This week’s question from Jenna
I get my annual rate increase on my Supplement in May, and I never know what it’s going to be. Is there any way to find out? I’m worried that it may be rather large like it was last year and I didn’t make any changes during the Annual Election Period (AEP) that just ended. What can I do if I can’t afford my plan when I get the increase?
Answer
Increases on F and G
I’m guessing that Jenna has Plan F or G. Those on F have seen extremely high rate increases and it’s going to continue. Unfortunately Plan G, probably the most popular plan choice for people who aren’t clients of The Health Insurance Store, is heading in that same direction. We’ve met a large number of new clients this AEP who after only four or five years have already seen $50 or $60 per month premium increases. G is the new F I’m afraid and I expect to see $20 plus per month increases every year moving forward.
I saw this coming when the Centers for Medicare and Medicaid eliminated Plan F for sale in 2020. People had always enrolled in F because it held the title of being “the best.” Almost everyone enrolled in it without realizing how small of a difference there was between F and G or N. Now G has that title and people who use more medical services are enrolled. In addition, when F was eliminated, G became the plan those who have what is known as Guarantee Issue (GI) must take. People with GI can enroll in a Supplement without going through underwriting. Those who lose insurance from an employer or Medical Assistance qualify and they are generally extremely high utilizers of health care, which drives up premiums.
My Recommendation
Here’s my recommendation for anyone who has Plan G or F; Move to plan N immediately if and while you can pass medical underwriting. Don’t be afraid of change. Don’t be fearful that you may have to pay thousands of dollars more in bills. You won’t. Don’t let the fact when you had surgery or were hospitalized and didn’t get a bill keep you from changing. You won’t pay any bills with Plan N for those services either. Don’t justify staying on G or F one more year to “see what happens.” In a year you could be diagnosed with a condition that would result in you being denied acceptance into Plan N, stuck paying high premiums or forced to move to an Advantage Plan sooner than you may have wanted. I’m predicting in just five years, Plan G annual premiums will be $800 to $2,000 more than N, depending on when one first enrolled.
N has the same deductible as G, and once met, CT scans, MRI’s, surgeries, hospitalizations, chemo, radiation, etc., are paid at 100%. The only difference is there’s a $20 co-pay for either a primary care or specialist physician office visit and $50 if one uses the Emergency Room with. The average yearly savings people see when moving from G to N is $900 for those who have been on Medicare five years or longer. That means you would have to go to the doctor 45 times in a year for G to be as equal value as N. And only physician’s office visits are subject to the co-pay. There are none for physical therapy, blood tests, MRI’s, outpatient procedures, etc.
What To Do
As far as what Jenna can do if she gets a big increase in May, there are two options. Because there are no enrollment period restrictions to move from one Supplement plan letter or company to another, if Jenna can pass underwriting, she can move from F or G to a much lower priced Plan N now, in May when she gets her increase, or at any time during the year. If she can’t, and it gets to a point where the Supplement simply isn’t affordable, she can transition to an Advantage Plan HMO or PPO, which many people do, especially those ages 80 and older when rates are get in the $200 to $300 per month range. And you can now move to 5 Star Medicare Advantage Plans all year round as well. Many of the most popular plans, and ones we recommend our clients consider, are rated 5 Star.
It’s possible the agent who sold Jenna her Supplement can let her know prior to May what her increase will be. Those are generally announced in the Spring or Summer, so we know what’s coming. If you have a policy with the companies we recommend to 99% of our clients who choose Supplements; New Era, Aetna, or Medico, we can tell you. If you have a Supplement that isn’t with those three companies, I’m 99% certain you’re paying too much and we can enroll you the same letter plan with one of the above companies for less premium, even N. And again, we can do that at any time.
Most companies sell what are known as “Age Obtained” policies. This means there’s going to be a guaranteed rate increase every single year starting at age 68. From ages 68 to 82 those are very small, between $2 and $6, which doesn’t worry us at all. What we are concerned about is the second type of rate hike, which we call “across the board” increases. When companies aren’t making a certain profit margin and can prove it to the Pennsylvania Insurance Commission, they can request, and will almost certainly be approved for a rate increase.
We use New Era, Aetna, and Medico almost exclusively because they’ve been the best at keeping Plan N increases to a minimum. I met with a client a couple weeks ago who’s had New Era Plan N for 10 years. Her rate has only gone up $45 since she turned 65. Aetna has only had one across the board increase on Plan N in the last six years. Medico, which we just started doing business with recently, historically averages just above a $5 increase per year, which is also fantastic.
Many of you are probably saying, “I’ve never heard of Medico and New Era. What if my doctor doesn’t accept it?” They do. Remember. All Supplements are created equal. Plan N is N is N no matter what company sells it. Cost is the only difference between companies selling the same letter plan. Access to doctors and hospitals and what’s covered don’t differ between companies. You shouldn’t ever call a provider and ask do you take Medico, New Era, or XYZ Supplement. All you do is ask if they take Medicare. If they do, which is the case at every full-service non-VA hospital in the country as well as all the doctors who are employed by those health systems, your Supplement is also accepted regardless of company. Medical providers don’t even bill Supplement companies. They bill Medicare only. Medicare then coordinates with the company to get the provider paid in full.
Thank you!
If you have any questions or concerns regarding this column topic, or would like to make an appointment for a no-cost consultation, please feel free to give us a call – we would be happy to help. I’d like to remind everyone that I do a live call-in talk show called Medicare A to Z every 1st and 3rd Monday of the month on WMBS Uniontown, 590AM and 101.1FM, from 1 to 3 PM. You can listen in on their website, wmbs590.com.
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