Medigap F versus G

[relentlesslyawesome]

I've noticed that the AARP sponsored Medigap plan F is much more expensive versus Plan G, although a deducible is paid ($203) under G. Even with the deducible Plan G nets a savings of around $350 annually.  

On the other hand, Plan F has stopped accepting new subscribers this year and if one moves out of Plan F you cannot go back. 

I'm wondering why Plan F is more expensive versus Plan G.  My understanding is that 50%+ of Medigap participants are in Plan F, but with Plan F not accepting new participants perhaps the aging of that group causes an increase in the monthly charge? Plan G does have younger - new participants signing up so perhaps the lower cost is the impact?

With that said, a couple can save $700 annually by switching to G from F, but are there other considerations?  Of course, Plan F going away for new participants is another puzzling event and perhaps connected to pricing in some way.

Input will be appreciated.

[somarco]

@relentlesslyawesome F always was and still is more expensive than G. And the premium surcharge is PARTLY to cover the Part B premium but that is not the only reason.

Until 2020 the F plan was over-promoted by carriers and agents because it was an easy sale. All approved claims are covered at 100%. How easy is that?

Shoppers who bought direct from carriers were pushed into F plans with nary a word about the competitively priced G plan. Consumers trusted the carrier to do right by them, so they bought into the plan like sheep.

To be fair, even though the G plan has been around for over 20 years many of the big name carriers did not have the G plan in their portfolio until a 3 or 4 years ago.

They can't offer you something they don't have, so . . .

But the F plan was priced higher than the Part B deductible for the simple reason the F plan took the brunt of heavy claim users. Applicants with certain SEP's were able to get an F plan without medical underwriting. Even if the carrier offered a lower premium G plan if the applicant was not in an "open enrollment" period and could not pass underwriting the default was plan F.

Short translation - sick people went into the F plan, healthy folks into G.

Every once in a while I run into folks with an F plan and are paying outrageous premiums. If they are healthy enough to pass underwriting, some won't give up their F plan because they foolishly believe they can never get it back.

In general, the F plan block is getting older and sicker. Healthy folks leave and the sick ones stay. Plan F blocks will go into a death spiral within a few years.

[relentlesslyawesome]

Great insights, @somarco - so, are you in F or G or something else?

[EliteInsPartners]

If you were eligible for Plan F and you leave, you can go back. I just wanted to clarify that. However, you are correct on the premium difference being due to the enrollees being older now and not accepting new enrollees. 

[relentlesslyawesome]

Hmmm...interesting that re-entry is possible. 

[somarco]

@relentlesslyawesome yes, Virginia, you can go home again. But why would you want to return to an F plan when there are better options (as long as you have a qualifying SEP or can pass underwriting).

[relentlesslyawesome]

Actually, it's not me that would want to go back - my wife is nervous about leaving Plan F. I imagine that there are a lot of seniors that neither don't even think about leaving Plan F or don't survey the costs periodically. It still is the best plan if the cost isn't a factor.

Saving $702 next year and possibly additional years is huge for me given that I get a thrill out of scoping out and getting the best deal on anything I buy.                                     

[GailL1]

How much money do you want to save ?

Both Medigap Plan F and G have a High Deductible version and they are both still offered.

From Medicare:

* Plans F and G also offer a high-deductible plan in some states. With this option, you must pay for Medicare-covered costs (coinsurance, copayments, and deductibles) up to the deductible amount of $2,340 in 2020 ($2,370 in 2021) before your policy pays anything.

Maybe those in the professional know can add some to the savings (long term perhaps) benefits or disadvantages in these HD plans. 

Those cost are not paid all at once in most cases.  Today an out of pocket cost of $ 2400 is still a great deal especially if it covers 100% on most other things thereafter.  And for some things, like Hospice care as defined by Medicare - I don't believe there is any cost anyway.

I know people that have been on some of these 100% gold-standard Medigap plans (several that are now closed to new enrollment) - that cover everything.  They have been on them for a VERY LONG TIME and their premiums have escalated in the last decade - depending on when their 100% gold-standard Medigap plan closed to new enrollees.  Several closed in 2010.  Now they are very old and do have to keep paying these premiums for these golden plans.

[GailL1]

@EliteInsPartners 

Since Plan F (and Plan C) has only been recently discontinued from availability (January 2020) and was sold up until that time - it probably still has a pretty good mixture of insured but yes, as time goes by the balance will get skewed.

[CaptainQueeg]

You understand the situation perfectly.  There are no considerations that you are not aware of.

Yes, the price difference between the two plans should be equal to the Part B deductible, perhaps a little more because some people might value not having to even deal with the deductible.

Why the actuaries came up with the prices  they did or how their pricing algorithms work we will never know.

In addition, as you alluded to, people believe that Plan G is now more preferable, since Plan F is now closed to new enrollees to Medicare and Plan F’s population will just grow older and older in future years, driving up costs.

My vote is just grab Plan G and pat yourself on the back for doing more analysis on this decision than 90% of people do.

Enjoy your $700 a year savings!

[relentlesslyawesome]

Thanks, @CaptainQueeg - so, are you in G or sticking with F? 

[CaptainQueeg]

I am going to be applying for Medicare in the upcoming months.

I have spent way too much time researching this over the last few months (including reading 5 books on Medicare - ugh!), but I plan on applying for a high-deductible Plan G when the time comes.