The only difference with Plan G compared to Plan F is that you have to pay the Part B deductible ($147, in 2015) and you will save at least $200/year in premiums; in some cases $500+/year in premium savings with a Plan G.
Analysts are currently projecting a 50% increase in the Part B deductible up to $223 per year, starting in 2016. This increase is not official yet, but it seems like it may be too late to stop this increase from happening.
So, is Plan G still a good value if the deductible increases to $223? Yes, it is. Here are some key reasons why.
- Plan F will need to cover the increased deductible - If the Part B deductible increases, Plan F will need to cover up to $76 in expense per subscriber that Medicare is no longer covering. Thus, the overall expenses will go up for Plan F, which will drive the premiums higher for Plan F.
- Plan G will have less expenses - the opposite is also true for Plan G. Plan G will have up to $76 less expense to cover for each policyholder. Plan G premiums will likely still increase due to age and medical inflation, but this reduction in coverage will help offset some of the costs and mitigate the increase in Plan G premiums.
- Plan F will not be available for new subscribers in 2020 - As mentioned in an earlier article, Plan F is going away in 2020. This will also drive additional increases in Plan F premiums, which cannot be understated.
I spoke with a potential customer (76 year-old male) this week who is still on an old Plan design (Plan J). The Federal government stopped allowing new customers in Plan J in 2010. Plan J now provides the same comprehensive coverage as a Plan F. (Plan J used to provide a couple of minor additional benefits but they are no longer included).
This individual is paying over $1,500 per year higher with his Plan J than a Plan F which provides the same benefits. The reason Plan J premiums are so high is because they have not had any new entrants into Plan J in the last five years so the youngest individual in Plan J is 70 years old. Additionally, some people in good health have left Plan J to get lower rates with other plans which drives up the costs per subscriber even higher in Plan J.
We are actively working with this individual to get setup with either a Plan F ($1,500/year savings) or Plan G ($2,000/year savings) and he will need to go through Medical Underwriting to be approved.
This is a prime example of the type of impact that could occur with Plan F after the year 2020, when Plan F is no longer available for new beneficiaries.
In summary, we still believe Plan G will be a great value if the Part B deductible increases and you will may even see increased savings with Plan G compared to Plan F in the future!