People choose medicare supplement plans for a variety of reasons. Some people choose them based on the name of the company offering them, advice from family or neighbors, and advertising on TV. Others may go with advice from a local senior center or simply go with a Plan F because it offers the most coverage. Whatever the reasons may be, they are usually not enrolling in the most financially sound option.
High Deductible plan F should be the choice for any person over the age of 65 taking a Medicare Supplement Plan. ( I say over 65 because it is not usually available to those on Medicare under the age of 65) High deductible F is not as easy to understand as the more popular options such as Plan F,C,D or even plan N. However, if people did take the time to understand the plan, they would see that it is by far the best option from a mathematical standpoint.
Plan F High Deductible works in the following manner: It will cover the Medicare co insurance and cost share once a person spends $2,070 in any given year. In general, this means that when a person goes to the doctor, Medicare will pay 80% of allowable charges and the patient will pay the 20% left over. It works the same way with other services such as testing and physical therapy. If they go to the hospital, they will pay the hospital deductible and then Medicare will pick up the rest. If these expenses add up to $2,070 in any given year, the high deductible F plan will pick up the remaining charges just like a normal Plan F does from the start.
The reason that high F makes so much sense is the math. In many states, high F costs $33.06 a month. The lowest cost standard Plan F is $214.50 a month. Plan F covers all medical costs (Medicare allowable) so there is no out of pocket expense, but the premium totals up to $2,574.00 a year. Even if someone uses little or no services for the year, they will still pay this amount. High F has a total cost of $396.72 annual premium ($33.06 x 12 months) and a max out of pocket of $2,070 for a total of $2,466.70. The worst case scenario leaves the person with High F saving $107.00 for the year.
The reality is that few people experience the worst case scenario. Very few will actually hit the $2,070 deductible for the year. Some estimates show that only 5% of people accumulate over $2,000 of utilization. There are a number of sources that estimate how much the average senior actually accrues in part A and B co-insurance and deductibles for the year but the average seems to show it is about $900 a year. Given this estimate, the average senior would save about $1,207.00 a year on plan F high deductible. If they have a very healthy year, they will save even more. If they have a catastrophically bad year, they will only save $107 but there is no risk involved. At the end of the day, they will save money period.
Due to a general lack of understanding, High F will never be as popular as plan F but it should be the overwhelming choice for anyone in a supplement. The math behind it is undeniable.
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