Choosing the right Medicare plan can potentially save you hundreds or even thousands of dollars per year and tens of thousands of dollars or more over your lifetime.
The purpose of health insurance is to transfer risk from you to the insurance company. Limiting your annual out-of-pocket expenses should be a major objective. Most people want to do this while paying the lowest possible premium, all else being equal. That is why, if you live in New York State, you should consider a Medigap high-deductible plan. The unique features of New York make these plans extremely attractive to many seniors when compared to the other Medicare plans available. Unfortunately, these high deductible plans are not promoted due to the general lack of understanding as to how these plans work and the lower commissions associated with them.
The first thing that we need to understand is that the deductible on the Medigap high-deductible plans is not truly a deductible in the way we usually think of it. Rather, the deductible ($2,370 for 2021) is the maximum out-of-pocket expense (MOOP) for the calendar year. Once an individual has incurred $2,370 in out-of-pocket expenses for Medicare-approved services, the Medigap high-deductible plan covers all Medicare-approved services for the remainder of the calendar year. (Non-Medicare covered services and prescription drug costs do not count toward the deductible.)
Some of the advantages of the high-deductible plans.
There is no network of providers. You can go to any doctor, hospital or medical provider in the United States and its territories that accepts Medicare without referrals.
The maximum out-of-pocked expense (MOOP) is less than one-half (and sometimes one-third) that of Medicare Advantage plans.
The difference in premium in New York between the Medigap High-Deductible plan and the popular Medigap plans F, G and N is significant. This difference is what makes the Medigap high-deductible plan so attractive. It is more of a pay-as-you go model which is similar to the Medicare Advantage plans except the maximum out-of-pocket expense for the Medigap high-deductible plan is considerably less than the MOOP associated with the Medicare Advantage plans.
The ability to change Medigap plans in New York without underwriting makes the Medigap high-deductible plan even more attractive. This allows you to switch from one Medigap plan to another Medigap plan as often as you like, 365 days per year.
While Medigap high-deductible plans are not for everyone, the potential cost savings suggest that if you live in New York, it would be prudent to consider these plans along with your other options before making a final decision on which Medicare plan you purchase. The current Annual Enrollment Period between October 15 and December 7 is an appropriate time to start.
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For additional information or to determine if a Medigap high-deductible plan is right for you or your client, call my office at 631-286-1061 or email me at craig@craigmarcott.com.