F & J Deductible Announcements

September 2012

ANNOUNCEMENT

Deductible Amount for Medigap High Deductible Options F & J

For Calendar Year 2013

Summary: Medicare supplemental (Medigap) Plan F can be sold with a high deductible option.  Before June 1, 2010, Medigap Plan J could also be sold with a high deductible.   Effective January 1, 2013, the annual deductible amount for these two plans is $2110. The deductible amount for the high deductible version of plans F and J represents the annual out-of-pocket expenses (excluding premiums) that a beneficiary must pay before these policies begin paying benefits. CMS updates the deductible amount for plans F and J each year, after release of the August Consumer Price Index for all Urban Consumers (CPI-U) figures by the Bureau of Labor Statistics, which generally occurs in mid-to late September.

Calculation of the Deductible: The deductible for plans F and J is determined in accordance with section 1882(p)(11)(C)(i) of the Social Security Act. This provision prescribed a deductible of $1,500 for 1998 and 1999 and directed that the amount increase each subsequent year by the percent increase in the CPI-U, all items, US city average.  The  increase in the applicable CPI-U from 2009 to 2013 is 5.2%, which results in a deductible of $2110 after rounding to the nearest $10 in accordance with section 1882(p)(11)(C)(ii) of the Social Security Act.

For Further Information, Contact: Derrick Claggett at (410) 786-2113 for policy issues, or Elizabeth Hale at 410-786-7604 for actuarial issues.