Medicare Supplement Insurance Plans are designed to help you cover the portion of your health care costs that Original Medicare doesn’t, including coinsurance amounts, copays and deductibles. These plans come in traditional no/low deductible or high deductible options, both of which offer advantages and disadvantages. The high deductible plans generally have considerably lower monthly premiums, but require you to pay a certain amount of your own healthcare expenses before they start paying. Traditional, no or low deductible plans will begin paying right away, but most likely will require you to pay higher monthly premiums. What type of plan will likely work best for your needs depends on several factors.
Advantages of High Deductible Medicare Supplement Insurance plans
As previously mentioned, the high deductible Medicare Supplement Insurance plan options—currently plans F and G—have lower monthly premiums then the traditional options. These plans can be appealing to people who want to keep their regular monthly health care spending low and don’t anticipate using a great deal of healthcare in the following year. If that describes you, these plans can be a way to save money, while still having protection in case of an unexpected serious illness or injury. Once you have paid the yearly deductible—currently $2,340 as of the year 2020—the plan will function just like the traditional version with all the qualifying benefits. Plan F and G are currently the only high deductible plans offered. These two plans are also the most comprehensive, with the only difference being that Plan F covers the annual Part B deductible of $198. Plan F is not available to new enrollees.
Disadvantages of High Deductible Plans
High deductible plans do not start paying until you have met the deductible, so you are responsible for all out-of-pocket expenses until that threshold is reached. With a plan of this type it is imperative to have money set aside for additional healthcare costs—at least the deductible amount of $2,340—so that you can cover these expenses as they come up. People who anticipate needing ongoing and significant care may be better off with a traditional plan that will start helping pay additional expenses right away. Also, if you are diagnosed with a serious chronic illness that may require ongoing care it may be very difficult and expensive to get a traditional plan, which can require underwriting. Purchasing a traditional plan while you are basically healthy or in your six-month open enrollment period is the best way to ensure you always have this comprehensive coverage. Having a traditional comprehensive supplement plan like G or F is also a way to standardize your healthcare spending so that it is more consistent on a monthly basis.
Example of how both types of plans work
Imagine that you get into a car accident, which requires a trip to the ER, x-rays, orthopedic consults, surgery and physical therapy. The bill for all this treatment could be $20,000. Medicare would pay around 80% or approximately $16,000. Without any supplement plan you would be completely responsible for the remainder of the bill or $4,000. With a high deductible Plan F or G you would pay the deductible—$2,340 in the year 2020—and then your plan would activate and pay the remaining amount ($1,660). If you have a traditional Plan G or F it would most likely pay the entire $4,000 amount and you would not be out of pocket anything (but would be paying higher monthly premiums). Keep in mind that even if you don’t have a serious medical problem with a high deductible plan you will probably end up paying small amounts along the way. For example, if a doctor’s visit costs $100, Original Medicare will pay $80 and you will be responsible for $20 at the time of service.
Reasons to choose a traditional plan:
- No or very few out-of-pocket expenses health care expenses
- Prefer to keep monthly healthcare spending stable
- Secure a full-service plan that you can keep for you entire life, regardless of your health status
Reasons to choose a high-deductible plan:
- Lower monthly premiums
- Large potential savings if health care costs remain low
- Coverage in a case of unexpected serious illness or injury (after annual deductible is paid)
Looking at the pros and cons of high deductible versus traditional Medicare Supplement Insurance plans and running the numbers to find out potential savings options will help you have confidence in your plan choices. This type of proactive Medicare planning ensures you know all your options and make the best choice for your particular situation and needs. If you have questions or concerns, a Health IQ licensed insurance agent is available to answer them and walk you through the process. We may also be able to help you get special rates based on your health consciousness. Call us today at 800-549-1664 (TTY 711) for a free no-obligation quote.