Thursday, December 15, 2016

IBM OneExchange Medicare Supplement K plan working well

This is the second year I used a "K" Medicare Supplement plan with original Medicare.  I am pleasantly surprised with the "K" plan. I have written extensively about the benefit of original Medicare and a Medicare Supplement plan (aka medigap) in other posts if you want to know more about the kind of insurance I recommend.

When I first bought a Medicare Supplement plan (in 2013 when IBM threw us out of their group health insurance), I was sure the best option was an "F High Deductible" plan.  I had a low premium for a policy that would only provide benefit when my out of pocket coinsurance costs went beyond about $2100. Some people call this "disaster insurance".  It turns out it was "disaster insurance" because the insurance company made many mistakes and it took an act of congress to get them to "activate" the policy.  I won't relive that story but if you are interested here's a link to that post:

After that experience I decided to try the K plan in 2015 because I wanted a reliable insurance company and AARP UHC has a good reputation.  Unfortunately they didn't sell a F-HD plan in my zip code. Turns out maybe that's not a bad thing. The K plan provides some insurance benefit (10% of coinsurance) until my out of pocket expenses are $4960 - then it covers all my coinsurance for the rest of the year.  That's a high deductible and it resets every year.  It takes a whole lot of being sick to reach that amount.  However, it took a whole lot of sick to reach the "F-HD" deductible of $2100 too. By the time it was met in 2014, the medigap year was almost up so there wasn't a huge amount of insurance benefit from the F-HD plan before it reset.

The premium for the "K" plan in New York is about the same as the "F HD" plan premium I purchased in 2014 and is about $80/mo.  However, this year the K plan paid about $500 of my coinsurance cost.  That's about $40/month I didn't have to pay out of pocket making the effective rate of my disaster policy about $40/mo. If I had used an "F-HD" plan I would have received NO benefit because my coinsurance and part B deductible costs for the year were about $1200 which is well below the F-HD deductible amount.
If you buy an F-HD deductible medigap it is likely your policy deductible will reset before you get much benefit unless you start accruing medical bills in the beginning of the plan year or you are chronically ill.  If you are considering something like hip or knee replacement, do it in the beginning of the F-HD medigap year to maximize your chances of receiving benefit for that year.  There is sometimes confusion over WHEN a medigap deductible year resets. It is on the anniversary of when you buy the policy.  (this was wrong - the deductible resets in January no matter when you buy the policy).

If you are reasonably healthy, the K plan is a nice option. However, if I could buy an F-HD medigap at the same premium price from a reliable insurance company I would switch back to it. I still think it is the best medigap policy to get unless you are chronically ill.  The bottom line is do the math to make sure you have the right policy and are not overpaying for medigap insurance.

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