You could save $1,000 on your Medicare Supplement premiums in just one year with the High Deductible Plan F
Plan F is the highest level Medicare Supplement plan available, but there’s a variation called the High Deductible Plan F. This plan pays the same benefits as the regular plan F after the person has paid out $2,700 during the calendar year of 2023. You’ll pay the 20% that Medicare doesn’t for all expenses that would normally be paid under plan F for Medicare Part A and B expenses until you hit $2,700. Then you’re covered at 100%. It’s a cost-effective way to have the best coverage if you’re willing to pay a little along the way.
Only a handful of companies offer this plan design, and very few people ever hear about it. If you’re in fairly good health and don’t utilize a lot of medical services, this plan will likely save you thousands of dollars during your retirement years. If you have an ongoing chronic illness that requires frequent testing, therapy, surgery or hospitalizations, you should probably steer away from this plan.
How Does the High Deductible Plan F Work?
You may think that the deductible means that you pay the first $2,490 similar to an employer group plan or an individual plan before you got Medicare. It works differently because Medicare will be primary and still covers 80% of your outpatient and physician expenses. All your left to pay is 20% of the bill. If you pay out $2,700 worth of 20%s over the year (very unlikely unless you are hospitalized or have a lot of costly outpatient therapy and tests) then all your Medicare approved health care is covered at 100%.
- Dr. billed $250
- Medicare Allowed $150
- Medicare Covered 80% of the $150.00= $120
- You are responsible for 20% of the $150.00= $30
- You pay the $30 which goes towards meeting the $2,700 annual deductible
Your deductible is now at $2,670. Now lets say you have an MRI.
- Outpatient Imaging billed $800
- Medicare allowed $400
- Medicare covered 80% of the $400.00= $320
- You are responsible for the 20% of the $400.00= $80
- You pay the $80 which goes towards meeting the $2,700 annual deductible
Your balance on the deductible $2,670 less $80 equals $2,590.
Now the doctor says you need to be admitted to the hospital. Medicare Part A has a $1,600 hospital deductible. It won’t matter if you stay 2 days or up to 60 days, the hospital portion of the bill will be $1,600.
- Hospital billed $10,000
- Medicare Allowed $6,000
- You are responsible for the Part A Deductible $1,600 (An amount set by Medicare each year)
- Medicare pays the balance of the Allowed amount
- You pay $1,600 which goes towards meeting the $2,700 annual deductible
The balance on your deductible is $2,590 less $1,600 leaves and you with $990.
You can see that it would probably take a significant amount of services and maybe a hospital stay to even hit the annual deductible but if you do, you’re done paying for the rest of the year.
HDF is Great Alternative to Medicare Advantage Plans
The High Deductible F plan can also be a better option for people who are considering a Medicare Advantage plan. Some Medicare Advantage plans cost $50 to $100 per month plus you still have copays, deductibles and cost sharing up to $6,000 or $10,000 for out of pocket expenses.
The High Deductible plan F (HDF) premiums can be less than what your paying for an Advantage Plan. The average premium for a 65 year old is about $35 a month for an HDF. You’ll need a stand alone drug plan too, and those will run an average of about about $25 month.
Drug coverage, whether it is included in a Advantage plan or purchased separately to go with a Medicare Supplement is not included in Medicare Advantage Out of Pocket Maximum and it’s has it’s own separate deductible. It’s completely separate so don’t consider that in the total picture.
In many cases the HDF is better coverage all around. It’s still a Medicare Supplement, so you can always choose you own physicians and hospitals, go to a specialist without a referral, and leave the decisions about your healthcare up to you and your doctor. The out of pocket Maximum that you can spend is only $2,490 with a High Deductible F plan, and is typically two to four times more with a Medicare Advantage plan.
The money that you will save over the years in premiums can easily add up to over $1,000 to $2,000 per year and that savings will pay the deductible if and when you get enough medical care to add up to $2,490 for the year.
The HDF plan is a better financial option than a Medicare Advantage plan too. If your Medicare Advantage premiums are more than about $50 or$60 per month, you should call talk to one of our independent agents to compare your Advantage plan to a HDF Medicare Supplement Plan. Once you have it for a couple of years and see the financial savings, you’ll probably never change back.
Becoming eligible for Medicare could be an enormous savings on your health care costs
If you are just turning 65, then you are probably used to having a significant deductible on your health insurance. Most insurance plans through employers or the private and public marketplaces have $1,000 to $5,000 annual deductibles so if you’ve recently retired, you’re probably used to having a deductible.
Most people new to Medicare go straight for the Plan F because it has the highest level of coverage or it’s what the agent recommended. In fact after the monthly premiums are paid, all your Medicare approved services are covered at 100%. The average price for a Medicare supplement plan F for a 65 year old ranges from about $150 to $250 and only $30-$50 for the HDF plan per month depending on the area you live in, gender and if you are a tobacco user or not.
Although all companies must offer the exact same benefits for each plan, the company can choose which plans to offer. Very few companies will sell every plan only a handful offer the High Deductible F plan. We usually recommend United American for this plan. They’re one of the Best Medicare Supplement companies and it’s their flagship product.