The “out-of-pocket” maximum is, in my opinion, the most important part of any health insurance policy.
Many of you may have heard me say before that the largest drawback to traditional Medicare is that it has no out of pocket maximum. The out of pocket maximum (OOPM) is what stops the financial bleeding. When something big happens it caps your financial obligation. Inside the insurance world it’s called a financial “stop-loss.”
Several Medicare Supplements and Medicare Advantage Plans will give you an out-of-pocket maximum. If you are still in the “under 65” market the legal limit on out of pocket maximums is about $8550 for a single individual. By contrast Medicare Advantage Plans limit your out-of-pocket maximum to a little over $5000 on average. The High-Deductible F Medicare Supplement effectively gives you an out of pocket maximum of $2370 for 2021 (it adjusts a little each year). The regular “F” Supplement gives you a $0 out of pocket maximum. That’s right. $0. Zero. Nada. Zilch. Medicare picks up what Medicare picks up and the regular “F” supplement picks up the rest.
So how much does it cost to get the out-of-pocket maximum these plans provide? For someone turning 65 and entering the Medicare System? Some Medicare Advantage Plans are available for a $0 dollar a month (not as many as there used to be though). A high-deductible F might run you $30 – $40 depending on the carrier. A regular F that pays all the out-of-pocket costs that Medicare doesn’t cover might expect to pay $120-$150 depending on the insurance company. All of which are pretty reasonable considering the alternative.
My favorite plan is the “High Deductible F.” It is affordable. It works with traditional Medicare, covers excess billing charges, and has a very low $2180 out-of-pocket maximum. The regular F is also an excellent choice and even though it’s more expensive is still substantially less expensive than if you didn’t have the Medicare option at all (see my post on “What if Medicare didn’t Exist?”) and virtually eliminates out of pocket costs.