What is High Deductible Plan G?
The high deductible version of Medicare Supplement Plan GIf you're turning age 65 this year, Medicare Supplement Plan G is the most comprehensive Medicare supplement you can buy. It's also the most popular. You might be thinking that Medicare Supplement Plan F is... has the same coverage benefits as the regular Medigap Plan G, but you pay all costs until your Medicare-approved costs reach the annual deductible. According to Medicare.gov, High Deductible Plan G is only available if you first become eligible for Medicare benefits due to age, disability, or ESRD on or after January 1, 2020. (see our main Medicare supplements page to compare your Medigap plan options.)
Once you reach the plan’s annual deductible, the plan covers you just like the regular Medicare Plan G. If you are coming from a high-deductible employer plan, or health savings account plan, you already know how this plan works. If you want to save money, and you have savings put away for your healthcare needs, this plan is worth considering.
How Does High Deductible Medicare Plan G Work?
As with all Medigap plans, High Deductible Medicare Plan G works with your Original MedicareOriginal Medicare is private fee-for-service health insurance for people on Medicare. It has two parts. Part A is hospital coverage. Part B is medical coverage.... benefits to cover your major healthcare costs. Basically speaking, if Medicare covers a service, this plan will pay its share of your covered expenses.
The standard Medicare Plan G is one of the most popular Medigap plans available. People who buy the regular Plan G want the peace-of-mind Plan G coverage offers. 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.
When you have a High Deductible Plan G policy, Medicare pays its 80% share, as usual, but you pay the remaining 20% of all costs until your out-of-pocket costsOut-of-pocket costs (aka, out-of-pocket medical expenses) are costs that a beneficiary must pay because their health insurance does not cover them. Out-of-pocket costs are found in the deductibles, copayments, and coinsurance outlined in each health... 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 AMedicare Part A is hospital inpatient coverage for people with Original Medicare, whereas Part B is medical coverage for doctor visits, tests, etc.... 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 G covers. You simply need to remember that you pay the first $2,340 each year (which includes the Medicare Part BMedicare Part B is medical coverage for people with Original Medicare. It covers doctor visits, specialists, lab tests and diagnostics, and durable medical equipment. Part A is for hospital inpatient care.... deductible) before the plan begins paying its share.
Is a High Deductible Plan G 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 F) 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 deductiblesA deductible is an amount a beneficiary must pay for their health care expenses before the health insurance policy begins to pay its share.... 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 G is probably a better option.
Also See: Is it Better to have Medicare Advantage or Medigap?
High Deductible Plan G is a good value for those who understand and plan for the day when they’ll need to write a check for $2,340. If you can’t do that, then this is 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 G premiumsA premium is an amount that an insurance policyholder must pay for coverage. Premiums are typically paid on a monthly basis. In the federal Medicare program, there are four different types of premiums. ... vary widely from carrier to carrier, and not all Medicare supplement insuranceMedicare Supplements are additional insurance policies that Medicare beneficiaries can purchase to cover the gaps in their Original Medicare (Medicare Part A and Medicare Part B) health insurance coverage.... 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.