Pros and Cons of High Deductible Medicare Supplement Plans

There are two types of high deductible Medicare Supplement plans – Plan F and Plan G. High Deductible Plans F and G are versions of standard Plans F and G, in which you absorb the early costs. Once a beneficiary reaches the deductible, the high deductible plans function just like standard Plan F and Plan G.

Those eligible for Medicare can choose between High Deductible Plan F and Plan G. However, if you were not eligible for Medicare until January 1, 2020, or later, you can only enroll for High Deductible Plan G, because Plan F is suspended for new beneficiaries.

How High Deductible Works

As with any Medicare Supplement Plan, Medicare first pays its share of covered medical expenses, and then the Medicare Supplement plan pays its share. However, when it comes to a high deductible plan, Medicare beneficiaries need to meet the deductible for the year before their plan can help pay their out-of-pocket costs.

The annual deductible for these plans in 2023 is $2,490. That is the maximum out-of-pocket on high deductible plans, though Medicare might adjust the deductible amount each year.

To better represent the deductible, let’s assume you had a hospital stay early in the year. Part A will cover expenses for the hospital stay, with exception of the $1600 deductible which is your part of the costs. Since the beneficiary must meet the $2,490 deductible on their Medicare Supplement plans, they will pay the $1,408 out-of-pocket. The $1,408 is then applied to the $2,490.

The Pros of High Deductible Plans

The number one benefit of high deductible plans is the very low monthly premium. However, as with all Medicare supplement plans, the premium you pay will depend on your location and sometimes your age. This means, with a low premium, it can take less cash to maintain your coverage.

Moreover, when compared to the Medicare Advantage plan, High Deductible Medicare Supplement Plans have a low annual maximum out-of-pocket risk ratio.

The Cons of High Deductible Plans

The drawback of choosing high deductible plans is the annual deductible. The deductible set for 2023 is not fixed and can and will increase over time. The deductible is also connected to the beneficiary’s Social Security cost of living in an index. And, if your Social Security COLA increases by 3%, it will also lead to a 3% increase in your Medicare Supplement High Deductible.

Moreover, if you have higher deductibles in addition to annual premium increases, you have two parts of your plan moving against you. With this, you are paying more money each year for less insurance. We are not saying that this is a deal-breaker, only that you should keep this in mind as you evaluate the plan.

Carefully weighing the benefits and drawbacks of High Deductible Medicare Supplement Plans F and G can help you find the best coverage for you. At Temmen Insurance, we can help you decide if this plan would be a good fit for you.

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