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High Deductible Plan G – Medigap HDG
Last Updated on
In 2020, the Government will authorize the creation of a new High Deductible Plan G. As you may know, Plan F is disappearing for new purchases as of 2020. With the disappearance of Plan F, the High Deductible Plan F will be gone as well. If you are interested in buying a High Deductible plan, the only option you will have will be the High Deductible Plan G.
You may be asking multiple questions:
- What is Plan G?
- What does the High Deductible option coverage? What are my costs?
- Why should I buy a High Deductible plan?
What is Plan G?
Medicare Supplement Plan G has become the most popular plan among our clients. It’s very similar to Plan F, with one exception. The Medicare Part B deductible is not covered
Here are the basic details of what Plan G Covers:
- Medicare Part A deductible, coinsurance, & hospital costs
- Medicare Part B Coinsurance, co-payment, & excess charges
- Preventative Care Part B Coinsurance
- Basic doctor visits
- Foreign Travel Emergency expenses
- Skilled nursing facility coinsurance
- Durable medical equipment (DME), blood transfusions, lab work, X-rays, surgeries, ambulance rides, etc.
It is the exact same as Plan F, except the Part B Deductible. Once the deductible is paid, Plan G provides full coverage for copays, coinsurance, the 20% Part B doesn’t cover, and the Part A hospital deductible. The deductible is not very high either. In 2019, the Plan G deductible is $185. If you are saving more than $185 in premiums by purchasing Plan G, then it makes sense to pick Plan G over F. You can see why so many people choose this one.
Here’s what the Plan G deductible looks like in action. Bob goes to the doctor for routine blood work on March 1. In April, he gets a bill from the doctor for $185. That $185 is his Part B deductible. Once he pays that bill, he will not incur any more out-of-pocket costs when he visits the doctor. So outside of the deductible, Plan G is identical and the second most comprehensive to Plan F.
What Does a High Deductible Plan Mean?
In 2019, the only High Deductible plan is the High Deductible Plan F. As we mentioned earlier, Plan F is retiring this year, so Plan G will get a High Deductible Plan to replace it. The best way to explain how the High Deductible G will work is to compare it to the current Plan F option.
High Deductible Plan F
In 2019, the HDF has a $2300 Deductible. The deductible for HDG has not been released yet, but it should be similar. If you look back over time, there has been very little change in the High Deductible amounts.
Here are the deductible changes since 2015. As you can see, some years there is very little price movement. In other years there is an increase, but it usually small. We would expect Plan G to have similar deductibles.
2015 – $2180
2016 – $2180
2017 – $2200
2018 – $2240
2019 – $2300
Where does the deductible apply? Medicare Part A (hospital) has out of pocket costs. Currently, there is a $1,300 deductible and co-payments of around $300 a day for Part A. The out of pocket costs for Part A will go towards the $2,300 deductible for the calendar year.
The 20% out of pocket costs for Part B and the Part B deductible will also be applied to the $2,300 deductible. This is the main difference between the plans HDF and HDG.
This example will help.
Susan is on Plan G. Her doctor visits will cost her the Part B deductible of $185. She is charged this amount prior to reaching her $2300 deductible. The $185 will be applied to the deductible.
However, if she has already spent the $2300 deductible on Part A (hospital costs). She still needs to satisfy the Part B deductible of $185. In this case the total max limit would be $2300 + $185 = $2485. On the HDF it doesn’t matter when you satisfy your Part B deductible, you satisfy your deductible when you reach $2,300.
How Do You Decide if Plan G is for You?
If you are looking for a comprehensive supplement plan, G is a perfect option. If your plan G premium is $185 less than F, it makes sense to go to G. The savings will make up for the extra cost you have in the Part B deductible. We at Medicare Nationwide normally see Plan G rates about $240-$480 per year cheaper than that of Plan F.
Also, as we’ve said Plan F is disappearing for new customers in 2020. If you currently have F, you will be grandfathered, but it still makes sense to look at G. Plan G’s rates have been much more stable and with F retiring, we expect them to continue to rise to encourage people to leave the plan.
Why Choose a High Deductible Plan?
So why bother with a High Deductible plan. It feels like you are going to have more out-of-pocket expenses. Not necessarily. Financial impact of High Deductible Plan Premiums on High Deductible Plans are much lower than their standard deductible counterparts. You may have experienced this with an employer plan prior to joining Medicare. If you chose a high deductible option, your shared cost was much lower. One thing we’ve seen consistently over the years is that age is a major factor in how much you could save with a high deductible plan.
Let’s use a 75-year-old woman under Plan F as an example. For a 75-year-old the average premium is around $3000 on Plan F. If she bought a High Deductible Plan, her premium drops to around $690. She is saving $2310 in premium, which is just slightly more than what her deductible would be. Sometimes this is referred to the break-even age and is a factor you should consider.
Make sure to quote both plans and consider the savings. The break-even bought will vary based on your age, gender, geography, and the insurance company. Also from year to year, the factors could change that makes one plan significantly more affordable than the other. Even if you aren’t in the break-even zone, you might still consider the high deductible plan. Let’s say you get us to quote your options and you find that you will only save about $1900 with a high deductible plan. This is much less than the deductible. Should you still buy it? If you are in good health and don’t anticipate any changes in medical expenses, it might be worth taking the chance of potentially paying that deductible.
There may be other considerations besides financial ones.
A good example is someone on a Medicare Advantage plan. With Advantage plans, the premiums may be cheaper, but there are co-pays and co-insurance that must be paid out-of-pocket. Often these costs are more than anyone would pay with a high-deductible plan. But money is not the only reason for moving.
Advantage plans have network restrictions. This can be burdensome especially if you the customer needs caretakers to drive them to doctor’s offices. Service areas may be limited and make transport difficult. Moving to High Ded Supplement plan, would solve this problem. There are no network restrictions as long as the provider participates in Medicare.
Cost may be important but there could be other considerations as well such as convenience and logistics in this case.Medicare planning can be complicated because of all the options. You can’t only think about the money. There are more considerations including prescription drugs, doctor availability, your own health history.
The Bottom Line
Is there a downside to a High Deductible Plan?
It usually depends on how you manage your health care costs. One thing we discover is they people who don’t mind keeping up on their deductible costs do well on a high deductible plan. Here’s what we mean. Any time you go on a doctor visit, Medicare will pay 80% and you will get a bill for 20%. Each time you pay this amount it will apply to the deductible. It is good practice to keep up with this running total, so you know when you getting close to maxing the deductible.
Some people do not like this kind of financial management and will opt for the traditional plan, so they don’t have to manage the deductible costs. Each individual should consider not only the savings but these other factors to determine whether a high deductible plan is the right choice for you. Here’s how we can help you make a good Medicare supplement decision.
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