By comparison, Plan G costs range from $211.75 to $630.01 a month in Connecticut in 2022, and Plan F costs anywhere from $260 to $800.89 a month (for those who can still buy it).

Keep in mind that Plans F and G cover more, but the upper end of their monthly premium range is pretty steep even with the extra coverage. If you’re comfortable paying the cost-sharing amounts for Part B required with Medigap Plan N coverage along with the Part B deductible, then Plan N can be a good choice for those looking for Medicare supplemental benefits without the higher cost of Plans F and G.

Medigap Coverage for Out-of-Pocket Costs

Medigap Plans F, G, and N provide a substantial amount of coverage for out-of-pocket costs under original Medicare. Seniors spend a lot on healthcare during an average year. One report from the National Bureau of Economic Research found that between 1996 and 2010, healthcare cost about $18,424 per person, per year for the 65-and-older crowd. That’s not what people spent personally, though. That figure includes the money that comes from Medicare, Medicaid and private insurance. Out-of-pocket costs represented about 20 percent of that figure, which means that the average individual was spending around $3,700 a year for healthcare costs.

For people with significant medical needs, the number will be higher. It’s also worth noting that yearly healthcare expenses double between the ages of 70 and 90, and during the last year of an average American’s life, medical spending tops $59,000 (individuals cover about 19 percent of these costs).

Planning for your post-retirement years can be a challenge even if you’ve got facts and figures in front of you. If you plan to choose original Medicare over Medicare Advantage, then you may benefit from exploring your options for supplemental coverage, especially if you see a doctor more often than most or you expect to need more expensive care in the next few decades.

Plan F offers the most coverage among Medigap policies, but these plans aren’t available to new enrollees as of 2020, and they typically cost a lot per month. Plan G, identical to Plan F minus coverage for the Part B deductible, comes in at a close second in terms of coverage, and the price difference makes it an attractive alternative. Plan N includes less coverage and a cost-sharing element for Part B costs, but it’s a less expensive supplemental plan with a bevy of good benefits. Choosing a Medigap plan that works for you will depend on your medical needs and budget.

Don’t Delay Enrollment Or Your Medigap Plan Costs Could Be Much Higher 

As with Medicare, there are certain time constraints for signing up for a Medigap policy. You have six months from when you’re 65 and have a Part B plan in place to enroll in a Medigap supplement plan without having to undergo medical underwriting. This is your initial eligibility window. During this period, you can’t be denied a plan or charged higher rates based on your medical history. Once the initial eligibility window closes, you may not find a Medigap policy at all. If you do, you’ll be subject to medical underwriting, which could raise your monthly premium. When you reach Medicare eligibility, weigh all the options carefully so that you can sign up for Medigap if you need the extra coverage. Planning ahead will save you money and frustration.