How does high-deductible Medigap Plan F work?
High-deductible Medicare Supplement insurance plans require you to pay for a certain amount of Medicare-covered costs on your own each year before the policy provides any coverage.
The only high-deductible Medigap plan is high-deductible Plan F. The high-deductible option is usually cheaper than the standard Plan F, but it requires higher out-of-pocket costs.
If you enroll in this plan, you must pay for Medicare-covered costs up to a certain annual deductible. For 2014, the deductible is set at $2,140 (and will go up to $2,180 in 2015).
For example, if you need a blood transfusion, a traditional Medigap plan will cover the cost of the first 3 pints, and Medicare will cover the cost of pints 4 and beyond. But if you are enrolled under the high-deductible Plan F and have not met the yearly $2,140 deductible, you will be responsible for the full cost of the 3 pints of blood.
Once you meet your deductible in out-of-pocket costs, the insurance company will begin paying the benefits offered in the plan.
Although Plan F is the most popular Medigap plan in the market today, the high-deductible option is not as popular. According to an analysis of enrollment data from America’s Health Insurance Plans (AHIP), only between 1% and 3% of newly purchased plans between 2007-2011 were high-deductible Plan F.
Before you choose a high-deductible plan, consider how likely you are to use enough medical services over the course of the year to even meet the deductible, and then how much coverage you would need after the deductible is met.