Tips and Tricks to Save Money On Your Medicare Supplement
The purpose of this blog is to provide you with some tips and tricks that will help you save money on your Medicare Supplement insurance (aka Medigap), which is designed to cover most or all of the co-payments, deductibles, and co-insurance not covered by Medicare. This article primarily applies to individuals living in California. With that said, a lot of the information in this blog still applies to other states as well, so hopefully, you will find this information to be helpful regardless of where you live!
IMPORTANT: Don’t confuse Medicare Advantage (MA) plans, also known as Part C, with Medicare Supplement plans! The two plans are entirely different! This article does NOT apply to MA plans.
Some Key Differences Between Medicare Advantage and Medicare Supplement Plans
With a Medicare Supplement, you have much greater freedom of choice than an MA plan because you can go to ANY doctor, specialist, hospital, care facility, etc. in the US as long as they accept Medicare, and most do, about 93%. With MA plans, you are much more restricted and have less freedom because most MA plans are HMO’s and you can only go to doctors, specialists, hospitals, care facilities, etc. that are in your local geographic network, and you must see your primary care doctor first and then get a referral to see a specialist in your network! You cannot go directly to a specialist!
With MA plans, your annual co-payments and deductibles are significantly more expensive than traditional Medicare Supplement plans. In fact, depending on which MA plan you have, the maximum in-network out-of-pocket (OOP) costs can be as high as $8,300 in 2023! If you go out of network, you will pay even more!
With a Medicare Supplement Plan G, the most popular Medicare Supplement plan, your maximum OOP cost for all of 2023 is only $226, which is the Medicare Part B deductible. There are many other reasons why I always recommend Medicare Supplements over MA plans, but that is a separate topic, and it’s beyond the scope of this article.
10 Standardized Medicare Supplement Plans
Nationwide, there are 10 standardized Medicare Supplement plans to choose from, Plan A through Plan N. The term “standardized” means that the coverage and benefits are exactly the same with every Plan F, Plan G, Plan N, etc. In other words, Plan G is Plan G, Plan N is Plan N, etc. regardless of what carrier you are with, so it’s much easier to compare “apples with apples,” etc.
Although Medicare Supplement plans are standardized, the premium rates are not standardized, and they vary significantly from one insurance carrier to another!
The following chart shows the 10 standardized Medicare Supplement plans that are available throughout the US.
NOTE: As of January 1, 2020, Plans C, F and High Deductible F cannot be sold to those newly eligible for Medicare. Newly eligible is defined as anyone who: (a) attains age 65 on or after January 1, 2020, or (b) who first becomes eligible for Medicare benefits due to age, disability or end-stage renal disease on or after January 1, 2020. Those enrolled in Plans C, F and High Deductible F prior to January 1, 2020 may keep their plan. Those individuals who became eligible for Medicare prior to January 1, 2020 may keep or purchase Plans C, F and High Deductible F after December 31, 2019.
TIP: You should shop around and compare rates every year or two to save money on your premiums.
Which Medicare Supplement Plan Is Best?
Of the 10 standardized Medicare Supplement plans, Plan F, Plan G, and Plan N (in green) are the most popular plans. Of those three plans, Plan F is considered to be the best because you have no out-of-pocket costs. For that reason, Plan F is also the most expensive plan, and not the most popular plan.
NOTE: As mentioned above, Plan F is no longer available for those individuals who are newly eligible for Medicare on or after January 1st, 2020. Plan F is still available for those who were eligible for Medicare prior to January 1st, 2020. In addition to the plans in the chart, there is also a high-deductible Plan F and a high-deductible Plan G. The annual deductible for both plans is currently $2,700 in 2023.
Most people who started off with Plan F, including myself, have switched to Plan G. Both plans are identical in every way except Plan F pays for the Medicare Part B deductible (currently $226 for all of 2023) and Plan G doesn’t. That is the ONLY difference between the two plans! Once you meet that small deductible, there is no difference in the coverage or benefits between Plan F and Plan G! The only major difference between the two plans are the premiums; in most cases, the Plan G premiums are significantly lower than the Plan F premiums!
It’s kind of like your auto insurance or your homeowner’s insurance. You can have a zero deductible, like Plan F, or you can have a $500 deductible or a $1,000 deductible, etc. The overall coverage is the same, but you pay a lot more for a $0 deductible versus a $500 or $1,000 deductible.
TIP: If you can save more than $226 per year on your premiums by switching from Plan F to Plan G, Plan G ends up being more cost effective, and you should switch to Plan G to save money on your insurance premiums!
Again, with a Plan G Medicare Supplement, your maximum OOP cost for all of 2023 is the Part B deductible, which is $226 in 2023. For example, if you have multiple doctor visits during the year, have a couple of surgeries and are hospitalized, the most you would normally pay for all of 2023 is the $226 Part B deductible and that’s all! With a Medicare Advantage plan, your maximum in-network OOP costs can be as high as $8,300 in 2023! If you go out of network, your OOP costs will be even more!
The California Birthday Rule
In California, there is a law called the California Birthday Rule. If you have one of the 10 standardized Medicare Supplement plans, such as Plan F, Plan G, Plan N, etc. you are guaranteed the right to switch your insurance plan or insurance carrier during the 60 days following your birthday each year, REGARDLESS OF YOUR HEALTH, and without answering any health questions or medical underwriting.
During this 60-day open enrollment period, YOU CANNOT BE TURNED DOWN FOR COVERAGE as long as you switch to any other plan with “equal or fewer” benefits. For example, if you have Plan G, you can switch to Plan G with any other carrier. Or, you could switch to a lower plan, such as Plan N because Plan N has fewer benefits than Plan G, etc.
NOTE: Unlike MA plans or prescription drug plans, you can change your Medicare Supplement plan any time of the year, but if you do so around your birthday, it’s easier because you don’t have to answer any health questions, there is no underwriting, and you cannot be turned down for coverage!
Although the California Birthday Rule specifies that you can apply for coverage during the 60-day open enrollment period after your birthday each year, many insurance carriers will let you apply during the 30 days BEFORE your birthday up to 60 days AFTER your birthday meaning you really have a 90-day open enrollment period each year for your Medicare Supplement! Although the majority of insurance carriers base their rates on your age after your birthday, a couple of the insurance carriers that let you apply during the 30 days before your birthday base their rates on your age on the application date, so their rates will be less than if you apply after your birthday.
TIP: If you live in California and you have a Medicare Supplement, you can often save money on your premiums by applying for a new Medicare Supplement plan during the 30 days before your birthday rather than during the 60 days after your birthday.
Most states do not have a birthday rule or anything similar. In those states, if you have a Medicare Supplement plan and you want to switch to a different insurance carrier with a more competitively-priced plan, you must fill out an application, answer health questions, and be medically underwritten and approved. If you have serious health issues, you will not be able to change plans.
NOTE: There are currently six states that have a birthday rule including California, Idaho, Illinois, Louisiana, Nevada, and Oregon. Before 2022, only two states had a birthday rule.
Qualifying for the California Birthday Rule
To qualify for the California Birthday Rule, you must meet the following requirements:
- Live in California
- Currently have a Medicare Supplement plan
- Switch to a plan with the same or fewer benefits
- Apply during the 30 days before your birthday up to 60 days after your birthday
Guaranteed Rate Locks
When you sign up for a new Medicare Supplement plan, most insurance carriers will guarantee and lock your premium rate for the first 6 to12 months.
TIP: To avoid any unexpected rate increases, I normally recommend going with an insurance carrier that locks their rates for the first year, if possible.
After the initial guaranteed rate lock period expires, an insurance carrier can raise your rate at any time as long as they raise everyone’s rates. (You cannot be singled out.) Just like your auto and homeowner’s insurance, it’s important to shop around every year around your birthday because rates change and what is good this year may not be so good next year. For this reason, I shop around for my clients every year around their birthday.
New to Medicare? Get a $25 Per Month Discount For the First Year!
If you are turning 65 or if you will be new to Medicare Part B (Medical insurance), a couple of insurance carriers will give you a $25 per month “Welcome to Medicare” discount for the first 12 months! These rates are almost impossible to beat during the first year. After the first year, the $25 discount will end, but you can still switch to another carrier each year around your birthday if you want, regardless of your health and without answering any health questions on the application.
Would You Like a Free Gym Membership?
If you like to go to the gym, several insurance carriers offer “Silver Sneakers” and “Silver and Fit,” which are free gym memberships to local participating gyms such as 24-Hour Fitness, LA Fitness, etc.
TIP: If you are paying a monthly fee to belong to a gym, eliminate that fee by signing up for a Medicare Supplement with an insurance carrier that offers Silver Sneakers or Silver and Fit!
Medicare Supplements Are Standardized but Medicare Supplement Rates Are Not Standardized!
In California, most insurance carriers base their rates on your “attained age.” This means that Medicare Supplement rates usually increase as we get older. Although the 10 nationwide Medicare Supplement plans are “standardized,” meaning that the coverage and benefits are exactly the same for every Plan G, Plan N, etc., insurance premiums for these plans are not standardized, and the rates vary significantly from one insurance carrier to the next for the same identical plan and coverage!
For example, for a 70 year old living in the 92056 zip code, the current Plan G Medicare Supplement premiums range from $158 to $243 per month! That is a difference of $85 per month or $1,020 per year for the same identical plan and coverage!
TIP: Periodically check your rates every year or two to make sure they are still competitively priced.
You Can Apply for Medicare Supplements All Year Long!
Unlike MA plans that have an Annual Enrollment Period (AEP) from October 15th to December 7th every year for a January 1st effective date, you can apply for Medicare Supplement plans all year long.
If you apply for a Medicare Supplement plan at any time of the year other than during your 60-day annual open enrollment period under the California Birthday Rule, you will have to answer the health questions on the application and be medically underwritten. If you have certain health conditions, you can be turned down for coverage. If you are in relatively good health, you should not have any problem qualifying for a new Medicare Supplement plan.
TIP: If you have a Medicare Supplement plan and you have a serious health condition, take advantage of the California Birthday Rule and apply around your birthday. It’s always easier to apply for a Medicare Supplement around your birthday since you don’t have to answer any health questions and you cannot be turned down for coverage!
Some carriers give you a household discount (HHD) and others don’t. If you qualify for a HHD, some give more than others, from 5% to 12%! To qualify for a HHD, some carriers require both parties in the household to have a Medicare Supplement with the same company, and others only require that you live in the same household with another adult to qualify for the HHD. For example, if you have a roommate or live with someone that does not have a Medicare Supplement, you can still get a full HHD with certain carriers!
TIP: If you are married or you have lived with another adult in the house for at least one year, some companies will give you up to 12% HHD on your insurance premiums, even if your spouse, roommate, etc. doesn’t have a Medicare Supplement policy!
I hope that you have found this information to be interesting and informative. I’m an independent insurance agent with over 15 years of experience specializing in Medicare Supplement insurance, primarily in California. As an independent agent, I work with most of the major insurance carriers including Mutual of Omaha, Cigna, Blue Shield of CA, Anthem Blue Cross, Health Net, Aetna, etc. I have hundreds of clients, and I shop around for them every year around their birthday. Please click here to see some of my client testimonials.
FINAL TIP: If you have any questions, or if you know anyone that is turning 65 or starting Medicare, or if you would like for me to shop around for you, I’m happy to help, and there is no charge for my service!!! Please feel free to call me or send me an email! Also, please feel free to forward this blog to anyone you know who may be interested.
CA agent #0B33674
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