High Deductible Medicare Plan G Vs The World

High deductible Medicare supplement plans. In all the years I've been in this industry, I have seen times when the high deductible Medicare supplement is a no-brainer, great decision. And I've seen times when choosing the high deductible Medicare supplement resulted in great regret and financial harm. In fact, the example I will share with you in this video was an event that changed my entire approach and philosophy regarding the Medicare supplement Plan G high deductible and the F high deductible. What I'm going to do in this video is not just talk about the benefits of the high deductible Plan G HD and the Plan F HD and clear up some of the misinformation about those benefits, but I'm going to share with you when and where it's a great plan to consider and when and where it can be a very poor choice. In addition, I will briefly compare the high deductible plans to the lowest cost full coverage Plan N, so stay with me. Hi, if we haven't met yet, I'm Matthew Clausen, CEO of Medigap Seminars Insurance Agency. We are one of the premier national insurance agencies specializing in Medicare. We can help you with your Medicare decisions and are paid by the insurance company that you choose when we submit an insurance application. And that means that our services are free to you, the consumer. Call us or use our quote request form to receive personalized service at no cost. So let's talk about the high deductible Plans G HD and Plan F HD. According to the industry surveys by GenRE, the high deductible Medicare supplement plans make up about five percent of the total Medicare supplement sales nationwide. However, they make up just over nine percent of our supplement sales nationwide for Medigap Seminars. I'm a strong believer in the high deductible Medigap plan under the right circumstances. I will go over those circumstances in a second, but first let me show you an easy way to understand the benefits of high deductible Medicare supplements. When you have either a high deductible Plan G or a high deductible Plan N, this is your primary insurance. Original Medicare Part A inpatient care and Part B outpatient services. When you see a doctor for the first time during the year, you will pay the annual $257 Part B deductible, then 20% of the bill thereafter. If you end up as an inpatient in the hospital, your Medicare Part A takes over and you'll pay the $1,676 Part A deductible even for just one night, and that buys you 60 consecutive days of hospital coverage. The Part A deductible, by the way, is not an annual deductible. It resets when you're discharged from the hospital for 60 days, which means that you can pay that deductible several times a year. Every dime that you spend towards your Medicare bills is credited towards your Medicare supplement high deductible. Once you reach that deductible, you have 100% coverage for the rest of the year. In other words, the deductible amount of your Medicare supplement is actually your maximum out-of-pocket limit for that calendar year, and that's how you should think of the high deductible Medicare supplement plan. You have Original Medicare as your primary insurance, and the amount of your Medicare supplement deductible is actually your annual maximum out-of-pocket limit. Your insurance coverage is Medicare Parts A and B until you reach your Then you have 100% coverage for the rest of the year. It's that simple. Also, please understand that the benefits of the Medigap Plan F high deductible and the Plan G high deductible are exactly the same. Exactly. There's a long story about the design of the G high deductible in some of my videos that are five plus years old now, but the issue is that the regular Plan G does not cover the Medicare Part B deductible, and the law is written such that no supplement other than Plan F and Plan C can pay the Part B deductible, and people new to Medicare as of 2020 or sooner cannot purchase those plans. The clever political solution is that the Plan G high deductible plan offers you a credit for the Part B deductible. You pay the deductible, but that amount is credited to your Medicare supplement deductible when your expenses approach that level. By the way, you can print out the original Medicare benefits with a link in the show notes below or on my website under the resources tab for MedigapSeminars.org. Next, let's look at the pros and cons of the high deductible plan, when and where it's a good choice, and when not. I'm going to cover the positives first. This includes when a high deductible plan makes the most sense and can be an obvious best choice. Then I'll go over when the high deductible plan should be avoided and who the plan is just not right for. To understand why it may be that a Plan G high deductible is a good choice in some occasions and not in others, you need a clear picture of the fact that the Medigap prices vary wildly from state to state. I'm going to go over some examples that include lots of numbers, so if you like, you may want to pause and get a pen and paper just to help follow along. For 2025, the Medigap high deductible is $2,870. That means that you must be out of pocket $2,870 before your supplement plan begins to pay a benefit. The Medicare supplement deductible increases every year at the same rate as the CPIU. It's our consumer price index, rounding to the nearest $10. For your information, to get an idea of how much this deductible has increased, it was $2,370 in 2020, so it's a 21% increase over the past five years. With that in mind, let's look at some Medicare supplement prices in the country's most expensive Medigap markets. These are all rough and rounded numbers that can vary by zip code. In Miami, a 65-year-old male can pay $3,000 a year for a regular Plan G. With a regular Plan G, you also must pay the Medicare Part B deductible, currently $257, when you first see a doctor during the year, which means your total annual cost for the Plan G in Miami could be $3,257. In the same zip code, a Plan G high deductible costs $915 a year. Your maximum amount of pocket for Medicare bills is $2,870, which includes the Part B deductible. So your total cost, the premium plus medical bills for those few years where you have medical bills that will max out your plan, is $3,785. That is a worst-case scenario because most people just don't have Medicare bills so high as to meet the Medigap deductible, except for a few years out of their life. So in Miami, your choice is to pay $3,000 a year just to have a supplement plan, or pay $915 a year for your supplement, saving over $2,000 a year with a potential occasional maximum out-of-pocket of $3,785. Which would you choose? Yes, I know I'm not considering premium increases or increases in the Medicare deductible. I'm simply trying to convey a concept of value. Another way to look at this is to subtract the annual premium of your Plan G high deductible from the annual premium of your regular Plan G. In this case, it's over $2,000 difference. Now, most of us would rather save $2,000 a year and risk the occasional year where you spend the $2,870 deductible than pay the massive Medigap Plan G premium every year. You can do the same math with Medigap policies in Washington State, where the difference in premium between the Plan G and its high deductible option is $2,200 in many parts, or in New York and Connecticut, where the difference in annual premium is often over $2,800. I'm leaving out a lot of expensive states, but you get the picture. Does this make sense? If you could save $2,800 a year in premiums, but had to risk an occasional year where you may pay the full deductible, currently $2,870, would you do it? I would. To me, that is a no-brainer financial decision. So let me know in the comments, please, if I need to come up with a different way of expressing this concept or if it makes sense to you. There are other factors that can impact your decision, including the fact that states like Connecticut, New York, and Vermont all have year-round open enrollment for Medicare supplements. You can change Medigap plans at any time without medical underwriting, which means you can go up in coverage if you're facing a lot of medical bills like what might occur with cancer. Now, let's look at where the Medigap high deductible option doesn't make sense. The negatives. Before I do, if the information I'm providing you is beneficial, let me know by pressing the like button below. And if I have earned your subscription, please subscribe for more content on Medicare. One of the weaknesses of a high deductible Medicare supplement is that regardless of your health or your situation, what you have spent towards your deductible resets to zero every January 1. If you have a serious illness that started in the last quarter of a year, you can easily be forced to pay your deductible twice in just a few months. You pay the deductible in November or December, then the deductible resets to zero on January 1, and you're still ill and under treatment. So you pay the deductible again in January. This leads to where or when the Plan G high deductible is a bad idea and why. There are two situations where this is the case. The first, the Medigap Plan G high deductible is not for people who can't afford a regular full coverage supplement. If you do not have at least twice the deductible amount set aside as a reserve for medical expenses, you should consider a full coverage supplement like the Plan N. One of my first Medigap high deductible plan sales was to a dear woman who had very few resources but didn't want an Advantage Plan. As fortunate would have it, just a couple years into her Medicare, she got very ill. Her Medicare bills were such that she had to pay the deductible in two consecutive years, but she didn't have the money. She went into credit card debt to pay the deductible, but then she couldn't afford the higher credit card monthly payments. Her story didn't end well in that not only did she have to go back to work, but doing so only made her health worse, and she never really recovered from the financial catastrophe. In a conversation I had with her a few years later, it was obvious that the Medigap Plan N with full coverage, she would have been much better off. The premiums weren't that much higher, and she would have made the made the entire medical event that she had much more affordable. The second situation where Plan G high deductible is a poor or unwise choice has to do with states that have lower than average Medicare supplement premiums. South Texas is a good example of that, although there are a lot of states where this is the case. Say you have a Plan G that costs $1,500 a year, a Plan N that costs $1,100 a year, and your Plan G high deductible is just $600 a year. I'm including the Plan N in this case because Plan N is the lowest cost full coverage plan. Full coverage means that 100% of your Part A inpatient deductible and co-insurance is covered by your Medicare supplement and Medicare. You can be in the hospital with a Plan N for a year, and all inpatient fees are fully paid for. Now let's say that you have your high deductible Medigap Plan, and something happens where you end up in the hospital for a few days. If you're fortunate enough to be an inpatient, that stay is going to cost you If you're under observation, which would be under Part B, it can be more. So how much did you save in premiums by purchasing a Plan G high deductible versus a Plan M? Well, in the case I just did, you saved $500. Well, how much did you just spend in medical bills? At least $1,670, right? So your one hospital stay just wasted 3.3 years of savings. Keep in mind that the Part A deductible is not an annual deductible. It resets 60 days after discharge. Of course, hospital stays also mean follow-up doctor visits. So by the time you're done with this one event and its repercussions, you are very likely to have spent either the entire $2,870 deductible or very close to it. What I'm trying to show here is that when you're saving money by lowering your premium a small amount of money, hundreds of dollars over a year, not thousands of dollars, you're still bearing the financial risk of a serious medical event. I know, and I can hear it through the camera, but I'm healthy. I'm active. I don't have meds. Sadly, I can't count how many times I have heard that from people who two or three years later are fighting for their lives. You're 65 years old or older. If you think your odds of anything bad happening are low, go and try to buy some permanent life insurance and see what they charge you. And I know that's harsh, but keep in mind that unlike any other Medicare supplement plan, the high deductible plan has two moving parts that both move against you every year, an increasing deductible and an increasing premium. That means that the math behind your decision to not get a Plan N is worse and worse for you every year. The bottom line, when the difference in annual premiums between a Plan G and its high deductible version is close to or over $2,000, a Plan G high deductible is a great value and it should be considered. When the annual premium for a Plan G high deductible versus the Medigap Plan N is measured in hundreds of dollars, not thousands, then consider the fact that one hospital stay can erase all of the savings that you were hoping for. In that case, a Plan N is a better value and better protection against financial loss. Please reach out to my office if you'd like to see what I might recommend for you. Don't forget to subscribe to keep up to date on Medicare and like this video and comment so that the algorithm will pass this along to others like yourself seeking answers on Medicare. I'm Matthew Clausen with Medigap Seminars. Thank you for watching.