From time to time, I see personal questions about Medicare. I studied for a year before needing Medicare by going to Medicare.gov and watching multitudes of YouTube videos. I figure I'll make this post in the hope it may help someone who is about to go on Medicare. It's important to make the right decision within the first year of signing up for Medicare because after the first year and if you want to change your decision such as signing up for a supplemental plan or changing plans or even companies, you will need to go through underwriting approval and may be denied acceptance by the new plan that you want.

I excluded Medicare Advantage Plans from my personal considerations because those plans limit your choices in who treats you to only those who are part of their network whereas regular Medicare allows you to see any provider who accepts Medicare. Additionally, Medicare Advantage Plans have more say over the healthcare you receive whereas under regular Medicare, your healthcare is between you and your provider of your choice and is limited only by the rules of Medicare itself. People old enough to have Medicare ought to know enough that there's no such thing as a free lunch. I'm not knocking people's choices should they choose Medicare Advantage Plans as long as they do so understanding all the pros and cons.

A person would consider getting a Medicare Supplemental Plan if they're somewhere between poor and rich. A Medicare Supplemental Plan limits your outlay for your medical costs incurred by having to pay the 20% coinsurance and deductibles of regular Medicare. Mind you, the 20% coinsurance is 20% of the Medicare approved amount and not the higher invoice amount. Poor people with little assets to protect can switch from Medicare to Medicaid where your healthcare becomes free. The income threshold is about $18,000 a year or lower for singles and $24,000 a year or lower if you're a couple (these amounts are for AZ but it's close to the most states. Rich people who have sufficient assets to pay the coinsurance or not worried about leaving an estate may decide to avoid paying premiums for supplemental plans and effectively just self-insuring for their deductibles.. How can you tell if you're rich enough to not need any supplemental insurance? You can decide after reading the example I give at the end of this post.

For those between being poor enough to easily qualify for Medicaid or rich enough to absorb the coinsurance costs, there are basically two choices - regular plan G and High Deductible G. There are other plans with different configurations but there's a reason why plan G is the most popular; the other plans do not offer much significant differences in comparing costs and benefits. Every supplemental plan type such as G, High Deductible G, K, L, M, or N offered by any company is the same regardless of the company as the configuration of each plan is dictated by the government. The only things you might consider as to which company to buy from is availability in your area, the premium charged, and the long-term financial stability of the company.

Choosing between a Plan G and a Plan G High Deductible is based on your outlook of your health; if you think you will need a lot of healthcare throughout each year, you will get Plan G with its low deductible but high premiums. If you think you will be relatively healthy for the most part and simply want to limit your outlay in case of catastrophic events, you will get Plan G High Deductible with its (as the name says it) high deductible but low premiums. Following are some numbers as an example. I'm giving round numbers for the premium costs for easier calculations; you'll have to plug in any actual premium quotes you get for your personal comparison.

Regular Plan G may cost $100 a month based on a range of $95 - $646 as shown on Medicare.gov. It has a Part B deductible of $233 as dictated by the government, meaning you'll have to pay the first $233 in co-insurance after which all your coinsurance will be paid by the insurance company. So, in addition to your Medicare premiums, you are committing to spending $100 a month plus $233 every year for a total of $1,433 each year for the peace of mind that you're not going to spend more than that each year.

Plan G High Deductible may cost $55 a month using the ranges Medicare gives. You'll have to pay the same first $233 in coinsurance plus the next $2,490 coinsurance each year before the plan takes over paying the rest of your coinsurance for the year. The $2,490 is also dictated by the government. Thus, you are committed to spending a maximum total of $3,383. Or, another way of looking at it, is that you are limiting your annual outlay to a maximum of $3,383.

With regular Plan G, you will spend a minimum of $1,200 a year but, should you need it, your total costs will be capped at $1,433. With Plan G High Deductible, you will spend a minimum of $660 a year and your total costs will be capped at $3,383. Again, I remind you these numbers depend on the actual premium quotes you get for each plan. You will need to plug in the quotes you get into my example for your personal comparison.

The next step is this: Take the difference in the annual premiums for the two plan which in this case is $540 ($1,200 for Plan G minus $660 for Plan G High Deductible. Add the $233 deductible common in both plans to give you $740. $740 is the deductible you will have to pay for the year under the High Deductible Plan to equal the total outlay under regular Plan G ($1,200 + $233 = $1,433 for Plan G and $660 + $233 + $540 = $1,433 for the High Deductible plan). Spending $740 in coinsurance for the year means you received $3,700 Medicare Approved Amount of healthcare ($740 / 20% coinsurance). If you think you will consistently need $3,700 or more in healthcare each year, then you should choose regular Plan G. If you think you will consistently need less than $3,700 a year in healthcare, then the better financial decision for you is to choose Plan G High Deductible.

If potentially spending $3,383 or more in Medicare deductibles each year won't significantly deplete your assets or is not a financial concern for you, then you may be rich enough to afford not paying for a Medicare Supplemental Plan and not need whatever incremental peace of mind it offers. For context, $3,383 equates to $16,915 in approved Medicare charges .

I hope this helps someone. I just want to share information that can help in the decision making process.

This message has been edited. Last edited by: Rey HRH,

Thanks for sharing this helpful information.

You certainly did your research Rey! Medicare and all the supplements can be a confusing rabbit hole to go down. As you said you studied for a year and all of this is forever changing. The best advice I can give is go to your insurance agent. They stay on top of this stuff all the time. I went to my insurance guy when I had to sign up and walked out a hour later signed up for Medicare A and B a supplement from Blue Cross Blue Shield to fill in the gaps and a prescription supplement from Humana. He knew all the ins and outs and explained why I wanted one supplement and not the other. Couldn't have been happier when I walked out of there.

The two supplements together run just under fifty bucks a month.

Thanks, Rey.

Yes indeed- thank you RHR

Good luck on getting G for $100 a month. Don’t forget all medigap plans can and do increase their costs each year and they have different ways to do so - your age, average age of all participants in a state, other approaches. You should be investigating that as well since while all plans have the same benefits, they can price future increases differently and over the years that can result in big cost differences between plans. And don’t assume you’ll just switch plans whenever you want to mitigate those fees; they only have to take you during your initial Medicare signup. Switching plans a few years later can come with checks on your health and/or higher monthly rates if they decide to take you at all (not guaranteed).

quote:

Originally posted by tsmccull:
Good luck on getting G for $100 a month.

I did say I used round numbers for ease of calculation and that people need to plug in their actual quotes. The important fact I was highlighting is the difference in the premiums between G and High Deductible G and how to make the comparison.

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Don’t forget all medigap plans can and do increase their costs each year and they have different ways to do so - your age, average age of all participants in a state, other approaches. You should be investigating that as well since while all plans have the same benefits, they can price future increases differently and over the years that can result in big cost differences between plans.

If I thought I could add this other level of complication easily for most people to digest, I would have. I wanted to give enough information for people to see the major decision points without the minutiae that most agents will gloss over anyway. I find that there's a disconnect between the links and plans shown on Medicare.gov and the actual plans companies steer you toward. You're talking about Community Rated versus Issue-age rated premiums with the Issue-age rated premiums not changing versus the community rated premiums being allowed to change based on the company's cost experience. This is similar to the pricing difference between whole life insurance premiums and term life insurance premiums - premiums for whole life do not change once issued and term life premiums increase over time. But there's no free lunch. If a company is going to charge you a premium that won't change over your life, they're going to bake in the additional costs over your life up front. I intended this part to be under the umbrella of having to consider the long-term financial stability of the company.

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And don’t assume you’ll just switch plans whenever you want to mitigate those fees; they only have to take you during your initial Medicare signup. Switching plans a few years later can come with checks on your health and/or higher monthly rates if they decide to take you at all (not guaranteed).

That's why my third sentence says "It's important to make the right decision within the first year of signing up for Medicare because after the first year and if you want to change your decision such as signing up for a supplemental plan or changing plans or even companies, you will need to go through underwriting approval and may be denied acceptance by the new plan that you want."

Thanks for your comment as it allowed me to expand and I think you additionally highlighted the important points outside of the math calculation.

My wife spent about a year researching Medicare Supplemental Plans before it would've been time for us to sign up. As well as all her own research, she consulted with two different advisors.

I asked her to review Rey HRH's write-up. She said it's right on the money.

As for us: We're in the "neither rich nor poor" category. She chose the normal-deductible Plan G's for us under the assumption that, while our health at the time was fair-to-good, who knew what the future might bring?

Our premiums are currently ±$200/month each. They were closer to half that when we first signed up.

Choosing the plan we did has paid off. I've had two medical "incidents" since we signed up (arthroscopic knee surgery and an emergency stroke evaluation) and she's had one (emergency heart issue evaluation). They cost us hardly anything at all, out-of-pocket.

Our Part G plan also gets us a number of discounts for other stuff. E.g.: I got a nearly 50% discount on my top-of-the-line hearing aids.

I'm about 4 1/2 years into Medicare and also recommend the traditional Medicare & Part G.

In round numbers just figure about $400 for the Part B and G premiums and that can vary a bit based on your income (or lack of) but in any case a great improvement over traditional Marketplace insurance.

Another big improvement is the deductible, $226 in 2023 vs thousands for most people on the Marketplace plans.

Also you'll spend some time evaluating your Part D drug plan as there are all sorts of coverage options and premiums there too.

I just do not like the means testing in the Medicare program. Socialism.

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Originally posted by ZSMICHAEL:
I just do not like the means testing in the Medicare program. Socialism.

What means testing in Medicare.

It exists in Medicaid, but that's a different thing.

The premium is increased depending on your income. They are already increasing the income ceiling for Medicare taxes.

The govt has some bulllshit name for it but it is socialism. Here:
If you have higher income, you'll pay an additional premium amount for Medicare Part B and Medicare prescription drug coverage. We call the additional amount the income-related monthly adjustment amount.

Employer group insurance does not do this.

quote:

Originally posted by ZSMICHAEL:
The premium is increased depending on your income. They are already increasing the income ceiling for Medicare taxes.

The govt has some bulllshit name for it but it is socialism. Here:
If you have higher income, you'll pay an additional premium amount for Medicare Part B and Medicare prescription drug coverage. We call the additional amount the income-related monthly adjustment amount.

Employer group insurance does not do this.

You're talking about IRMAA and it's a surcharge for higher income brackets.

The regular monthly premium for Part B in 2022 is $170. If you make more than $91,000 as a single or $182,000 as a couple then your individual part B premium becomes $238 and you pay an additional $12.40 for your prescription plan. If you can't help but make $91,001 as a 65-year old, I don't see the problem in you paying more premiums. The average 65 year old has an income of $47,600. Being taxed progressively on your income is one thing, but paying for a government service / subsidy is another.

Otherwise, do you also complain about paying more in property taxes for the same amount of services as your neighbor in a lower priced home pays?

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Otherwise, do you also complain about paying more in property taxes for the same amount of services as your neighbor in a lower priced home pays?

^^^^^^^^^^^^^^
Apples and Oranges. Tax successful people who are still working and contributing to society. If that makes sense to you I can't help you. Do you like Medicare for all?
Maybe I should sell Cracker Jacks at the ballpark and pay less. It makes no sense.

quote:

Originally posted by ZSMICHAEL:
The premium is increased depending on your income. They are already increasing the income ceiling for Medicare taxes.

The govt has some bulllshit name for it but it is socialism. Here:
If you have higher income, you'll pay an additional premium amount for Medicare Part B and Medicare prescription drug coverage. We call the additional amount the income-related monthly adjustment amount.

Employer group insurance does not do this.

I am really tired of the "you're rich so you can afford to pay more" attitude.

Lots of retirees, such as us, still have mortgages. We pull taxable money out of a retirement account to pay the mortgage. As a result, we pay more for many things including medical insurance. We're not over 65 so we're not on Medicare, but we could buy on the Obamacare exchange. The price there is highly variable depending on income.

Social Security is taxed more if you have more taxable income. Our "income" disqualifies us from property tax relief in this state.

I am a huge proponent of ROTH retirement accounts after seeing how retirement taxation works.

quote:

am really tired of the "you're rich so you can afford to pay more" attitude.

^^^^^^^^^^^^^^^^
Thank you!

When I went on Medicare, I chose the Coventry Gold Medicare Advantage Plan (It's now Aetna Gold Advantage). All we pay each month is the basic Medicare amount. No premiums at all for the medicare advantage plan. No copays on our prescriptions, and all the doctors we were seeing are covered in their plan. What we do pay is a nominal amount for doctors office visits as well as visits to specialists. I was in the hospital for 4 days in November. The total charges from that stay were over $32,000 and we had to pay roughly $900 of that. It has a catastrophic limit of $2,500 per year.

quote:

Originally posted by ZSMICHAEL:

quote:

am really tired of the "you're rich so you can afford to pay more" attitude.

^^^^^^^^^^^^^^^^
Thank you!

I've even got a couple of nephews who do the "you're rich so you can afford to give us some of your money so we can live better" routine.

You may already have known/predictable healthcare needs, but your best guess, and tailoring your decision as to what those needs will be, is a bad gamble for anyone 65+ yrs of age.

Fortunately, I knew the kinds of treatment and costs I would be facing due to a long history of specialized care and diagnostics, so I had to get the supplement. It has a low premium and the standard deductible, saved me thousands.