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Category: California

14 posts

Almost nobody knows about the High Deductible Plan F (HDF). And insurance agents rarely discuss it due to low premiums which translates into low commissions. But for those people who are looking for a plan to cover expenses they can’t afford while avoiding the limitations of an HMO, this could easily be the plan of choice.

An HDF will start paying the deductibles and coinsurance after these items total $2,200 (the amount will vary slightly from year to year). So while Medicare will pay their share you could be on the hook for up to $2,200 during the course of the year.

Why would anyone want to do this? Plain and simple. Value. The monthly premium for most people will be in the $30-40 range. That’s typically $120-150 less than a Plan F. So you save $1,400-1,800 by being willing to assume the first $2,200 of share of cost.

Let’s look at a real life example:

Mary goes to the doctor with shoulder pain on January 3. The doctor runs tests, x-ray, and maybe an MRI. The total allowable cost for all this is $1,183. Medicare has a deductible of $183 and then pays 80% of the remaining $1,000 balance. Mary will pay $383 for all those services against the annual maximum of $2,200.

The doctor recommends surgery. At that point Mary will likely pay the balance of costs until she has spent the entire $2,200. She is now done with her costs for the year.

Mary has had the HDF for 5 years with little expense. In those years she saved an average of $1,500 a year. That means she has already saved $7,500 in premiums. She can easily afford to pay for her services this year.

Again, it’s value that matters. Ask your agent about this concept. It’s not for everyone as some people might be hesitant to “risk” $2,200. But if you can guarantee a savings of $1,500 in premium it’s not much of a risk.

The short answer is as long as your doctor or other provider accepts Medicare, they will accept any supplement you have. So regardless of your company you can be assured it will be welcomed by everyone.

The first reason for this is called “crossover.” Your doctor doesn’t actually bill the insurance company but instead sends it to Medicare. Medicare then pays their share of the allowable charges and forwards the information to the insurance company (called “crossover”). The insurance company then pays their share and does so virtually immediately. No company decides what is covered nor delays payments.

The second reason is federal law. No provider may suggest that one company is better than any other. And really, why would they when all plans of the same letter (ie, Plan F) pay exactly the same and just as quickly?

So if anyone tells you one company is better than another you might want to question if they have ulterior motive (such as an insurance agent) or just don’t know the truth (ie, your friends).

Generally speaking it makes little difference which insurance company provides you with a Medicare Supplement. There are 10 Standardized Medigap Plans and every company that provides this type of insurance can only use these plans. So from a coverage standpoint it makes no difference.

Where we might find a difference is how often and how large rate increases might be. It’s hard to have a crystal ball but a few companies are notorious for “bait and switch.” They get you in with a low rate and within a few years stop offering coverage to new applicants, form another company with low rates, and then start everything over again.

A good insurance agent can help you decide what company might be the best now and (based upon track record) in the future.

“My Plan F is the best, I never pay anything for doctors.”

Well, Plan F may be the best unless you actually factor in the cost. It’s true that Plan F leaves zero for the patient to pay for Medicare covered services. But being willing to pay a small (and I mean small) amount every year can save a good deal of money.

The following is a true example of the kind of thing I hear daily:

Mrs. M: “I wouldn’t want to change my Plan F. I never have to pay anything for my care.”
RB: “Do you realize if you are will to pay the Medicare deductible of $183 you can save $500 in premium – GUARANTEED? In other words, your insurance company is charging you 3 times what they are paying just for your convenience. Do you still think that’s such a great deal?

Usually this gets people thinking about VALUE. Plan G is exactly the same in every respect to Plan F except it does not pay the Medicare deductible. The savings in premium tends to be $30-50 per month.

I always ask the question at this point about how much money they want to give an insurance company so they won’t be billed an annual deductible, currently $183. Rarely does anyone tell me $500!

Most people won’t discover this on their own. Only an independent insurance agent can show you the value of a Medicare Supplement. If you haven’t reviewed your options maybe now is the time.