2 Dec 20190 Comments
I am sure, after reading the headline to this article, most of you are wondering what the heck is Medicare HD? (Nope, the HD doesn’t stand for high definition.) The odds are high that you’ve never spoken to anyone about HD or even heard it mentioned in a Medicare presentation. The HD stands for high deductible which is a supplement/gap plan (also known as Medigap) that has exactly the same benefits as the most costly plans – for a fraction of the cost.
Before you say to yourself, “No way,” keep in mind all supplemental plans, including the HD one, are regulated by Medicare and are exactly the same in every state except Massachusetts, Minnesota and Wisconsin.
The important point to understand about supplemental plans, including the HD plans, is that the private carriers offering them can charge whatever they want for them. As a result, there are large discrepancies in cost between carriers but not in coverage, so it makes sense to have your supplemental plan from the carrier that charges the least for it.
The costliest non-high deductible supplemental plans (I cannot mention specific carriers due to the Centers for Medicare and Medicaid Services’ regulations) cost, on average, about $300 per month in the New York metropolitan area. A single person would be paying $3,600 a year or $7,200 a year for a married couple.
The HD plan from the most cost efficient carrier offering it costs $70 a month or $840 for the year. The HD part or, as I call it, the co-pay portion for the HD plan has a maximum of $2,340 in 2020.
Therefore, the maximum cost per year for the HD plan is $3,180 (the $840 plus the $2,340) for a single person and $6,360 for a married couple, and then the plan covers all costs: 100% at any doctor, hospital or facility in the U.S. that accepts Medicare. You would be way ahead of the game on the HD plan compared to the highest cost supplemental plan, even in a bad health year.
The only way you would hit the maximum co-pay on the HD plan is to have a bad health year. Most people on the HD plan spend about $300 to $500 annually on the co-pays in addition to the monthly $70 premium in a normal health year. Do the math over a five to 10 year span and include two or three bad health years for the HD plan. You will see savings are in the thousands to tens of thousands of dollars.
For anyone still skeptical, I want to reiterate that the HD plans allow you to visit any doctor, hospital or medical facility in the US that takes Medicare from day one and, yes, you have the same foreign travel protection as in the more costly non-high deductible supplemental plans.
The high deductible plan is only one of many Medicare supplemental plans available. The best way to determine which plan is most appropriate for your situation is to meet with an independent and unbiased resource.