Plan F Going Away – You don’t hear as much talk about Plan F as you did just a few years ago. That’s led many to believe Plan F is going away. But is it? Are the Medicare beneficiaries enrolled in Plan F going to lose their coverage? Not quite. However, anyone on Plan F may want to consider other options. Let’s talk about the changes to Plan F over the last couple of years.
What is Medigap Plan F?
You may hear Medigap Plan F, also called Medicare supplement Plan F, Medicare Plan F, or just plain old Plan F. (Some people also call it “Part” F, but the word “parts” only refers to the Medicare program, not Medicare supplements.
First, what is a Medicare supplement plan? Supplements allow beneficiaries to add coverage to Original Medicare (Parts A and B). Since Original Medicare requires individuals to pay deductibles, copayments, and coinsurance costs, most people choose a secondary form of insurance. The two options to do so are Medicare supplements and Medicare Advantage (Part C) plans.
Plan F provides first-dollar coverage for enrollees, which means that it takes care of all costs that remain after Original Medicare pays. Plan F includes payment for:
- Part A deductible
- Part A hospital coinsurance, plus an extra 365 days of coverage
- Part A hospice copayments and coinsurance
- Part A skilled nursing coinsurance
- First 3 pints of blood
- Part B annual deductible
- Part B copayments and coinsurance
- Part B excess charges
- Foreign travel emergency (up to plan limits)
It’s easy to see why Plan F is referred to as the Cadillac of Medicare supplements and why many people choose to enroll in this plan.
Is Medicare Plan F going away?
The answer to this question is partial yes, partially no.
MACRA – the Medicare Access and CHIP Reauthorization Act – passed in 2015. The goal of MACRA was to entice healthcare providers to remain in the Medicare program. At that time, Medicare reimbursements were lower, putting a financial strain on providers and healthcare facilities. MACRA’s goal was to increase reimbursements for quality care.
The intention was good, but of course, the government had to find a way to increase those reimbursements. One way to do this was to advance payments made into the federal Medicare program by removing any Medicare supplements that included the Part B deductible payment. Plan F was one of the two plans that provided this coverage. (The other is Medicare supplement Plan C.)
We saw the changes from MACRA begin in 2020. No Medicare beneficiary who turned 65 after January 1, 2020, is eligible to enroll in Medigap Plan F. Anyone who was already registered was allowed to keep their plan. In addition, even people who delayed Medicare enrollment until after 2020 could enroll in Plan F as long as they met the birthday cutoff.
What are the alternatives to Medicare supplement Plan F?
Beneficiaries who aren’t eligible for Plan F still have great Medicare options. Anyone who wants to know the next best option should consider Medigap Plan G. It offers nearly identical coverage except for the Part B deductible. If you enroll in Plan G, you’ll have to pay the Part B deductible of $233 (in 2022).
Surprisingly, this actually might be the better choice. Even if you are eligible for Plan F. In exchange for comprehensive coverage, you’ll pay the highest premium for Plan F. Plan F has seen higher rate increases than the other plans. Most Medigap premiums increase as you age, but some will grow faster than others. Since the pool of Plan F enrollees is getting older, their healthcare costs are higher on average. We’ve seen around a 6% increase in Plan F premiums each year.
Plan G premiums will be less than Plan F and could more than make up for the $233 difference in coverage. Let’s look at an example using tips from the lower end of each plan. Plan F is $150 per month, and Plan G is $120 per month.
If you’re on Plan F, that will make your yearly premium $1,800. If you’re on Plan G, you’d have $1,440 in bonuses. The difference is $360 – more than enough to cover the Part B deductible.
There are about eight other Medicare supplement plans to choose from, plus high-deductible versions of both Plans F and G. Plan N is another intelligent option among beneficiaries and one you should consider.
If you’re currently enrolled in Plan F and would like to find out if you can lower your monthly premiums, we can help. In most states, you’ll need to answer health questions and pass medical underwriting to switch Medigap plans, but that’s not always the case. Our licensed insurance agents will help you through this process and talk about other options you might have to lower your monthly expenses.