Is Medicare Supplement Plan F Going Away?

Medigap F and C

MACRA Means Farewell to Medicare Supplement Plans F and C

Medicare Supplement Plan F is and has been by far the most popular choice for folks to buy when they’ve decided to go with a Medigap plan and a stand-alone PDP for their Medicare coverage. It’s been the leading plan for years, and agents who sell it like it because the premiums are relatively high (more commission dollars for them) and it provides near-100% coverage of anything not covered by Medicare A and B. It even covers “excess charges” which you can read more about by clicking here which the other popular plan (Medigap plan C) doesn’t cover.

Comparing Medicare Supplement Plan F and Plan C

Today, there are ten different Medicare Supplement plans you can choose from. The coverage you get ranges from a basic set of core benefits, to highly comprehensive. But there are some proposed changes on the horizon, and ones you may (or may not) have been hearing about. These changes could require you to choose a different Medigap plan, based on your specific coverage needs, as well as your budget.

What is Happening to Medicare Supplement Plan F in 2020?

Beginning in January 2020, Congress will no longer allow Medicare Supplement insurance Plan F (including the high deductible version of Plan F), and Medigap Plan C to be sold to newly eligible individuals.

What does this mean? Simply, if you already have a Plan F and you like it, you can keep it. If you become eligible for Medicare in 2019, you can still buy it. But if you turn 65 and become eligible for Medicare in 2020, you can’t. It will no longer be available.

Why?

It stems from the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which prohibits the sale of Medicare Supplement insurance policies that cover the Part B deductible to newly eligible Medicare enrollees.
In this regard, a newly defined Medicare enrollee in the year 2020 is someone who has attained age 65 on or after January 1st, 2020, or someone who initially became eligible for Medicare coverage due to age, disability, and / or having End-Stage Renal Disease (ESRD) on or after January 1st, 2020.

Will Medicare Supplement Plan F Premiums Go Up?

Probably. Very likely, in fact. Premium increases are up to the individual insurance carrier, experts do anticipate that the premium for Medigap Plan F may increase in the year 2020 and thereafter, due in large part to the potential increased costs to the insurer as the enrollees in these plans get older and require more medical and health care services.

In other words, yes – it’s extremely likely Medicare Plan F rates will go up, because of what’s called a “closed pool.” Here’s how one of my actuary buddies explained it to me: When you put a bunch of people into one type of insurance plan, the overall thought is, as they get older (and spend more) and eventually die (end of life care is very expensive) the pool keeps getting re-stocked with healthy 65 year-olds who don’t cost the insurance company as much money. Once you “close the pool” that whole cycle stops – and you just have older people…getting older and thus, spending more money on healthcare the insurance company has to pay out. To re-coup their losses, the insurance companies must raise premiums, since they can’t change the benefits.

What to Do If You Want Comprehensive Medicare Supplement Insurance Coverage

If you are lucky (or unlucky) enough to turn 65 in 2020, plans C and F will no longer be available for purchase. If you decide a Medicare Advantage plan isn’t the way to go – take a look at Medicare supplements G and N. Plan G basically looks, feels, walks and talks like a Plan F, just doesn’t cover the Medicare Part B deductible (which is $185 in 2019) The only difference between Plan G and Plan N is that Plan N does not provide benefits for Medicare Part B excess charges, sorta like Plan C.

Should You Keep Plan F If You Already Have It?

I would. No one is going to kick you off the coverage if you already have it, and even though I personally think the premiums could rise pretty dramatically over time – you wouldn’t have this plan if you couldn’t afford the coverage in the first place. If you’re not in good health, I’d say definitely keep it. If you currently have Medicare Supplement Plan F or the high-deductible version of Plan F, you will not be forced to drop your coverage – obviously so long as you continue to make your premium payment.

If your monthly premium payment is already stressing you out, now might be the time to explore your Medicare Advantage options, or look into getting into a cheaper Medicare Supplement plan. Fair warning though, if you’re already sick (have chronic or serious health conditions) most states allow Medicare Supplement carriers to ask you health questions and decline your coverage request. So please don’t cancel any coverage without being approved for your next!

Medicare Supplement or Medicare Advantage?

That’s the million dollar question, folks. Most people I know think the MACRA changes will simply mean more people will buy Medicare Advantage policies since the two “best” Medicare Supplements are going away in 2020. I wrote a nice comparison article a few months back you can reference if you’re still unsure which way to go – Medicare Supplement or Medicare Advantage or simply sticking with Original Medicare and adding a PDP card to it.

That said, you could always keep your Plan F (or C) take a little while to see what happens to your premiums and ride it out until they get too expensive. You can always change to a Medicare Advantage during the AEP and drop your Medicare Supplement if you want. Just remember – you can’t have BOTH a Medicare Supplement plan and a Medicare Advantage plan.

I’ll keep my eye out for more changes and potential impacts of MACRA as we get closer to 2020 and update this post as needed.

Sources:

How to Compare Medigap Policies. Medicare.gov https://www.medicare.gov/supplements-other-insurance/how-to-compare-medigap-policies

Implementation Guidance for MACRA Revisions to Medigap Model Regulation. NAIC. https://www.naic.org/documents/cmte_b_senior_issues_related_macra_faq_2018.pdf

Two Popular Medigap Plans Are Ending. Should You Enroll While You Can? ElderLawAnswers. https://www.elderlawanswers.com/two-popular-medigap-plans-are-ending-should-you-enroll-while-you-can-16471