If you are like most people, once you hear there is a limited supply of something or a deadline is approaching, your ears perk up. I know mine do. Psychologists say we are hardwired to respond to scarcity (even if psychologists rarely talk about the Medicare Supplement plans in CT.) So hearing Medigap Plan F won’t be available soon might tap into primitive instincts and make it harder to resist.
Maybe it is because somewhere in our pre-history one of our forebears connected with the last single woman at the party outside the cave. Without love connections like this, we might not exist.
But I caution you not to give in to this instinct when you think about health or Medicare insurance.
Medigap Plan F is going away.
Why is Medicare Plan F going away? Plans that pay the Medicare Part B deductible are being eliminated. It won’t be sold after 2019. Insurance marketing departments will soon telling you it is your last chance to buy Medigap Plan F and this might cause to to focus less attention on the other Medicare Supplement plans in CT.
But this policy is clearly already overpriced. And if history is any guide, we’ll see the rates go up faster and faster as time goes by.
Why? The price for these plans is determined by the amount of claims the insurance company must pay per policy holder on average.
Sometimes, plans that promise less benefits are more expensive than plans that cover more. This is the reason it happens.
The average age of the policyholders is the biggest factor impacting claims. Monthly premiums have to go up in order to pay these claims.
Plan C was popular twenty years ago. It was well-priced then. It is a still good plan, but Medigap Plan F is a better plan. I has all the benefits of Plan C, plus some benefits no other plans has. (View this benefit chart of Medicare Supplement plans on Medicare.gov and you will clearly see why.) Yet Plan C costs more.
Again Why? The people who enrolled in these plans, did so when are were close to age 65. But not anymore. Two decades have passed. And on average, 85-year-olds spend more time sitting doctors’ waiting rooms than 65-year-olds. So, claims and premiums went up.
When a policy is introduced, it is likely to have a lower price for several years. Why? It will have a disproportionate number of policyholders who are close to age 65. So the best medicare supplemental plans, are more likely to be among the newest to in market.
(By the way the new kids on the block are the Medicare Advantage Plans, plus Medigap Plans K, L, M and Medigap Plan N.)
Conversely, when a policy closes its doors to new enrollees, the average age of a policy holder goes up and so do monthly premiums.
Typically people spend a lot of time investigating their choices at age 64. But many never look at their options again.
By now, you may see why you want to have an agent like me, who will do this for you each year.
Why is Plan F Overpriced?
Let’s compare Medicare Supplement Plans F and G. The only difference between Plan F and Plan G is the part B deductible. (“part” not “plan.”). The part B deductible is $183 in 2017. It can only be paid once per year.
Medigap Part F covers this deductible, so it is a better plan. But the difference in yearly premiums between the two plans is much more than $183.
The following is based on the 2017 Medigap rates I just pulled from the Connecticut insurance department website: The price difference between the two plans is $31.75 per month on average. This adds up to $381.06 per year. Medicare Supplement Plan F rates for Connecticut are almost $200 dollars more than they should be.
I’m sure you don’t want to pay an extra $381.06 for one additional benefit that cannot possibly be worth more than $183. If you don’t see any doctors, you could pay $381.06 and get nothing in return.
Why Will Plan F Keep Going Up in Price?
It must. Once the doors are closed to new enrollees in 2020, no 65-year-olds will be able to enroll. The average age will go up. Claims per capita will go up. Prices will follow.
Is Medigap Plan N a Better Choice
There are several other options that may better for you than the soon to be retired Medigap Plan F. A zero premium Medicare Advantage Policy may suit you well. One of the other Medicare Supplement plans in CT may be your best choice including Medigap Plan N.
It is not uncommon for people in their 80s and 90s to pay twice what they should. Far too often they last shopped around fifteen or twenty years ago. Some even qualify to have the State of Connecticut pay their Medicare Part B premium, but don’t know it.
Unfortunately, there are thousands of seniors around the State of Connecticut who hold on to old plans because of habit or inertia. Many are still holding on to retired plans. Some are afraid to switch. If you think you have a relative who is paying too much, they might benefit greatly by requesting current rates and a recommendation from me.
Request recommendations to get my answer to the question which medicare supplement plan is the best for you.