Is Plan F discontinued?
Not quite yet, but the rumors are true!
Plan F is going away for good.
Plan F will be closed to new enrollments, starting in 2020.
Is this really a bad thing, and what could this mean for you?
Here’s the truth about the future of Plan F.
Plan F Discontinued as a Result of Vote by Congress
Due to recently passed legislation, the Part B deductible will no longer be covered by insurance, (by 2020).
Since Plan F (and the lesser known Plan C) are the only Medicare Supplements (Medigap Plans) that cover this deductible, by default, this eliminates the ever popular Plan F.
However, if you have Plan F when 2020 rolls around, you won’t lose it.
But the real question is, will you WANT to keep it?
Stay tuned.
What’s the “Doc-Fix?”
This legislation, nick-named the “Doc-Fix,” is congress’s attempt to reduce pending cuts (up to 21%) to physician payments.
According to this recent Reuters article explaining the Doc Fix and resulting impact,
…the doc fix needs to be done. Eliminating the SGR will greatly reduce the risk that physicians will get fed up with the ongoing threat of reduced payments and stop accepting Medicare patients.
According to CaliforniaHealthAdvocates.org, the bill could’ve been worse. The current solution will hopefully encourage providers to join the Medicare program and stay with the program, boosting provider access – a long term benefit to Medicare recipients.
But should you even WANT plan F?
When it comes to Medicare Plans, not everyone agrees on what is best.
Even seasoned professionals and long time agents disagree about what is best for seniors.
There are two schools of thought:
1.) Medicare Advantage Plans save on monthly premium and are the smartest deal.
Or
2.) Medigap is the only way to go because of provider freedom and predictable costs.
But there’s more to consider than just the price tag on the monthly premium.
In the Medigap camp, I believe the fans of Plan F are mostly sold on how that level of coverage makes them “feel.
People like the Plan F because there are no network restrictions, and no copays for all medical services covered by Medicare.
Difference in Cost Between Plan F and Plan G
While it’s not always cut and dry when comparing costs, in the case of Medigap F vs. G, it is very straightforward and simple to understand.
What is Plan F REALLY covering, that the next lowest plan doesn’t cover?
The ONLY thing that plan F covers above Plan G, is the Part B deductible (this is the coverage that Congress eliminated).
That deductible, in 2016, is $166.
Yes, you read that right.
The ONLY expense that plan F covers over Plan G, is a mere $166 (in 2016).
The kicker is, that in MOST cases (in most zip codes), when you compare quotes, the difference between plan F and the next lowest plan (Plan G) is far more than $166!
The difference in premiums for Plan F can be as much as $400 per year or more, just to cover your $166 deductible.
If I said to you, “If I give you $400, will you give me $166 back?” Wouldn’t you say, “YES?”
But that’s not all.
Rising Premiums
Even MORE important to consider, is potential premium increases over time, once the plan is closed to the “new-to-medicare” crowd.
If you know anything about how insurance works, and actuarial principles, you know that
premiums go up as claims go up, to cover the rising costs.
The healthier the pool of policy holders (i.e. the younger & healthier), the lower the premiums. The sicker the pool, the more claims there are, and the more claims, the higher and faster the premiums rise.
(Do you see where I’m going with this)?
Add to that the possibility that YOU become one of those sicker policy holders. You will no longer qualify to shop around for a lower rate.
(If you’re lucky enough to be in one of the states that waives the health questions once per year, such as California, this wouldn’t apply to you).
In short: staying on Plan F with no younger, healthier enrollees spreading out the risk, you could get stuck on a Plan F with rising premiums.
Why plan G is the best, even now.
One solution is to enroll in a Plan G while you can qualify; (either enroll when first eligible for Medicare, or switch while you are able to qualify based on health).
Not only does Plan G have a history of the lowest rate increases NOW, but you’ll be in a better position come 2020, once the enrollment for Plan F permanently closes.
Plan N is another up and coming popular plan.
It allows you total provider freedom that the Medigap fans love.
But the lower premiums and office visit copays strike familiarity with the Medicare Advantage crowd.
In Conclusion
While Plan F is not discontinued yet, it will be unavailable as a new plan option, starting in 2020.
If you already have plan F, you will be allowed to keep it.
You may want to consider the risks associated with the rising premiums of a plan no longer open to new, healthy enrollees.
The only difference between Plan F and Plan G is that you pay the $166 deductible. The premium savings more than covers this cost.
Plan G or Plan N are good alternatives to consider in the coming years, if you decide to replace your Plan F.