You may have heard that certain Medicare Supplement plans are being discontinued in 2020.
While this will affect new beneficiaries, it will not affect existing ones.
Since it was first offered, Medigap Plan F has been the most preferred and comprehensive Medigap plans available. There are many millions of Medicare beneficiaries enrolled in this plan.
If this plan is so popular, why would it be ending? We’ll provide answers to that and more here.
The Deadline for Medigap Plans C and F
In 2020, both Medicare Plan F and Plan C will no longer be offered. However, the changes to these Medigap plans will not apply to all beneficiaries. Up until 2020, those who are eligible for Medicare Part A will still be able to apply for both of these Medigap plans.
Over the years, Congress has periodically made changes to Medigap policies. Way back in 1990, Congress passed the standardization of supplement plans. Later in 2010, they voted to get rid of several other plans, including the popular Plan J, and create new plans like Plan M and Plan N. Now we will see their latest change as F and C are phased out.
However, before you call your agent and ask to purchase Plan F right away, you’ll want to consider that the elimination of Plan F may negatively affect rates in the long-term. To clarify why, let’s review why these changes are happening in the first place.
Reasons for the Change
The demise of Plan F is a result of the passage of the Medicare Access and CHIP Reauthorization Act (MACRA) several years ago.
In simple terms, this legislation was put in place to make sure that the doctors that provide Medicare healthcare services are getting paid appropriately. Prior legislation existed that called for future cuts to doctor pay, and there were too many doctors threatening to stop taking Medicare if this continued.
A solution was desperately needed as a bigger crisis would ensue if more doctors continued to decline accepting Medicare. Congress needed a solution that could help both physicians and Medicare beneficiaries. As you might imagine, a change like this is expensive. It will cost around $200 billion over the next decade.
You might be wondering, “Where will Congress find $200 billion dollars?” The answer is reform. By reforming several things, including current Medigap policies, they will be able to fund MACRA.
Medicare Recipients Must Pay a Deductible
As it stands now, both parts of Original Medicare have deductibles. A deductible is what you pay yourself before your Part A or B benefits kick in.
After 2020, Medigap plans will continue to cover your Part A deductible (if you’ve chosen a plan that covers this). However, Medigap plans will no longer cover the Part B deductible for new enrollees.
Since Medigap Plan F was designed around having no deductible, it will no longer be offered to new enrollees. Legislators are hoping that this change to Medigap plan availability will cause beneficiaries to schedule less doctor appointments.
Currently, those with Plan F have coverage that kicks in from the very first day that they use their benefits, Medicare covers 80% and Medigap Plan F covers the deductibles and the coinsurance of 20%. This means individuals enrolled in a Plan F policy pay nothing out-of-pocket from the get-go.
With the low (or no) cost-sharing involved in a plan like this, lawmakers worry that beneficiaries overuse their benefits and head to the doctor when it isn’t necessary.
What Will Be Different?
After 2020, no matter what plan you choose, you can expect to pay the Part B deductible out of your own pocket each year. The hope is that this change will help cut down on unnecessary spending.
However, if you have a Plan F policy in place as of January of 2020, you will not be booted from your existing policy. The law only blocks new beneficiaries from purchasing these two plans in the future.
Likewise, if you were eligible for your Medicare benefits prior to 2020 but you delayed enrollment into Medicare because you had other creditable coverage, there is no need to fret. When you retire and leave that coverage to enroll in Medicare as your primary coverage, you will still be able to apply for Plans C or F.
It’s only the individual who become eligible for Medicare on or after January 1 of 2020 who will no longer be able to purchase Plan C and F.
Other attractive plans like Plan G will still be around for new Medicare beneficiaries to enroll in.
Will Plan F Rates Increase?
Some Medicare beneficiaries are concerned about Plan F rates going up, and it’s a valid apprehension. When Medicare Plans H, I and J were ended several years ago, we saw price inflation with some carriers, but not all carriers and not in all states. Notably, the discontinuation of Plan F will be different because people who are grandfathered will be able to switch their Plan F carriers beyond 2020.
Yes, changes are coming to Plan F but you don’t have necessarily have to make changes. When it comes to something as important as your healthcare coverage, it is good to have an expert on your side.
If you currently have a Plan F, it is best to reach out to your licensed Medicare insurance agent. They will be able to give you an unbiased opinion about how you should move forward and will also be able to offer options depending upon where you live.