The Medicare supplemental insurance market was a pretty staid affair for years (if not decades). You had a standard suite of plans to choose from which from from A to J and all was well with the world. Things have change quite a bit just in the last decade and will undoubtedly change more into the next decade for different reasons. One of the first changes that occured was the release of an F plan with a high deductible. Most Medicare supplement shoppers and agents for that matter were taken back since we were all so use to the relatively rich benefits of traditional medicare supplements that a high deductible F plan approached heresy. Why on Earth would any one want a high deductible on their Medicare supplement plan? That was back in the early days of rapid health care cost inflation which would quickly answer the previous question. The high deductible F Medicare supplement insurance plan would save you money. It\’s now firmly established and somewhat popular. Let\’s take a closer look at the high deductible F plan to see how it shakes out versus the other Medigap plans including the standard F plan.

First, let\’s define the deductible on the F plan. The deductible is an amount you will have to pay before getting help in most types of insurance and it holds true here but differs slightly. Usually, you have to pay the whole bill until the deductible is met with traditional health insurance but in the case of a high deductible F plan, Medicare is already paying part of the bill so really the deductible only applies to what Medicare isn\’t picking up. What does this mean in practical terms?

You will have to pay your Part A (hospital) and Part B (physician) deductibles in full and these amounts go towards the F plan high deductible. These amounts are scheduled to go up annually according to Medicare\’s inflation index. You can find the detail at our Medicare current year deductible page. That feels like what we mean with a deductible but it differs quite a bit after that. After the Part A and Part B deductibles are met, you then start paying 20% of the remaining (allowable) charges. This still holds true with the high deductible F plan. Once the Part A and B deductibles are met, you will then pay 20% of the charges until you meet the rest of your F Plan Medicare supplement high deductible. This isn\’t that bad. 20% coinsurance is great on the insurance market today. So how do we compare the standard F plan with its high deductible cousin?

Simple. They\’re exactly identical plans except for the high deductible component we described above. You then look at what the annual deductible amount is and compare it with the annual premium difference between the two plan. In most situations, the deductible will be greater than the premium savings, otherwise…why go with the standard F plan at all. They may however be pretty close. For example, if the deductible is $2000 annually and the premium savings is $1500, you could argue for the high deductible option if you\’re in good health (less likely to hit the full deductible especially since the last part of it is at a 20% clip). Keep in mind though that we are making a decision for years if not decades and the probability is that our health care costs will increase as we get older. At some point, you may be hitting the deductible every year and then it swings out of your favor. It may be impossible to change plans at that point due to health. Look at those two numbers (deductible and premium savings) to decide what you feel most comfortable with…possible premium savings versus reduced health care costs risks. That\’s how you analyze the F Medicare Supplement plan with high deductible.

Dennis Jarvis is a licensed insurance agent concentrating on medicare supplement insurance.