For us agents, Medicare Supplements are pretty cool. The commissions are level for years, which means we can build a solid book of renewal income. Additionally, the plans themselves are standardized, so you don’t have to worry about quirky benefit changes between carriers – Plan F is Plan F, no matter who offers it. Price is the differentiating factor between carriers, and that means if you can save your client some money you’ve usually got a sale. After all, if two carriers are offering the exact same coverage, why wouldn’t you go for the cheaper option?
Many of our Medicare clients strongly believe that Plan F is the right choice for them. Their friends have probably told them so, and their agent was probably happy to sell them the policy. Plan F is extensive – and expensive. It covers all out-of-pocket costs for Medicare covered services, which sounds great. However, it’s typically $500 – $700 more expensive than Plan N and will only save our clients $200 – $250 in medical costs over the year. Plan F’s coverage may be great, but its value is lacking.
There are only four real differences between Plan F and Plan N:
1. Plan F pays “excess charges,” which occur when a physician accepts Medicare but not assignment. In the real world, this is virtually never an issue. Something like 98% of doctors who accept Medicare do accept assignment.
2. Plan N requires your client to pay the Part B deductible. In 2014, that was $147.
3. Your client will pay $15-$20 (but not more than $20) for office visits.
4. Emergency room visits carry a $50 copay (assuming there’s no admittance).
There is no copay or share of cost for any other services including labs, x-rays, hospital stays, etc. That means that the vast majority of people will have an out-of-pocket medical expense of around $250/year with Plan N (the Part B deductible plus a few office visits). And remember, the average Plan N is $500 – $700 less per year when compared to Plan F. Why give an insurance company $600 just so they can pay $250 for you? If your clients pay the $250 themselves (in other words, if they go with Plan N over Plan F), they’ll see a net savings in their medical expenses. Unless your client is going for office visits a huge number of times per year, they’ll like these numbers.