High Deductible Medicare Supplement Plans

Medicare Supplement Plan G High Deductible

There is a lot of confusion around the high deductible Medicare supplement plans. There is confusion about how they pay benefits, as well as their value.  In this article I am going to show a very easy way to view the benefits of high deductible Medicare supplement plans and determine if they are a good value for you. 

What Is a High Deductible Medicare Supplement Plan? 

There are two Medicare supplement plans that also have a high deductible option; Medicare supplement Plan G and Plan F.  The high deductible option is the same plan, the same benefits, but a higher deductible to overcome before the plan starts to pay benefits. 

A deductible is an amount of money you must spend before your insurance pays benefits.  With a Medicare supplement plan, you would need to spend that deductible on Medicare approved services.

It’s important to understand that this deductible is on your Medicare supplement, noy on your Medicare.  Medicare still pays first. 

For example: with Medicare you have a $233 annual Part B deductible you would pay before your Part B pays you a benefit.  Once you have satisfied that annual Part B deductible, Medicare will pay 80% of your outpatient services, you pay 20%.  When you have a regular Medicare supplement Plan G or Plan F, your supplement will pay that 20% for you.  With high deductible Medicare supplement plans you will pay that 20% until all your Medicare bills add up to the deductible.  Then you supplement will pay its benefits and cover that 20% for you. 

How Much Is the High Deductible? 

For 2022 the deductible for the high deductible options of Plan G and Plan F is $2,490. This is a calendar deductible.  It resets every January 01.    This deductible is also not fixed.  It can change each year along with inflation.  In fact, the deductible is linked to the CPI-U (Consumer Price Index for all urban households).  If the CPI-U increases by 5%, your deductible will increase by 5%.

Understanding High Deductible Medicare Supplement Plans

The easiest way to understand the high deductible Medicare supplement plans is to stop thinking of them as high deductible.  Instead view them as high maximum out-of-pocket options. 

Take a look at the 2022 Medigap Benefits Table.  You will notice that the benefits of Medicare supplement Plan G and Plan F are very similar. Medigap Plan F pays 100% of your inpatient and outpatient Medicare expenses, leaving you with zero out-of-pocket.

Plan G pays 100% of your inpatient and outpatient Medicare expenses except for the annual Medicare Part D deductible (less than $250).

With ether plan, you can easily reach a level of expenditures where the supplement plan will provide you 100% insurance coverage.

Now look at the benefits of Medicare Part A and Part B below.   When you have a high deductible Medicare supplement plan, these are your benefits until you reach the $2,490 deductible.  Once you have $2,490 in out-of-pocket Medicare expenses for the calendar year, your high deductible supplement starts to pay its benefits.  

From the benefit table we can see that both plans would pay 100% coverage.  So, this is the tricky part, your maximum annual out-of-pocket financial risk is equal to the $2,490 Medicare supplement deductible.

In other words, these plans offer a fixed maximum out of-pocket limit equal to the supplement deductible.  That number will change every year with inflation.  But it puts a cap on your financial risk that Original Medicare does not have.

I suggest keeping the Medicare Part A and B literature so you know exactly what your insurance benefits will be prior to meeting your deductible