Even with their low monthly premiums, people often ask if high deductible Medigap plans are worth the risk. If you are someone who has just entered the Medicare program or will be entering soon, and you’ve had a high deductible health plan in the past, these might sound like an attractive option.
But are high-deductible Medigap plans worth it? Are the lower premiums worth the higher out-of-pocket costs you could face if you need care? Well, that’ll be up to you to decide. But today, we’re going to explain how the plans work and what your options are for coverage.
How Do High Deductible Medigap Plans Work?
High-deductible Medigap plans work the same as any other high-deductible insurance plan offered by insurance carriers. Their name is helpful in explaining how the plans work, but in case you aren’t familiar with insurance deductibles, let’s explain a little further.
A healthcare deductible is the amount of money you must pay before the insurance begins to pay its portion for services. If you’ve had private insurance in the past, you might have had a $500 or $1,000 deductible. Often, preventive services don’t apply to the deductible. High deductible plans work the same way but with a much higher deductible – usually several thousand dollars.
The tradeoff is that premiums for high-deductible plans are a fraction of the cost compared to traditional insurance plans. The same is true when it comes to Medigap plans. There are two high-deductible Medigap plan options available to Medicare beneficiaries: Plan G and Plan F.
Medigap Plan G vs Plan G High Deductible
First, understand that these deductibles usually change each year. We’re going to discuss the deductibles as they stand in 2023.
Plan G picks up nearly every remaining cost from Parts A and B except the Part B deductible. As long as Medicare approves a service, the entire cost will be paid for by Original Medicare (Parts A and B) and Plan G, save for the deductible. Currently, the Part B deductible is $226.
On the other hand, the high deductible Medigap Plan G option is set at $2,700. Once you’ve met those amounts, depending on which plan you have, the rest of your approved costs are completely covered.
Now, let’s compare premiums for the two types of Plan G. Understand that Medigap premiums vary based on several personal factors, including your age, gender, location, and tobacco use. In addition, insurance carriers have their own rating methods. On average, Plan G costs $100 to $150 for newly-eligible beneficiaries. By contrast, the high deductible Plan G option averages around $50 per month.
Medigap Plan F vs Plan F High Deductible
The other high-deductible Medigap option is Plan F. Only beneficiaries who were enrolled in Parts A and B of Medicare prior to 2020 are eligible to enroll in either Plan F or its high-deductible counterpart.
If you’re eligible, you’ll be pleased to find out that Plan F picks up every remaining cost that Original Medicare would otherwise leave you to pay. You will not have a deductible if you enroll in the traditional Plan F. If you choose the high deductible version, your deductible will be $2,700 in 2023.
Plan F ranges between $150 to $300 or around $70 for the high deductible version.
High Deductible Medigap Plan Alternatives
You are the only one who can decide if a high-deductible Medigap plan is right for you. However, if you are considering one, we’d also recommend that you look at two other options: Medigap Plan N and Medicare Advantage.
Medigap Plan N
Plan N and Plan G are very similar, with one notable difference. Plan N requires copays when you visit your doctor (up to $20) and the emergency room (up to $50). In addition, Plan N does not cover any Part B excess charges. However, those are rare and are even prohibited in some states. The cost of Plan N averages about $40 less per month when compared to Plan G, so it may be a great way to compromise saving on the monthly premium with excellent coverage.
If you really want to decrease your monthly premium, Medicare Advantage is a great option. Most people even have access to plans that start as low as $0 per month. There are out-of-pocket costs and other limitations to consider.
However, each plan has a maximum out-of-pocket (MOOP), which is the maximum amount of money you’d have to spend on covered healthcare services in the calendar year. The MOOP varies between plans but is often around the deductible amount of the high-deductible Medigap plan. Plus, Medicare Advantage plans offer other benefits like prescription drug coverage, dental care, gym memberships, and over-the-counter allowances.
You don’t have to make these tough decisions alone. The advisors at Carolina Senior Benefits are happy to help you decide which Medicare plan is right for you and guide you through the enrollment process. Call us today and schedule your consultation.