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What is Happening with Plan F?

Approximately forty-nine million Americans currently rely on Medicare for their health coverage needs. By the year 2020, it is projected that Medicare will cover sixty-four million baby boomers.

Those currently enrolled in Medicare are well aware of the gaps in coverage by original Medicare. The vast majority of qualifying enrollees who come under the Medicare umbrella opt to purchase additional coverage in the form of a supplemental plan, or Medigap as it is also called. In fact, in 2010 approximately twenty percent of those who enrolled in Medicare opted for a supplemental plan to cover gaps in Medicare coverage.

Those who are turning sixty-five by 2020 will face a significant change in coverage options. One of the most talked about changes coming up is the elimination of Medigap Plan F. Yes, Plan F is going away, but not immediately and not for everyone. The logical, natural next question a lot of people are asking is:

What is happening with plan F?

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) puts an end to the sale of any supplemental policy that provides coverage for the deductible of Medicare Part B after January 1st, 2020. This change will affect two plans that cover plan B deductible, which is currently at $183 a year – Plan C and F. However, this only affects new enrollments. Those who currently have a supplemental Plan C or F get to keep it. That is the good news.

Currently, Medicare Supplemental Plan F, also known as Medigap Plan F, has been the most popular of the supplemental plans because if its comprehensive coverage for parts that are not covered by Medicare alone.

Let’s do a brief review of what plan F covers. The plan covers 100% of Part B coinsurance or copayment. There are a total of eight plans that also offer the same coverage. Only Plan F and Plan G also cover Medicare Part B excess charges. Excess charges are fees added by doctors who do not accept Medicare assignment rates. Plan F also covers 100% of Medicare Part A coinsurance as well as hospital costs for up to a year, beyond the time when Medicare benefits have been exhausted. It also covers 100% of foreign travel emergency within plan limits.

Plan F also covers 100% of the first three pints of blood, Part A hospice care coinsurance and copayments and skilled nursing facility coinsurance, all of which are gaps in original Medicare coverage. As you can see, Plan F is a very robust supplemental plan, hence the reason it has been called “The Cadillac” of supplemental plans. The more reason those who currently have the plan, will be happy to know that they get to keep it.

Why is Plan F being phased out?

Medical service providers expect to be adequately compensated for their services. Medicare limits the amount that doctors can charge for specific services, that does not sit well with the medical community. Many, in fact, suggested that they may cease to participate in Medicare altogether. Congress, in turn, passed MACRA, the law that transformed how Medicare doctors are compensated for services to maintain an acceptable level of medical care of the Medicare recipient community.

Ensuring that quality care is offered to Medicare recipients comes at a cost; an estimated two hundred billion over the next decade. The government now faced a new problem; where would the funds come from to cover the additional expense of paying the doctors more? Congress figured out that by ending supplemental plans, such as plan F and C, that provided deductible coverage, they could make up for some of the additional expense of coverage.

Currently, those with plan F get first dollar coverage. From the very start, Medicare covers the first eighty percent, then Medigap plan F kicks in and pays the deductible plus the remaining twenty percent. The patient then pays zero money for their doctor visits.

Those that oversee the budget were concerned that with such arrangement, no cost-sharing by the patient, it would make it easy for people to run to the doctor for unnecessary visits. They then determined to mandate that all Medicare Beneficiaries must be subject to a deductible.

What are the alternatives if Plan F is going away?

For those who will be eligible for Medicare on January 1st, 2020 and after- there are still options to reduce out of pocket expenses for medical care.

1. Choose from the several Medigap plans that will still be available. One of the better alternatives is Plan G which covers everything Plan F covers except Medicare part B deductible.

Plan D is also quite comprehensible, covering the same thing Plan G covers, less the Part B excess charges which are covered by the current plan F and G. If you carefully consider your options, you can find good coverage for the things that matter. Take hospitalization for instance; ALL Medigap plans offer the extra protection you need to cover you in case of an extended hospital stay. They all have the extra 365 days of coverage after Medicare’s base plan runs out.

2. Consider Medicare Advantage.

There are two ways in which you can get your Medicare coverage – The Original Medicare Plan (Part A and Part B), and there is also Medicare Advantage (Part C) which is provided by private insurance companies and includes Hospital Insurance as well as Medical Insurance. These plans come in the form of HMO or PPOs.

You will also need to decide Prescription Drug Coverage (Part D). Whether you go Original Medicare or MA (Medical Advantage), you will need to make provision for this coverage if you foresee yourself making use of it. Fortunately, Medical Advantage plans have built-in drug coverage plans if you opt to go that route.

What will happen to Plan F rates after 2020?

Many of those currently enrolled in Plan F are concerned about rate increases, and rightfully so. Some carriers may increase the cost of the plans. Currently, plan F runs around $120-$140 monthly for a 65-year-old female. Costs, of course, vary by factors such as Zip code, Gender, and use of tobacco status.  Fortunately, it is an open marketplace. Since the plan must offer the same coverage and benefits across all carriers, but not at the same price, enrollees who are grandfathered into the plan can shop carriers for the best price.

Furthermore, the states of Oregon, California, New York, Connecticut, and Missouri allows enrollees to switch Medigap carriers at certain times of the year, such as birthdays and similar provisions, without having to undergo medical underwriting.

In summary: Plan F is definitely a 5-star Medigap plan, millions of new qualifying seniors can still take advantage of it until the deadline for the new rules – January 1st, 2020. If you can still buy it, you will likely be well served by it. For those that will be eligible after the plan is no longer sold, you still have options. The best course of action is to speak with a qualified professional who can guide you to make the best decision for your specific needs. Call us today at 844-374-1950 to talk to one of our dedicated professionals.

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