Plan F is the Best?
Sheep get sheared. They follow the other sheep into the pen, down the shoot, then in to the hands of the shearer and are fleeced. The ram is a alert. He doesn’t go with the flow he leads the way and butts heads when he is force to go where he doesn’t want to go.
How do people pick their Medicare supplement plan and company? They talk with their buddy on the left and their buddy on the right. ‘They both can’t be wrong.’ Everyone says Plan F is “the best.” “I never have to pay anything”—no co-pays. That’s great! Sign me up. That is the thought process of the sheep. Insurance companies love it. Insurance agents love it. Plan F is the most expensive plan in all kinds of way.
There are ten possible Medicare supplement plan types that an insurance may offer–A–N. In reality, they usually only offer 4 or 5. Plan F is the most popular as well as the most expensive. Insurance companies and agents like that because it brings in the most money and pays the highest commission. But is it the best for a client?
Plan F does cover all the deductibles and co-insurance that Medicare doesn’t cover. That is nice, but you pay a price for that convenience. It raises the question whether Plan F is the best.
Is there an alternative? How about Plan G? Plan G is very close to Plan F. The difference is that you pay the Part B deductible of $147. It is a one-time annual deductible. Once you pay your Part B deductible of $147, for let’s say a doctor’s visit, you are done for the year. Everything else will be covered 100% which is similar to a Plan F. So why plan G? Because the premium is lower—quite a bit.
Let’s do some simple math. Let’s say that a plan F is $150 per month for a 65 year old male and a plan G is $110 for the same person. The difference is $40 per month and $480 per year less for the Plan G. Subtract the $147 Part B deductible, and you are still ahead $333. Putting it another way, you are paying $333 for the convenience of having the insurance company pay your Part B deductible so that you don’t have to write a check IF you go to the doctor or have some other procedure. Multiply that times 10 years and you are at $3,330.
The second and more important consideration about Plan G is that the rate increases are smaller and less frequent. Yes premiums go up because medical costs go up, but the unusual reality about Plan G policy holders is that they generally do not go to the doctor or emergency room as frequently as Plan F policy holders. There is something about the $147 deductible that causes people to pause and think. ‘Is this really medically necessary?’ The result is that, because Plan G policy holders do not over use medical benefits to the extent Plan F policy holders do, the claims and cost are not has high. Consequently the rate increases for Plan G’s are fewer and smaller than Plan F. Plan F is the best?
Don’t be a sheep. Don’t follow the herd. Stop and look at the different plans. Ask yourself the hard question in light of the facts whether Plan F is the best. Do some analysis, and you will save money in the short, long, and longer run.