February 22, 2021
If you are researching Medicare and looking for a video that will help you understand the Medicare supplement plans G-high deductible and Plan F-High deductible, this video is for you. So, stay tuned.
Hi I am Matthew Claassen with MedigapSeminars.org. We are an independent insurance broker helping people with their Medicare and retirement needs from Hawaii to Virginia and Alaska down to the Florida Keys. We are a true independent insurance broker. That means we work with all the major insurance companies and offer all Medicare supplement plans. Most of all, we represent your best interest, not that of any insurance company, and our services are free to you the consumer. All you need do is ask is us for our help.
I understand how confusing Medicare can be. I help people with their Medicare decisions every day. My mission and my agency’s mission is to help you make an informed decision about your Medicare choices. That is why in this video I will go over what you need to know if you are considering a Medicare Supplement High Deductible Plan G or High Deductible Plan F.
In this video I will
Show an easy way to understand exactly what the high deductible Medicare supplement plans cover and how they work. At the same time, I have already seen other videos and heard other agents mis-characterize Medicare Supplement Plan G High Deductible. Which is a nice way to say they described its benefits incorrectly. I will clarify that confusion for you in this video.
Then, in this video we will Review the Pros and Cons or strengths and weaknesses of a high deductible plan that may be different than other Medicare supplement plans. Finally, We will look at when you should consider a high deductible plan instead of another Medicare supplement and how to tell if you are in a part of the country where High Deductible Medicare supplement plans are worth considering.
There are some parts of the US where a Medicare supplement High Deductible Plan is a no-brainer. There are other parts of the country where it is such a poor value relative to other Medicare supplement plans that it simply doesn’t make sense to seriously consider the high deductible option.
I have a rule of thumb which I apply and teach my agents to use when quoting a high deductible plan to determine when it makes sense financially. I am going to share that rule of thumb with you in this video.
Let’s get started
Click here to get the details of Medicare Part A and Medicare Part B coverage.
There are two Medicare supplement high deductible plans. There is a Medicare supplement Plan F high deductible and a Medicare supplement Plan G high deductible. If you were eligible for Medicare, even if you didn’t enroll, if you were eligible for Medicare prior to January 01, 2020 you can choose either the Plan F high deductible of the Plan G high deductible. If you were not eligible for Medicare until January 01, 2020 or later, your only high deductible choice is the Plan G high deductible.
Despite a common misconception, they both have the exact same benefits and should be the exact same price, or within pennies. I will go over that in detail in just a moment.
First, with the high deductible plans, like all Medicare supplement plans, you get to keep the benefits of Original Medicare. You can see any doctor, go to any medical facility in the country as long as they accept your Original Medicare.
Second, no insurance company has a say in what is covered. Medicare is your primary insurance coverage. The intent of Medicare is to cover everything that is medically necessary, and they rely on your doctor’s opinion and diagnosis to determine medical necessity.
Next, to understand what the Medigap Plan G and Medigap Plan F high deductible plans cover, the first thing you need to do is erase whatever preconceived notion you have of the term “high deductible”. Just erase it. I can assure you; the benefits of these Medigap plans will be unlike any of the other high deductible plans you have experienced in your lifetime.
The easiest way to understand the benefits of the Medicare supplement or Medigap Plan G high deductible and Plan F High Deductible is to first look at your coverage under original Medicare. Then understand that the role of the Medigap High Deductible plan is to provide a maximum annual out-of-pocket expense cap on your medical expenses.
I have linked here the benefits of Medicare Part A (inpatient care) and Medicare Part B (outpatient care). If you can, please print that out. These are the benefits you have with your red, white and blue Medicare card if you do nothing else. If you just keep your Original Medicare and do not trade it in for a Medicare Advantage Plan or add a supplement.
For example, when you see a doctor for outpatient care you will pay a small annual deductible, in 2021 it’s $203, you pay the first $203 in outpatient Medicare bills. After which, Medicare will pay 80% of your coverage and you pay 20%.
If you go into the hospital as an inpatient, your Medicare Part A will only start covering you after you have met the Medicare Part A deductible. This is a per event deductible of $1408 for the year 2020. Then you have coverage for a total of 60 consecutive days before having to pay daily copays. Now, it’s 2020 as I make this video so the numbers you see represent the 2020 deductibles and copay of Original Medicare. That will change every year, but the concept of how your coverage works with a Medicare supplement high deductible Plan G or High deductible Plan F will not.
When you get a Medicare supplement Plan G high deductible or Plan F high deductible, Medicare Part A and Medicare Part B will be your only insurance coverage up until you reach the amount of the deductible. After that, you have 100% coverage for the rest of the calendar year.
Medicare Part A and Medicare Part B still pay their portion first. For 2020 the Medicare supplement Plan G high deductible and the Medicare supplement Plan F high deductible both have a maximum deductible of $2,340. Because Medicare still pays its portion first, that $2,340 is really your Maximum out-of-pocket for 2020. The deductible for these Medicare supplement plans is really your annual maximum out-of-pocket for the calendar year.
In my Medicare Supplement Plans Explained video I go over your MOOP. MOOP stand for your annual Maximum Out-Of-Pocket Expense. If you just have Medicare Part A & Medicare Part B as your insurance, you have no MOOP. You have unlimited financial exposure to Medicare bills. When you purchase a Medicare supplement high deductible plan, you create a MOOP equal to the plan deductible. That means, these plans create a Maximum Out-of-Pocket risk of $2,340 for the year 2020.
The entire intent of a Medicare supplement plan is to put a maximum annual out-of-pocket cap on your financial risk for in-patient and outpatient expenses. That is exactly what the Medigap Plan G High deductible and Medigap Plan F High deductible do. That annual maximum out-of-pocket cap is equal to the deductible.
The easiest way to understand these Medicare supplements is to simply understand that your insurance is Original Medicare with a maximum annual cap equal to the Medigap plans’ deductible. It’s that simple. Your Medigap deductible is your maximum out-of-pocket risk.
I am a visual person. That’s why I like the idea of printing these out (showing A & B sheets). If I were sitting next to you, I would place them on the table, and have you study them so you can see exactly what coverage you have. Then understand that the Medigap Plan G and F High Deductible simply place a maximum on your financial risk.
I want to next clear up a confusion about the benefits of a Medicare supplement Plan G High Deductible versus the Plan F High Deductible. Then I will go over some of the risks these plans have that other supplements do not. After which I will show how to evaluate if a high deductible Medigap Plan is right for you, and the rule of thumb I use to determine if a high deductible plan should even be considered
So, let’s clear up the confusion about Plan G High Deductible benefits vs the Plan F high deductible.
It was introduced officially on January 01, 2020, but even as I make this video the Plan G-High deductible is not available yet in many areas. Each state has to approve the supplement plan itself, then approve the insurance applications for each insurance company to use. The bottom line, very few insurance brokers have experience with this specific plan, and I have seen and heard the benefits of Medicare supplement Plan G explained incorrectly.
Most people evaluate the different Medicare supplement plans by looking at this Medicare supplement benefit table <show table>. You have probably seen this on the Medicare website, or your Medicare & You Guidebook or even the Choosing a Medigap Policy publication.
Here is the problem, this table as it refers to the high deductible plans has been dummied down to the point of being incorrect.
When we look at the reference to the high deductible plans it reads:
“* Plans F and G also offer a high-deductible plan in some states. With this option, you must pay for Medicare-covered costs (coinsurance, copayments, and deductibles) up to the deductible amount of $2,340 in 2020 before your policy pays anything. (Plans C and F won’t be available to people who are newly eligible for Medicare on or after January 1, 2020.)”
This leads most readers to believe that the Plan G high deductible policy is like the regular Plan G in that the there is no coverage for the Medicare Part B deductible.
Well, like I said, dummied down to the point of being incorrect. These publications are nice and useful, but they are not official insurance documents.
The official document you want to reference is called an Outline of Coverage and is provided by the insurance company offering the Medicare supplement plan. The Outline of Coverage is an official document that provides a summary of your coverage. You should get an Outline of Coverage either when or before you apply for your supplement. Just ask the agent, they should have no problem providing it to you.
For this example I am going to pull up an outline of coverage from the company that sells close to 90% of all the high deductible Medicare supplement plans in the country. I cannot give the name without their permission, so we blur that out. Let’s take a look.
We have the same benefit table, just stylized a little better. I like it better.
“Plans F and G also have a high deductible option which requires first paying a plan deductible of $2,340 before the plan begins to pay. Once the plan deductible is met, the plan pays 100% of covered services for the rest of the calendar year. …… that’s the same, In fact Medicare supplement Plan G does not cover the Part B deductible. So you would think it would be extra. But then right here .. High deductible Plan G does not cover the Medicare Part B deductible. However, high deductible Plans F and G count your payment of the Medicare Part B deductible toward meeting the plan deductible.”
Let me repeat that “However, high deductible Plans F and G count your payment of the Medicare Part B deductible toward meeting the plan deductible”
When designing the Plan G high deductible, the intent was for it to be just like the Plan F High Deductible. In order to get the Plan G High Deductible to have the same benefits as the Plan F High Deductible, but still follow the Macra law of 2015 that indicated no supplements offered to people new to Medicare as of 2020 can “cover” the Medicare Part B deductible they had to get cute with the language.
Plan G high deductible doesn’t cover the Part B deductible, but it credits you for the money spent towards the Part B deductible in meeting your $2,340 annual MOOP.
Plan G high Deductible and Plan F High Deductible offer the exact same benefits.
What is relevant to you as a difference is that you can only get the Medicare supplement plan F-High Deductible if you were eligible for Medicare prior to 2020. Actually, if you were eligible for Medicare prior to 2020, you can get either Medicare Supplement Plan F high deductible or Medicare supplement Plan G high deductible. If you were not eligible for Medicare benefits until 2020 or after, the only high deductible Medicare supplement plan available to you is the Medigap Plan G-High Deductible.
They should be the same price when offered by the same company.
Next I want to cover the Pros and Cons of these high deductible plans and my rule of thumb to help you identify if you are in a part of country where a high deductible Medicare supplement makes sense.
What are some of risks of a high deductible Medicare supplement that other Medicare supplement don’t have?
First is the annual deductible, that $2,340 for 2020? That’s not a fixed amount. It can and will increase over time. It is linked to your Social Security cost of living index, your COLA.
This link is written into law. If your Social Security COLA goes up by 2%, your Medicare supplement’s High Deductible will also increase by 2%. Now, this has not been a problem as we have not had persistent high inflation since 1980. But still, if you are considering this plan at age 65 and you have another 20-25 years of life, understand 25-years is a long period of compounding against you. With the current deductible of $2,340, if there just 2% annual inflation your deductible would be close to $4,000 by the time you are age 90. At 3% inflation your deductible will near $5,000. You get the picture. Suffice it to say, unlike any other Medicare supplement, the value of the high deductible will decrease during prolonged periods of high inflation.
If you have annual premium increases in addition to a higher deductible, you have two moving parts of your plan compounding against you. This will leave you paying more each year, for less insurance.
In states that price these policies as Attained age, where the price automatically increases a little each year as you attain an older age, the annual percentage price increase on a Medigap High deductible plan is typically higher than the average annual percentage price increase on a Medigap Plan N. As a result, in those states the value of a high deductible plan, relative to your other choices, is less and less each year even in times of relatively low inflation.
I am not suggesting this a deal breaker, only that as you evaluate this plan relative to your other choices, keep this in mind.
Recall that the deductible for these plans and for Medicare resets every January 01. It’s a calendar year deductible. That means If you get seriously ill late in the year (in October, November, December for example) and your expenses meet the deductible. You’ve paid the deductible for the year.
You may find yourself still fighting whatever ails you come January, and your deductible resets January 01 right in the middle of your medical battle. As a result, you end up paying the deductible twice because of when you sick.
If you have a High Deductible Medicare supplement Plan, you must have the resources available to pay at least two-years deductible. Otherwise you may have insurance and still face economic hardship from a medical event. Or, just as bad, forego seeking medical care because paying the deductible twice is a burden. That’s not a good thing. If that is the case, you might want to consider another plan.
What are the benefits of a high deductible Medicare supplement relative to your other Medicare supplement choices?
Number one is a very low premium. As with all supplement plans, the premium will depend on your location and possibly your age. But the premium is typically less than $100 per month and often closer to $50 a month.
A Low premium means that in the worst of times it takes less cash outlay to maintain your Medicare coverage. It also frees up money to build on your coverage. That’s very important. You can have a High Deductible Medicare supplement Plus Cancer Coverage to pay you a lump sum tax-free check of $25,000 or $35,000 or more when diagnosed with cancer and even add Dental, Vision & Hearing coverage and still save money over other Medicare supplement plans. You can end up with much broader, more comprehensive health coverage and still have less out of pocket than if you had a higher cost Medicare supplement.
Second is a low Maximum annual out-of-pocket risk relative to a Medicare Advantage plan. While you would have more out of pocket risk relative to other supplement plans, your High deductible Medicare supplement has an annual out-of-pocket exposure that is a third to nearly to one fifth a typical Medicare Advantage plan. And, you keep the benefits of Original Medicare. A typical Medicare Advantage PPO can have a maximum annual out-of-pocket expense of $6,700 to $10,000 when you need medical services. The High Deductible supplement is currently $2,340 for the calendar year 2020.
All of that should be considered when researching which Medicare plan is right for you.
Next, Let’s look at when you should consider a high deductible Medicare supplement plan instead of another supplement. Plus, how to tell if you are in a part of the country where High Deductible Medicare supplement plans are worth considering and I will share my rule of thumb for when to consider a high deductible Medicare supplement, and when not to.
Medicare supplement premiums are wildly different from state to state as well as from one insurance company to another in the same state and region.
As I mentioned earlier, there are some parts of the country where the Medigap High Deductible Plan G or Plan F is a no-brainer. There are other parts of the country where it is such a poor value relative to other Medicare supplement plans that it simply doesn’t make sense to seriously consider the high deductible supplement.
As you may know, my company helps people with their Medicare choices in every state except Massachusetts. Sorry Massachusetts. When I consider if a Medicare High Deductible plan is or is not a value worth seriously considering or advising a person to consider, I look at two things.
This is my Rule of Thumb I use to tell me if you are in an area of the country where a High Deductible Medicare supplement Plan should be considered. When I evaluate the price of a high deductible plan I do so relative the Medicare Supplement Plan N and Plan G. Both of these plans offer full coverage. For a high deductible Medicare supplement to be a good value, the annual premiums for full coverage, the Medigap Plans N or Plan G should be close to the MOOP of the high deductible plan.
That means Medicare supplement Plan N should be at least $165 to $180 / month in premium. Why? Because at that price level the annual premium for the Medicare supplement Plan N, plus deductibles and copay, is close to the Maximum annual out-of-pocket you would pay with a high deductible. For example, let’s say your Medigap Plan N option is $180 a month. That’s $2,160 a year in premiums even if you do not go to the doctor even once. If you do see a doctor, you will pay the Medicare Part B deductible, currently $198, plus copays. Add those expenses and you are looking at $2,500 out-of-pocket for the year.
Compare that to the high deductible plan where your premium may be between $600 and $850 a year. And only in the worst-case scenario, maybe once or twice in ten years, would you have enough medical expenses to reach the maximum $2,340. The rule of thumb number 1; when your out-of-pocket expenses during the average year owning a Medigap Plan N is close to the worst case scenario of a high deductible plan, you should consider the high deductible plan.
Rule of thumb Part 1: The Premium on the lowest cost full coverage alternative, the Medicare Supplement Plan N, should be close to or over $2,000 a year.
Rule of thumb Part 2: I Prefer a High Deductible Medicare Plan in an Issue Age or Community rated state. Some states mandate that all Medicare supplement plans are priced as either Issue Age or Community rated. We discuss this in detail in our Medicare Supplement Plans Explained video. For this case, understand that in those states, unless you are with the wrong insurance company, price increases are few and far between. There is no automatic annual price increase.
We already know that the $2,340 deductible will increase each year. The last thing you want is for the premium to increase each year too. Then you have two components of your healthcare compounding against you. That can be devastating over the decades you may be on Medicare.
I do have a few exceptions to that rule. One of them is certain parts of California. Not all of California, but parts have very high Medicare supplement prices combined with some of the highest annual price increases in the country. That’s just one exception to the rule.
There you have it. You have enough information to understand and evaluate a high deductible Medicare supplement Plan G or Plan F. If you would like us to provide quotes or a recommendation, please reach out to us by phone (800) 847-9680 or email. Our services are free to the consumer.
I am Matthew Claassen, with MedigapSeminars.org
Thank you for watching.
#Medicare #PlanGHighDeductible #PlanFHighDeductible #NewToMedicare #MedicareSupplementPlans #MedigapSeminars #MatthewClaassen
For Part D drug plan info visit: http://www.medicare.gov
Also visit: https://en.wikipedia.org/wiki/Medigap
Get your Medicare Guide to supplements here: https://www.medicare.gov/Pubs/pdf/02110-Medicare-Medigap.guide.pdf
And your Medicare & You Guide here: https://www.medicare.gov/pubs/pdf/10050-Medicare-and-You.pdf