A High Deductible Plan F could be your best insurance option. Under most circumstances, I’ve discouraged anyone from purchasing a standard Medigap Plan F. In comparison, with the high deductible version, my thoughts are entirely different. With its low cost and lower rate increases, it can be a good coverage option for many Medicare-eligible seniors.
A High Deductible Plan F Works the Same as a Standard Medigap Plan F
It works the same with only one difference. With a High Deductible Plan F, you have to pay the first $2,180 (2016) of charges out of your pocket. After that amount, the plan pays 100% of the costs not covered by Medicare. Consequently, with this type of benefit structure, companies can offer you a significant amount of savings on your Medicare Supplement premium.
For example, in Melbourne Florida, the lowest cost for a standard Medigap Plan F, for a 65-year-old, male, non-smoker, is $184 a month. A high deductible Plan F for the same individual is only $63 a month. That’s an annual saving of $1,452. If you are in reasonably good health, and you don’t foresee excessive doctor visits or any chance of hospitalization in the immediate future, this plan makes a lot of sense.
After Your $2,180 Deductible a High Deductible Plan F Covers
Medicare Part A Coinsurance (Hospital)
Medicare Part B Coinsurance (Medical)
Blood (First 3 Pints)
Part A Hospice Care Coinsurance and Copay
Skilled Nursing Facility Care Coinsurance
Part A Deductible
Part B Deductible
Part B Excess Charges
Foreign Travel Emergency
Do Not Confuse Medicare Part A and B Deductibles with A High Deductible Plan F
Your Part A and Part B deductibles apply towards your Original Medicare benefits. The deductible of $2,180 applies towards your Medigap Plan’s benefits. However, the deductible amounts you pay towards A and B also count towards your high deductible Plan F.
For example, when you visit the doctor, you will be charged 100% of the costs until the Part B Deductible of $166 is met. After that, you only pay 20%, and Medicare pays the rest. Let’s say your doctor bill is $80, and you’ve already met your Part B Deductible for the year. Medicare will pay $64 (80%); you only pay $16 (20%). It works the same for your Medicare Part A benefits. The Part A Deductible is $1,288, in which you pay would 100% if your Medigap Plan’s deductible of $2,180 has not already been met. Once your total out-of-pocket reaches $2,180, your high deductible Plan F will cover all the remaining costs that Medicare doesn’t pay. Then you pay nothing for the remainder of the calendar year.
High Deductible Plan F Has Fewer Rate Increases
Because High Deductible Plan F tends to attract healthier people, rate increases are much more manageable. Another reason for fewer rate increases is having a deductible. Without first dollar coverage, you are less likely to go to the doctor’s office or hospital for less serious conditions. Cutting down on frivolous claims saves the insurance company money which is then passed on to you in the form of lower rate increases.
Over the long-term, minimal rate increases can add up to a substantial amount of savings.
Consider This Before Buying a High Deductible Plan F
Do you have enough savings to cover the deductible amount? The plan only works if you can afford to pay $2,180 a year if necessary. We can’t predict the future, so if you end up seeing a physician more often than you anticipated, or need services that require hospitalization, you must have enough savings to cover the cost.
As of yet, I cannot confirm how the phasing out of Medigap Plan F will affect the high deductible version in 2020. In theory, because it doesn’t offer first dollar coverage, the new law should not apply. I will continue to update this post as more details emerge.
I’ve done my best to explain how the plan works, but with so many deductibles and benefits, it can be confusing. If you have any questions, please contact Medigap Planners. We’ll be happy to help.