What is High Deductible Plan F?
High Deductible Plan F is a version of the regular Medicare Supplement Plan F in which you pay all costs until spending reaches the annual deductible. According to Medicare.gov, this plan is only available to people new to Medicare. That means you can buy this Medigap plan if you first become eligible for Medicare benefits due to age, disability, or ESRD on or after January 1, 2020.
Once you reach the annual deductible, the plan pays just like the regular Medicare Plan F. If you are coming from a high-deductible Obamacare plan, or health savings account plan, you’re already familiar with how this type of plan works. For people aging into Medicare with a good amount of healthcare savings put away, this high deductible plan is one way to save money.
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How Does High Deductible Medicare Plan F Work?
As with all supplemental Medicare insurance, High Deductible Medicare Plan F works in lock-step with your Original Medicare benefits. So, if Medicare covers a service, your Medigap plan will pay its share of your covered costs.
The standard Medicare Plan F is the most popular plan available because seniors like having first-dollar coverage. People who buy the regular Plan F or most concerned about peace-of-mind coverage. However, the high deductible version of this plan typically attracts cost-conscious people who look at this plan as a way to cash in on considerable savings by taking acceptable risks.
When you have a High Deductible Plan F policy, Medicare pays its 80% share, as usual, but you pay the remaining 20% of all costs until your out-of-pocket costs reach $2,340 (2020 deductible). Once you reach that level of spending in a calendar year the plan kicks in and pays all remaining costs for the rest of the year. That’s why this plan works for people who have savings for healthcare put away.
Here’s an example to illustrate. Let’s say you had a car accident, broke your hip, and needed a five-day stay in the hospital to care for your injury. Your Medicare Part A benefits pay for most of your hospital, but it does not pay for the Part A deductible. This is a $1,408 (2020 rate) that you must pay out-of-pocket, which is a bit more than half of your $2,340 deductible on your plan.
Then, let’s say later in the year your hip is still bothering you and your orthopedic surgeon recommends a hip replacement. The average cost for a hip replacement in the United States is around $32,000, but that’s not what you’ll pay. You’ll only pay $932 because that’s what’s left on your annual deductible before your plan pays all Medicare-covered costs.
The following Medigap Plan Comparison Chart will help you understand what High Deductible Plan F covers. You simply need to remember that you pay the first $2,340 each year before the plan begins paying its share.
Is a High Deductible Plan F Really Worth It?
You might be wondering how a Medigap policy with a $2,340 deductible could possibly be beneficial? Typically this type of plan (there’s also a high deductible version of Plan G) offers a substantially lower premium, making it to people with a significant amount of retirement savings or healthcare savings. These people are able to take the risk of high out-of-pocket costs because they save money on all of the years that they barely use healthcare services.
High deductible plans are a common option for many people aging into Medicare and out of their employer group health plans. In fact, many employer plans have deductibles ranging from $4000 to $10,000 per year, just like the catastrophic Obamacare plans. For people coming from one of these plans, a $2,340 deductible is a great relief.
Although this type of plan works for some people, particularly those who are accustomed to putting money away for their healthcare needs, it’s not for everyone. Specifically, if you don’t have money saved, a high deductible Medigap plan will make your budget feel unpredictable. That’s because every time you go to the doctor you’ll be pulling out your wallet to pay. If you’re looking for predictable costs, the regular Medicare Plan F or Plan G is most likely a better option.
High Deductible Plan F is an exceptional value for those who understand and plan for the day when you’ll need to write a check for $2,340. If you can’t do that, then it’s not the right plan for you. Don’t be wooed by the savings if you’re not equally ready to pay the price.
Be aware that High Deductible Medigap F premiums vary widely from carrier to carrier, and not all Medicare supplement insurance companies offer it. If you’re thinking this plan might be right for you, call 1-855-728-0510 (TTY 711) and speak with a licensed HealthCompare insurance agent. There’s no obligation, and they offer more plan options than any other national agency.
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