Selecting the Perfect Florida Medicare Supplement

What You Need to Consider When Choosing Your Medigap Plan

 A logical question to ask when choosing a supplement is  “Why wouldn’t I just buy the least expensive plan since most plans cover all of the essential benefits that I might need?”

Understanding the answer to this question will lead you to finding the perfect Medicare supplement.

Interestingly enough, the answer to this question is not only financial.

We have another article where we go over the basic Medicare features and another where we delve into the differences between the different supplements. But you do not have to go back and read them. We will touch on the more important points once again in this article.

Core and Basic Medicare Benefits

When you buy insurance, any type of insurance, you should be thinking in terms of how it limits your financial exposure and safeguards your assets. Medicare supplements are no exception.

When we take into account where you might be most vulnerable with just having basic Medicare, you want to be sure that you have coverage for the following:

• Part A or the hospitalization coinsurance payment – All supplements will cover this.
• Part B coinsurance of 20% – All supplements essentially cover this as well.
• Coverage for Skilled Nursing Care beyond the first 20 days
• The addition of more hospital reserve days in case you  have an illness that keeps you going in and out of the hospital – All supplements cover this benefit.

If you had a plan that just covered these four benefits , you would have a pretty good health insurance plan. But there are a few more things you might want to include as long as the cost versus the benefit is not too lopsided.

All Medicare supplements except the A and B plans will cover these things. 

If you travel outside of the country you might want to have the Foreign Travel Emergency benefit. This will cover up to a $50,000 lifetime payment at 80% of billed charges. It only provides coverage for the first 60 days of your trip. It does not provide medical evacuation to a US hospital. One important note. If you are on a cruise ship within 6 hours of a US port, Medicare will pick up the bill without this benefit.

Once again, all plans cover this except A and B. I think that if you are traveling anywhere that does not have medical care equivalent to the United States, you should think about a separate plan that covers medical evacuation. But that is a personal opinion.

Coverage for the part B deductible is optional. After January of 2020 this will no longer even be available. Two plans cover the Part B deductible which will be going up to $185 in 2019. But for now, if you are choosing between two plans and the one that pays this deductible is for example $150 more than the other, it could be considered a no-brainer to take the plan that covered it.

Additional Considerations Beyond Cost

The most comprehensive and the most popular plan is the “F” plan. This is the plan that covers all the deductibles and co-insurances. In most cases you should not have to pull out your wallet at the doctor’s office or the hospital.

There are two reasons for its popularity.

The first is that people like the idea of never thinking about deductibles or coinsurance. They want to go to the doctor, show their card, get service and walk out. Let the doctor’s office or hospital take care of the bill. While it can be argued that this comes at a cost, it does offer a lot of people comfort and they are willing to pay a little more for it. I guess compared to what health insurance costs today they consider it a bargain.

But there is a second factor to take into account. 

When you know that you can go to the doctor or have tests done and it will not cost you a dime, you are more likely to look seek medical attention for whatever ails you. That pain in your stomach or the constant headache or the unusual mark on your arm are all more likely to be seen by a physician when you do not have to pay for the visit. In short, you will probably take much better care of yourself. 

This is not an opinion. We have worked with major corporations in the past as benefit consultants. Utilization goes up as the cost goes down. When high co-pays are added to a plan or the co-pay is raised, people are more reluctant to seek medical attention. 

Do not sell this concept short when looking for a plan. Are you as likely to get medical advice is you know it will cost you $50 or $100 as you are if will cost you nothing at the time of the visit?

FLORIDA MEDICARE SUPP BUYER’S TIP: As of January 1st 2020 the two plans that pay the Part B deductible, the “F” and “C” plans are going away. You can still get them up until that time and you can keep them even after this date.

Now for Some Real Numbers

Keep in mind that we are providing prices for Florida Medicare Supplements. The rates vary state by state and county by county.

To help push you towards certain plans, the insurance carriers, will discount some of the more popular plans. So do not be confused if you see an F plan that is cheaper than a slightly inferior C plan. They are doing this on purpose and you might as well take advantage of it. It is there way of saying that they don’t want to be bothered selling all the plans.

I will use an A, F, N and High Deductible F (HDF) plan for the illustration. I just want to be clear though that I am not a fan of the A plan. It lacks too many features to be of serious consideration. For just an additional $23 a month more you can get the much superior N plan. 

Our example applicant will be a 65-year-old male with a Palm Beach County zip code. The rates in other parts of the state could be higher or lower but the illustration still holds up. By the way, rates for women are lower than the rates for men.

The monthly cost for the four plans are:

Plan Letter Monthly Cost

A:  $179

N:  $202

F:  $252

High Deductible F (HDF): $64

The A Supplement

The A plan is the most basic supplement. It does not cover any deductibles but will take care of the 20% you might owe on any medical expenses. As we already mentioned we do not care for this plan. Most people want and should have a little more coverage. 

If you are budget conscious, the High Deductible F plan is a better bet than the A plan.

The N Supplement

The N plan adds in payment for the Part A or hospital deductible. It also covers a Skilled Nursing Facility for a limited number of days and has the Foreign Travel Emergency Feature. It covers all the things that should be covered in a supplement.

But, there is a small catch. Once you pay your Part B deductible (the doctor part of the insurance) you will pay $20 for every office visit and $50 copay for the emergency room. The doctor visit fee of $20 is for in-patient and out-patient visits.

The cost difference over the A is $23 a month or $276 a year.   It is well worth it.

The F Supplement

The F plan is the “gold standard” and the most popular Medicare Supplement plan in Florida (and most other states). It covers more than any other plan. It even covers the Part B deductible. But it costs $50 a month more than the N plan and $74 a month than the A plan. Since it does cover the Part B deductible you can take off $15 a month to make the comparison with other plans meaningful. Now we are looking at about a $35 a month difference between the N and F plans.

Is the F plan worth $35 a month ($420 a year) more than an N plan?

This is a tough question for a lot of people. You might only see a doctor a few times a year at this stage in your life. But, as you age you can find yourself reading a lot of old magazines in a doctor’s waiting room throughout the year.

An office visit is $20 after the deductible with the N Medicare supplement. If you do the math, you would need to see a physician more than 21 times a year to make the F plan a better buy than the N plan. If you consider in-patient doctor visits it is definitely possible that the F plan becomes a better bet. An once again, there is the “feel good” factor of no out of pocket expenses that many (most actually) people will pay for.

The N plan has always been a favorite of insurance agents. But the general public overwhelmingly takes the F plan.

NOTE: After January 1st of 2020 you will no longer be able to buy the F or HDF plans. If you have one you can keep it. At that time the G plan which is identical in every respect except for the Part B deductible will take its place.

The High Deductible F Medicare Supplement

The High Deductible F Plan (HDF) is only $64 a Month. What’s the Catch? 

The High Deductible F plan is almost the same as the F plan. There are only two differences;

1. There is a deductible of $2240 per year (which goes up each year).
2. It will not pay the Part B deductible which is $183 ($185 in 2019).

Let’s be clear what the deductible means in this instance.

The $2240 a year deductible means that it will not pay out anything at all until you have had at least $2240 of expenses that year. This does not include the Part B deductible. After that, it covers everything the regular F plan covers. 

I am going to go into the logic of this plan shortly.

A, F HDF or N – Which Florida Medicare Supplement Plan Should I Take?

First of all, you must remember that you are buying a Medicare supplement both for now and in the future. 

Changing your mind and selecting something else 5 years later is not generally an option. You could be in a situation where you cannot change your plan due to a pre-existing condition. That is why we tell everyone to consider your choices carefully. It can be a lifelong choice.

In Florida, the price you pay now for a supplement will remain more or less constant. It does not go up each year as you age. There can be increases but unlike health insurance, Medicare supplements are not based on age. But if you ever did change plans, which once again might not be possible, you would then pay a much higher premium depending on how old you were when you changed.

Your selection factors should be based on:

1. Your budget – although the annual expense from the most to the least expensive plan is not life-changing for most of us.
2. Your risk tolerance – some of you sleep better knowing that they are no at risk for big medical bills.
3. Your health now and your family health history – for some it is a no-brainer to take a more comprehensive plan. Your current medical condition or a likelihood of certain illnesses based on family history may play a part in your decision.

If your health is already compromised and you make frequent doctor visits, have expensive routine testing, etc. then the F plan is an obvious choice.

Many healthy people take the F plan because there are no out of pocket payments. It handles the deductibles, co-pays, etc. It is as close to a 100% coverage plan as you can ever get. As I explained already it is very tempting to wash your hands of doctor and hospital bills.

If you are relatively healthy, want complete coverage and have no problem paying a $20 copay for office visits, you will find the N plan is a good choice. But be aware that in-patient doctor visits have to be paid as well. 

This leaves the A and High Deductible F plans.

I don’t really see a place for the A supplement. It does not save you enough money to take on the liabilities if presents. Which leaves the High Deductible F.

More About the High Deductible F or HDF plan

The High Deductible F or HDF plan is the least understood plan and often avoided by agents.  They worry about a client becoming unhappy with constant doctor bills and losing a profitable client who might be purchasing other products.

Some Reasons for Taking the High Deductible F Plan

First and foremost the plan is very inexpensive. 

– Even in a relatively expensive zip code like Palm Beach County, it is still only $64 a month.

– Once you reach the deductible of $2240 for the year, it covers everything except the Part B deductible. 

– It is every bit as comprehensive as the F supplement.

So far so good. But that deductible is still stuck in your head. Let’s try to work this out in financial terms.

If you compare it to a regular F plan it will save you about $2100 a year. Let that soak in for a moment. You start the plan year with $2100 in your pocket that you did not spend on a more expensive plan.

Now comes the advanced arithmetic (3rd grade level). 

– You saved $2100. 

– Your deductible is $2240. 

You have a terrible year and you were in the hospital, had numerous doctor visits and so forth. If you had the regular F plan you would have paid out nothing. With the HDF you had to meet the Part B deductible of $183 and the first $2240 of your medical bills. That equals $2423 that you paid out. If you forgot the money you saved you would be regretting your decision.

But wait a second, you saved $2100 on premiums. Your real out of pocket expense was $323. You spent $323 more that year than you would if you had an F plan. Hopefully, you spent if for only that year. You also need to consider all the money you saved over the life of the plan.

Sure, if you wind up in the hospital on a regular basis or have high reoccurring medical expenses it does not look as good. That is a decision you will have to make.

High Deductible F or HDF plan Drawbacks

There are a few things you must always keep in mind with this plan.

First of all, the deductible of $2240 could and probably will go up each year. It might not go up much but that is an unknown. It takes an act of Congress and they can never agree on anything. Past increases were in the $20 to $50 range.

Second, if you find yourself in a situation where you have high annual reoccurring medical expenses you will be forced to meet the deductible each year. You will not be saving money.

The psychological factor cannot be denied. You might have saved the $2100 in premiums but where is it? Did you invest it or put it into the bank? You have a problem and want to see the doctor. In your mind you now know that you will pay for the visit (20% of the Medicare rate). The same goes for tests or an emergency room visit. Will this inhibit you from going? Will you avoid medical care? 

There is no doubt that a few of you will decide that this is the best plan they can buy. But statistically most of you will still opt for the regular F plan. You have had enough of high deductible health insurance and you just want everything covered.

MEDICARE SUPP BUYER’S TIP: If you take the High Deductible “F” plan to save money, we can set up a special account that pays 3% interest (this can change) and the insurance company will pay your bills automatically from this account. It will make it act just like a regular “F” plan. It acts like a health savings account. You put your savings into it each year and when you do have a medical expense you don’t have to reach into your pocket. Ask me about it.

I want to point out that all the plans we sell are issued by an A+ rated insurance company that has been in business since 1947 and has a major commitment to the Medicare Supplement market. They do not pay money to a well-known senior organization for an endorsement. I have been selling supplements and health insurance for more than 25 years and they have the lowest rates and the best customer service.