Medigap Plan F vs. Plan G: Is More Really Better?

If the prospect of paying 20 percent of your healthcare bills scares you, and you're nearing age 65, you're in the market for a Medigap policy. Of all Medigap policies, F and G are the most comprehensive. Both cover what Medicare calls "excess charges" -- just about everything Medicare doesn't pay for. As it turns out, both appear to be good deals in the long run.

Medigap F and G Policies Cover Coinsurance

According to the Centers for Disease Control and Prevention, the average American 65 years old and older sees a healthcare provider 7.2 times per year. Every year, 32.8 percent are hospitalized and released, staying for an average of 5.5 days. But as an individual, you can't know your healthcare future. To guard against financial surprises, one in four Americans held Medigap policies in 2010, according to an April 2013 Kaiser Family Foundation study. Plan F was the single most popular choice.

Should You Buy Medigap or Not?

The KFF study reported average premiums for Medigap policies in 2010. KFF figures provide a thumbnail for comparing today's policies. The deductibles are slightly different. Deductibles at the time of publication are $100 higher for Part A (hospital services) and $8 less for Part B (out-of-hospital, called medical services). The average F policy premium in 2010 was $181. For G, it was $169. Both policies pay the deductible for each separate hospitalization, $1,200 at publication. Both cover coinsurance for both Part A and Part B. Medigap F covers the $147 deductible for medical services. Part G doesn't. At publication, the plans price out to identical costs.

Medigap F and G Compared to A and B

Medigap A and B cover coinsurance for hospitalization, but only B covers the hospitalization deductible. The average premiums were $140 a month for A and $169 for B in 2010. With Medigap B, if you're hospitalized once every three years, you're paying $936 more than you would for A to cover a $1,200 deductible. Of the two, Medigap B is a better buy. But for the same premium, Medigap G also covers skilled nursing care, Part B coinsurance and travel emergencies. Based on CDC and KFF figures, Medigap F and G are both better buys than A and B.

Medigap F and G Compared to C and D

Medigap C and D policies are identical to F and G except that they do not cover Part B coinsurance. Medigap C doesn't cover the medical deductible, but D does. The premium for C was $177 a month in 2010. For D, it was $187. Since D charges $120 a year more for a $147 deductible, at the time of publication, D is a better buy than A. But you'd pay $36 a year more for Medigap D than for F, so F (and G) policies are still better values than either.

Calculate Using Your Own Premium Quotes

There's also a version of Plan F with a deductible of about $2,100 a year, and that poses a trickier question. Enrollment in 2010 was so small that the KFF report folded high-deductible Plan F into the overall Plan F figures. As you near age 65, you'll have to calculate the figures with your actual insurance quotes. KFF figures cited in this article are based on community-based plan premiums. If you choose a community-based Medigap plan during your age 65 enrollment period, your premiums will not rise due to your age. The costs you incur, however, almost certainly will.