What Is A High-Deductible Medicare Supplement Plan?

Michael T. Braden, September 10, 2024, Medicare Supplement Plans

WHAT IS A HIGH DEDUCTIBLE MEDICARE SUPPLEMENT PLAN?

IS A HIGH DEDUCTIBLE MEDICARE SUPPLEMENT PLAN G WORTH CONSIDERING?

For many people, High Deductible Medigap Plans (HDG and HDF) may make sense, but they would not be my first choice for most Medicare Beneficiaries. The appeal of a High-Deductible Medicare Supplement/Medigap plan is its lower premiums, some of which can be under $50 per month. But, instead of having the regular $240.00 Part B Deductible, the Deductible is $2,800. But that in itself is misleading.

Original Medicare will still pay 80% of all costs from day one, and you will still have to pay the Part B Deductible of $240.00. But that does count toward the $2,800 Deductible for the Plan. Your maximum out-of-pocket expense is $2,800 for the year. Conversely, if you chose the traditional Medicare Supplement route, a Plan G will cost around $150 per month until Age 70; some may be higher based on your Tobacco use, and a Plan N would run in the neighborhood of $100 per month. For Plan G, the premium is $1,800 per year, and your only Out-Of-Pocket Costs should be $240—the Part B deductible—totaling $2,040. A Plan N would cost approximately $1,440, including the Part B Deductible.

My concern for everyone is to A) keep as much money in your pocket as possible. B) Be aware that the rate is much lower for an HDG, but what happens if you get dealt a bad hand? If you have a Cancer Diagnosis, Cardiac Issues, COPD, Diabetes, etc you may not be able to pass Underwriting to switch to a regular Plan G or Plan N in the future.

Most years, you will likely save money with a High-Deductible plan G, but is it worth the risk? I think if you are financially secure and have done a great job of preparing for retirement, this may work well, but for the masses, I think a Medicare Supplement Plan G or Plan N is a better fit.

What Is A High Deductible Medicare Supplement

IMPORTANT FACTS ABOUT HDG IN 2024

• The High Deductible Plan G has a $2,800 deductible in 2024.

• Once the deductible is met, the High Deductible Plan G covers 100% of the cost of approved services.

• The Part B annual deductible is included in the High Deductible plan.

Isn't THERE ALSO A HIGH DEDUCTIBLE PLAN F?

For beneficiaries who became eligible for Medicare on or after January 1, 2020, a High Deductible Plan G option will be available. This plan will be like the High Deductible Plan F; however, it will not cover your Part B deductible. Since Plan F has historically been more expensive than Plan G, I cannot say that a High Deductible Plan F is a better option than a High Deductible Plan G.

REMIND ME AGAIN ABOUT HOW A HIGH DEDUCTIBLE PLAN G (HDG) WORKS

With a High Deductible Medicare Supplement Plan G, the best place to begin understanding coverage is with the original plan. Therefore, in this scenario, Medicare Supplement Plan G is the parent plan.

To sum it up, Plan G covers your whole portion of medical benefits that are left over after Original Medicare has paid its portion, except for the Part B deductible. Likewise, a High Deductible Plan G provides coverage in the same way, but only after you meet your annual deductible.

2024 MEDICARE SUPPLEMENT PLAN COMPARISON CHART

2024 Medicare Supplement Plan Comparison Chart

IS THE PART B DEDUCTIBLE INCLUDED IN THE HDG?

The Part B deductible is included within the High Deductible plan’s deductible. Therefore, the enrollee would pay the first $240, Medicare would pay 80% of Part B services, and the enrollee would pay the remaining 20% until the deductible is satisfied. However, there is one rare situation. If an enrollee meets the $2,800 deductible with only Part A services, they would still pay the $240 in full, in addition to the $2,800 deductible. Medicare Part B would not pay its 80% cost-sharing until the $240 is satisfied. That is why you must know how Medicare works and how much Medicare costs when you are considering enrollment in a High Deductible Plan G, since you are responsible for the remaining balance until the high deductible is met.

WHAT HAPPENED TO MEDIGAP PLAN F?

When the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) was enacted, it made significant changes to Medigap plans as we know them. This legislation was designed to prohibit any Medigap plan from covering the Medicare Part B deductible (so the playing field was level for everyone), also referred to as first-dollar coverage. The key point is that for those newly eligible for Medicare on or after January 1, 2020, Plans C and F (including the high-deductible option) are no longer available unless you were 65 before January 1, 2020.

IF YOU SWITCH CARRIERS IN THE MIDDLE OF THE YEAR, WILL ANY MONEY YOU HAVE PAID IN COUNT TOWARDS THE DEDUCTIBLE?

No. The deductible will reset when you switch to another carrier with the same High Deductible plan.

IS THERE ANY ADVICE WE WOULD OFFER TO SOMEONE CONSIDERING ANY HIGH DEDUCTIBLE MEDICARE SUPPLEMENT PLAN?

Yes, if you have sufficient funds set aside for Medical expenses, either from your bank account or from a large balance in your HSA, an HDG could be viable.

WHAT ARE PEOPLE SAYING WHO HAVE GONE THIS ROUTE?

I will say that the feedback we receive from clients who go this route is that the lower premiums are often not worth the trouble. If you’re unsure which Plan G policy to go with, you can read reviews on Medicare Plan G to help. My best advice before enrolling in this plan is to do your homework and fully understand what you’re signing up for before you make your decision.