When you go onto Medicare you will begin the process of shopping for a Medicare plan to cover the gaps left by Medicare. Medigap plans in America are standardized (meaning that all plan F supplements have the exact same benefits, yet they will vary greatly in price) and for a long time Medigap Plan F was a big seller. This is largely because it covers all of the deductibles, coinsurance, and co pays that would normally be your responsibility after Original Medicare pays its share. Beneficiaries insured with a Plan F policy pay nothing for doctor visits, lab work, surgeries, hospital stays, and much more (as long as Medicare approves the claim).
This type of first-dollar coverage provides huge peace of mind to Medicare recipients as they age because their costs are predictable. If there is an illness that requires extensive treatment, they don’t need to worry about what kind of bills will be showing up in their mailbox. Another benefit of having a Medicare Supplement is there are no networks like Medicare-Advantage plans. You do need to work with hospitals and physicians who accept Medicare but generally speaking most still do across America.
In 2020 Plan F and Plan C are being discontinued.
Why Plans Are Being Discontinued
Congress passed the Medicare Access and CHIP Reauthorization Act of 2015. Part of this legislation will outlaw the sale of Medigap plans (on or after January 1st, 2020) that pay for the Part B deductible to a newly eligible Medicare beneficiary. In 2019, the annual Part B deductible is $185.
Since both Plan C and F pay for this deductible, they will no longer be available to new beneficiaries. The reasoning behind the law is that Congress doesn’t want people to have plans that pay for everything that Medicare does not pay. The theory is that if you have no “skin in the game” that you will go to the doctor or hospital more often.
Individuals who know they must pay for their own Part B deductible (albeit only $185 per year) might think twice about visiting the doctor for a minor ailment. Fewer doctor visits equal less spending by Medicare itself.
What if I already have a plan C or Plan F
People who are already insured by a Medigap Plan C or F will be able to keep their coverage. It is only new enrollees who will not have the option to buy it. Beneficiaries who stay on these plans could find that after 2020, the rates for these plans will begin to creep up. This is certainly possible, as the “pool of business” of insured individuals will be aging and there will be no new younger healthier clients added to this pool.
Should I buy a plan F now or keep my plan F?
Some beneficiaries are choosing to leave Plan F now and enroll in other Medigap plans that are not going away. Plan G is a good example. It covers all the same services that Plan F does except for the Part B deductible. Although Plan G policyholders will have to pay the Part B deductible if they incur any medical services, the premiums for Plan G are often considerably lower, making that plan a good value either way. You can do the simple math- if plan G saves you more than $185 per year over a plan F it is my opinion that you should choose a plan G.
If your health does not allow you to switch to a plan G at this time (moving from F to G will require you to answer health questions) have no fear. In the past when we experienced the phase out of the Plan J clients were allowed to switch to another plan on their anniversary date. It is my assumption that we will see the same type of rules concerning the plan C and F.
Medicare enrollees should continually review pricing and coverage for various options before choosing or staying with a plan.