Medicare Supplement: What’s the Difference Between Plan C and F?

Medicare Supplement plans have been around for ages, and the most popular plans by far are Plan C and Plan F.  So, what’s the difference?  Not much. In fact, the only thing Medigap plan Plan C does not cover is Medicare Part B excess charges, which Medigap plan F does.  Is it a big deal?  Not really.

Medicare Part A covers hospital stays and Part B covers outpatient services while Part D covers prescription drugs. As you know by now, Original Medicare still leaves gaps in your healthcare coverage.  Medicare supplemental insurance (Medigap) fills in these gaps.  Some plans fill in most of the gaps, others fill in ALL of the gaps.  Medigap plans F and C fill in all of the gaps, hence their popularity.  Unlike Medicare Advantage plans, you don’t need to worry about an HMO or a PPO network when you buy a Medigap policy.   When you buy a Medigap policy, Original Medicare will pay its Medicare-approved amount first, and the Medigap policy will then pay its part. Depending on the plan, this may leave a balance for you to pay.

Medicare Supplement = Medigap

Medicare Supplement insurance policies are also known as Medigap policies. These Medigap policies are important due to the fact that they may take care of other costs Original Medicare coverage will not cover. These include costs such as: co-payments, coinsurance and deductibles. Some Medigap policies also go the extra mile and pay for care when you travel outside the country. If you travel a lot, you need to check out my post on this subject by clicking here.

There are many different Medigap plans, ranging from plan A to plan N. Two of the most popular plans are Medigap Plan C and Medigap Plan F. Both of these plans cover 100% of what Medicare doesn’t cover.  Out of all the supplement plans available, only Plan F is more comprehensive than Plan C.

You Need a Medigap or Medicare Advantage Plan

As you by now know going “Bare with Medicare” is an OK option, but not advisable under most scenarios, mostly due to the lack of a, “Maximum Out Of Pocket,” or MOOP.  Click here to see my post outlining why a Medicare Supplement needs to be a part of your health insurance coverage if you don’t want to choose a Medicare Advantage plan.

The Takeaway

The only thing that Medigap plan Plan C does not cover is Medicare Part B excess charges.  Plan F DOES cover Part B excess charges. These are the fees that a doctor is legally to charge over and above the amount approved by Medicare as payment for a health service at a physician’s office IF THEY DON’T ACCEPT MEDICARE ASSIGNMENT.  Usually, when these charges occur, it is up to the patient to pay for them out of pocket.  I wrote a blog post about Medicare excess charges and Plan F.  You can read that by clicking here.

Over 99% of doctors and hospitals across the country accept Medicare Assignment. The doctors and hospitals that don’t are usually specialty cancer centers or research institutions.  Medigap Plan F covers these excess charges.  Medigap Plan C does not.   So if Medicare Supplement plan C is substantially less expensive than Medicare Supplement plan F, I’d go ahead and choose C.  If the monthly premiums are within $10, I’d stick with Plan F.

It is also important to note that Plan F offers a high deductible plan. HD-F has a pretty substantial deductible you must pay before it kicks in.  But when it does, the same features of the regular Medigap plan F kicks in, including coverage of the Medicare excess charges.  Check out my comparison of HD-F and Medigap F by clicking here.

 

Medigap Plan F Versus High Deductible Plan F

Medicare Supplement (Medigap) High Deductible Plan F suffers from a horrible name, but don’t overlook it.  The premiums can be very affordable and the coverage is better than the name suggests.

Let’s begin with shortening up Medicare Supplement (Medigap) High Deductible Plan F for readability.  Let’s use HD-F from now on.

Deductible

Next, let’s make sure you understand with the word – deductible.  A deductible is the amount you pay each year before your health insurer begins to cover your medical services.

The deductible in 2016 for HD-F is $2,180.

Just to be crystal clear, this means before your Medicare Supplement insurance company pays anyone or anything… the first $2,180 is out of your wallet.

The thing is, the deductible really isn’t all that high, especially when you compare it to what they are in individual ACA (Obamacare) plans.  Right now, the average the average combined deductible for 2016 is $5,765 for bronze plans (up from $5,328 in 2015) and $3,064 for silver plans (up from $2,556 in 2015).  So, if you’re currently paying for your own individual coverage, odds are $2,180 doesn’t scare you.

If it does, I’m about to show you how the differences between premiums for these plans can more than pay for the deductible in a very short amount of time.

Price

Then there’s the price: They’re cheap.  Obviously, prices vary from state to state and carrier to carrier, but they’re generally half – if not less than half the price of a regular Medicare (Medigap) Supplement Plan F.

Let’s take a look at both of them side-by side (premiums are illustrative only).  Here’s a hint:  The only things different are the monthly premium and MOOP!

We’ll start first with Medigap Plan F

Medicare SupplementPlan F
Monthly Premium$180 per month
Annual Deductible ExpenseNone
Annual Coinsurance ExpenseNone
Annual Maximum Out-of-Pocket (MOOP)Zero
NetworkYou can see any doctor who accepts your coverage; no referrals needed for specialists
Other Out-of-pocket CostsNo copays for doctor's visits or hospitalization
Prescription Drugs Does not include prescription drug coverage

Well, that was nice.  Let’s now look at Medigap HD-F

Medicare SupplementHigh Deductible F
Monthly Premium$80 per month
Annual Deductible Expense$2,180
Annual Coinsurance ExpenseNone
Annual Maximum Out-of-Pocket (MOOP)$2,180
NetworkYou can see any doctor who accepts your coverage; no referrals needed for specialists
Other Out-of-pocket CostsNo copays for doctor's visits or hospitalization
Prescription Drugs Does not include prescription drug coverage

Break Even

I’ve done a bit of quick math for you below.  If you assume a monthly premium of $180 for Medicare Supplement (Medigap) Plan F, and an $80 monthly premium for HD-F, the chart shows you’ll break even in a little under 2 years.  Another way of saying that, is: by paying less monthly premium for HD-F, you’ll effectively save enough money (if you don’t use it) to cover the deductible in just under years.

 Medicare Supplement Plan F Monthly PremiumMedicare Supplement HD-F Monthly Premium
Jan$180$80
Feb$180$80
Mar$180$80
Apr$180$80
May$180$80
Jun$180$80
Jul$180$80
Aug$180$80
Sep$180$80
Oct$180$80
Nov$180$80
Dec$180$80
Total Annual Premium Cost$2160$960
Annual Savings$1200
Number of Years to Break Even1.81

But there’s yet another way of thinking about this: If you buy an HD-F when you turn 65, by the time you turn 67 you will have already saved enough money to cover an entire yearly deductible.  By the time you’re 69, you’ve already got more than two and on your way to three year’s worth of maximum deductibles saved up.

The Takeaway

So, which one is the right choice for you?  To get there, the central questions you must ask yourself (and answer) are these:

  1.  Do I want to give the insurance company $180 per month for 100% coverage and 100% peace of mind?
  2. Or do I want to give them $80, save $100 a month in premium and stick that $100 it in my back pocket just in case I get sick and need it?
  3. Should I just go with a Medicare Advantage plan?