When it comes to Medicare plans, there are plenty of options to choose from. However, one of those options is slowly making its exit over the coming years. It’s Medicare Supplement Plan F – a popular Medicare Supplement (also known as Medigap) plan.
And even if you live in a state that offers a plan similar to Plan F (like Minnesota or Wisconsin), the federal law that’s causing the disappearance of Plan F will affect those options as well.
For a growing number of new retirees, Plan F won’t be an option in the coming years. But what exactly does this mean for you? We’ll discuss what this popular plan is, why it’s being phased out, who’s still eligible and what options you have without it.
What is Medicare Supplement Plan F?
- Plan F is one of several types of Medicare Supplement insurance plans. These plans help pay for out-of-pocket costs like coinsurance and copays that Medicare Part A and Part B (aka Original Medicare) can charge.
- What makes Plan F stand out is how it covers the Medicare Part B deductible. In return for a higher monthly premium up front, Plan F covers the Medicare Part B deductible AND the remaining 80% of costs that Original Medicare doesn’t cover.
- This type of coverage, also known as “first dollar coverage,” means that you have no expenses for covered medical services beyond your monthly premium.
- As a result, Plan F has been the most popular Medicare Supplement option for many years. In fact, 55% of enrollees that chose Medicare Supplement plans in 2019 chose Plan F.
Why is Medicare Plan F no longer an option for most people?
In short, Medicare Plan F is being phased out because of the first dollar coverage that made it so popular. As federal lawmakers saw it, that kind of coverage has the potential to be overused at the expense of the Medicare program. By requiring a deductible, the insured has a stake in making sure their visit to the doctor justifies the cost.
So, as part of the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015, the limited offering of Plan F was set into motion on Jan. 1, 2020. But just because the clock is ticking doesn’t necessarily mean that you can’t join either Plan F or another Medicare Supplement plan.
I live in Minnesota or Wisconsin or Massachusetts. Does this still affect me?
Definitely – these three states have their own plans that are similar to the standardized plans offered in other states but with different plan names. If you live in one of these three states, your Medigap coverage options also changed.
For instance, in Minnesota, two Medicare Supplement plan options offer coverage for the Part B deductible. For the Extended Basic plan, this coverage is included for certain enrollees. For the Basic plan, the Part B deductible coverage is available through an optional rider.
Now, with the passage of MACRA, the Part B deductible coverage is only available depending on your eligibility – take a look at the next section for more information.
Is Plan F still available for me?
It depends on when you became eligible to enroll in Medicare:
Unfortunately, no. You can join other Medicare Supplement plans, but any plan that has the Part B deductible coverage (like Plan F) is out of the running. We have other suggestions for coverage though – keep reading for more.
Yes – you can stay in your plan. You will continue to have coverage of the Part B deductible.
Yes – you can still enroll in Plan F. You were eligible before the cutoff date, so you’re OK to enroll.
Yes – you can still enroll in Plan F. It doesn’t matter if you were enrolled in a Medicare plan, just that you were eligible to enroll before January 1, 2020.
All of this doesn’t take into account if your state allows you to change plans without medical underwriting. If not, pre-existing conditions might result in higher premiums or an application denial. Before you go too far in looking at plans, talk to a broker or health insurance expert that specializes in Medicare.
So, if you made the cutoff, it may sound like it’s smooth sailing from here on out. However, just because a first dollar coverage plan like Plan F may be available, it might not make sense in the coming years.
What about Plan F rate increases?
If you’re eligible to remain on, or enroll in Plan F, it’s worth it to consider the plan’s future.
Insurance plans depend on new members enrolling each year to keep premiums as low as possible. These younger and (typically) healthier members help offset the costs brought on by older members. Due to limits on who can enroll in Plan F, premiums may rise over time.
Starting in 2010, we saw something similar happen with several Medicare Supplement plans that were closed to new members at the time. The premiums for these plans went up over time, but the increase wasn’t consistent across states and even carriers. So, it’s hard to tell what exactly will happen. But, it’s generally expected that the annual increase in Plan F premiums will be higher than those of other Medigap plans.
What is replacing Plan F?
While there’s no specific replacement for Plan F, there are plenty of other options available. Here are a few popular ones:
- Other lettered Medicare Supplement plans – If you live in a state with standardized lettered supplement plans, you have several options. Plan G is a very popular choice since it’s very similar to Plan F but doesn’t cover the Part B deductible.
- Medicare Supplement plans in Minnesota – The names of the plans available to you haven’t changed. What may have changed is your ability to purchase a plan with Part B deductible coverage or add an optional rider to cover your Part B deductible. Your eligibility depends on when you first became eligible for Medicare – before or after Jan. 1, 2020.
- Medicare Advantage Plans and Cost Plans – These plans have lower premiums than many popular supplement plans and often cover the Part B deductible. Many also include extra benefits and perks like prescription drug coverage, dental options, gym memberships and more. Another bonus? They aren’t impacted by the MACRA phase out.