If you are like most people going on Medicare for the first time, you will probably have the same question.
The best Medicare Supplement for someone new to Medicare is High Deductible Plan G. It provides the most coverage while being the lowest priced Plan. HDG costs anywhere between $30-$45 a month, where most other plans are twice the price. It covers everything in addition to Medicare after you pay a small deductible.
High Deductible Plan G, or HDG for short, is a Medicare Supplement that you purchase in addition to Medicare to cover the out-of-pocket Medicare does not cover.
We will talk about what HDG is, how it works, and what it covers. We will also look at situations where High Deductible is not a good fit.
High Deductible Plan G is a Standardized Medicare Supplement
Medicare Supplements, or Medigap Plans, are the coverage you can purchase in addition to Medicare.
If you want to learn the basics of Medicare, you can read these posts about the different parts to Medicare: Part A and Part B.
Generally speaking, Medicare only covers about 80% of approved medical expenses. The rest is your responsibility. There is no maximum out of pocket, which means there is no telling what your costs could be.
If you’re like me, you would want some protection to limit your exposure to the ever-increasing medical costs.
Medicare Supplements are the best way you can do this.
All Medicare Supplements are standardized; this means that the coverage is the same, no matter the company.
Plan G is one of ten standardized plans available, but the only one with a high deductible option. You can read about the basics of Medicare Supplements here.
What does High Deductible Plan G cover?
The Medicare and You guide includes a list of the 10 Medicare Supplements available. This list also consists of an outline of coverage that explains what is covered.
As you can see, Plan G and High Deductible G have the same coverage.
*Note – If you were new to Medicare, before January 1st, 2020, you cannot get High Deductible G. High Deductible F is your option. Do not worry. Everything is exactly the same as HDG. Everything in this post still applies, except you’d be getting HDF instead of HDG
The only difference between Plan G and High Deductible Plan G is a one-time yearly deductible. In 2020, the deductible was $2,340. Once you meet this deductible, everything is covered 100%.
High Deductible Plan G covers:
- Medicare Part A coinsurance and hospital costs
- Medicare Part B coinsurance or copayment
- Blood (first 3 pints)
- Part A hospice care coinsurance or copayment
- Skilled nursing facility care coinsurance
- Part A deductible
- Part B deductible
- Part B excess charges
- Foreign travel emergency (up to plan limits)
You may be wondering why you should choose a higher deductible vs. a plan that may have a smaller pocket.
The answer to that question is cost. I’ll cover real-life examples. Keep reading to learn more.
Example of how it works
You are finally old enough to go on Medicare! You are retiring and need a plan to help pay what Medicare doesn’t cover.
Maybe you are considering high deductible Plan G because you are very healthy, rarely see a doctor, and don’t take any medications – the ideal candidate.
Let’s say you walk out of your house one day, and you slip and fall.
You end up in the emergency room, they put a brace on your wrist, and now your doctor recommends hip surgery.
As you know, Medicare Part A and Part B both have coverage gaps that leave about 20% of your medical bills your responsibility. If you don’t know how Part A or Part B works, I recommend you read those articles first.
After your visits and procedures, your bill looks a little like this:
ER Visit – $600
Wrist brace – $200
Pain medications – $400
X-ray – $250
Hip Surgery: $32,000
As you know, Part A only covers inpatient medical stays, so Part A pays nothing.
Part B is outpatient medical coverage, so you’ll have to meet the Part B deductible first ($203 in 2021), then they pay 80%.
High Deductible Plan G covers 100% of everything after you meet your HDG deductible.
In the example above, you would have paid $2340.
Let’s Use one more example.
What if the situation wasn’t as serious as the example above and you did not need hip surgery?
Suppose after your slip, and you go to the ER and only get an x-ray and a brace.
From the example above, the cost would be $1450 (assuming they gave you the pain meds also).
Again, Part A would pay nothing.
Part B would pay 80% after you meet the Part B deductible.
So you would pay $452.40
$1450 – $203 (Part B Deductible)= $1247
$1247 X 20% (Part B Coninsurance) = $249.40
$249.40 + $203 = $452.40
You’ll continue to pay like this until you meet the HDG deductible. Once that deductible is met, everything is covered 100%.
How are rates calculated?
One of the most important things you can do when buying a Medicare Supplement is to compare the cost and coverage from several different plans.
When generating a quote, your age and where you live determine the cost of your plan.
To pull the most accurate quote, I ask for someones:
- zip code
- if they are a smoker
- if they are married
So how much lower is the cost?
To see the price differences, we need to pull a quote in several areas.
Let’s say someone is turning 65 this year and lives in Fort Lauderdale, Florida. Female, non-tobacoo user.
The quote for Plan G would look like this:
Now Look at what High Deductible Plan G rates are in the same area:
The lowest rate for Plan G is $217.61, and the lowest for HDG is $61.00.
A price difference $1872 a year.
Every plan is going to have a rate increase
Let’s assume an 8% rate increase every year on both plans.
In 5 Years Plan G is going to cost $296.06 while HDG will only cost $82.99
So over five years, you’ll save $10,989.36!!!
Let’s do one more
Female turning 65 in Houston.
Plan G price is $117.51
HDG is $34.99
The price difference is $990.24 a year and $5612.16 over 5 years.
That is huge!
What High Deductible Plan G rates look like across the country.
We did a study in our office and pulled rates around the country to do an in-depth analysis comparing Plan G to HDG. This is about 20 states and we did 2 zip code per each one.
All of this data is random and in no particular order.
If you are curious what it looks like in your area, shoot us an email or give me a call.
The results were very impressive.
Although, we did mention that HDG isn’t for everyone, this chart shows that the plan is something worth considering.
As you’ll see, there are significant savings in the first year, as well as over the course of 5 years.
(If you are on mobil, you can move the chart left and right to see more of the data).