Choosing the right Medicare plan can potentially save you hundreds or even thousands of dollars per year and tens of thousands of dollars more over your lifetime if you consider both premiums and medical expenses.
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 (Connecticut has similar features) make these plans extremely attractive to many seniors when compared to the other Medicare plans available. Unfortunately, these high deductible plans are not often promoted due to the lower commissions associated with them. There is also a general lack of understanding as to how these plans work.
The Medigap High Deductible Plan G and Medigap High Deductible Plan F offer the same benefits and, in most cases, have similar premiums. Since the Medigap High Deductible Plan F (HD-F) is not available to everyone, I will focus on the Medigap HD plan G (HD-G)
As with the other Medicare supplement plans, there is no network of providers. You can go to any doctor, hospital or medical provider in the United States and its territories who accept Medicare. If the medical provider accepts Medicare, they must accept your Medigap HD plan.
We have established that the deductible is your maximum out-of-pocket expense (MOOP). The MOOP for 2021 is $2,370 which is less than one-half (and sometimes one-third) that of Medicare Advantage plans.
The difference in premium between the Medigap HD plan and the popular Medigap plans F, G and N is significant in New York. This difference is what makes the Medigap HD 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 HD plan is considerably less than the MOOP associated with the Medicare Advantage plans.
Due to the lower premium associated with a Medigap HD plan, someone can purchase a dental plan and cancer or critical illness insurance to create more comprehensive coverage for about the same price they would pay for one of the more expensive Medigap plans.
The ability to change Medigap plans without underwriting anytime you wish in New York adds to the attractiveness of the Medigap HD plan. Should your circumstances change, you can switch to another Medigap plan that might be more appropriate.
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.