Is Medicare Plan F going away? Yes, it is – but not yet, so don’t panic.
Medigap Plan F has been one of the most popular supplement plans on the market for decades. Millions of people will be affected, so Congress has given us plenty of time to prepare for this – until 2020, in fact.
So why in the world then is Medicare Plan F going away? We’ve got the scoop for you here today.
When is Plan F Going Away?
Both Plan F and Plan C are going away in 2020. However, these Medicare changes in 2020 won’t affect everyone. People eligible for Medicare Part A prior to 2020 will continue to have options to enroll in Plans C and F later on.
Every so often, Congress decides to change the landscape on Medicare supplement plans. In 1990, they first standardized plan options. Then in 2010 they eliminated some plan options like E, H, I and J. Now here in 2020 we have Plan C and Plan F going away for good.
This may make you want to run out and buy Plan F right away, but keep reading. It’s possible rates for Plan F may be negatively affected long-term. To explain why, we need to first dive into why these changes are taking place.
Why is Plan F Going Away?
So what is happening with Plan F? Why is Medicare Plan F being phased out?
Well, these changes to Medicare supplement plans are a result of the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015. You may have heard it referred to as the “doc fix” law.
Congress passed this legislation last year to ensure that doctors would be paid better for providing Medicare services. We all want our doctors to be paid fairly for seeing Medicare patients. However, some earlier laws in place would have actually decreased pay for doctors over the next few years.
Doctors, of course, don’t like this. Many threatened to leave the Medicare program if the cuts continued. Every year, Congress has been voting at the last minute to stall the cuts, but kicking the can down the road doesn’t work forever.
They needed a solution to fix the payments for physicians so that they would not bail out of the Medicare program. As you can imagine, that costs money, around $200 billion over the next 10 years.
Congress had to come up with that money somewhere. They decided to reform our existing Medigap policies, among other measures. Read on for what they came up with.
All Medicare Beneficiaries Must Be Subject to a Deductible
Currently Medicare Parts A & B both have deductibles. Deductibles are the amount of money that you pay out of pocket before your benefits begin.
Medigap plans can still cover the Part A Hospital deductible, but as of 2020, the plans can no longer cover the Part B deductible for new enrollees. Currently this deductible is $185 per year in 2019.
Since Plan F covers that deductible, it is going to be phased out for new enrollees.
The goal of this measure, in the view of Congress, is to make Medicare beneficiaries put a little more “skin in the game.”
You see, people with Plan F have what we call “first dollar” coverage. Right from the first day, Medicare covers 80% and their Medigap Plan F covers the deductibles and the other 20%. So at the time of service, people currently on Plan F pay no copay for their Medicare-related doctor visits. No deductible either. Lawmakers fear that this lack of cost-sharing results in people running to the doctor for minor issues that may not really require medical care.
These changes mean that all Medicare beneficiaries will have least $185 in deductible spending out of your own pocket each year. In light of this, they hope you might think twice before seeing a doctor and perhaps causing the Medicare Trust Fund some unnecessary spending.
Basically…. they want you to think about whether you really need to see a doctor for every little sniffle.
Will this really work to reduce Medicare’s overall annual expenditures? We’ll see. Opponents have argued that people may end up waiting to seek medical care for serious issues. This would ultimately cost the Medicare program more money down the road. The end result is something we’ll all be discovering together after 2020.
Medicare Plan F 2020 Changes
So is Plan F going away? Yes, BUT only for new Medicare enrollees starting in 2020. People eligible for Medicare prior to 2020 will continue to have Plan C and F options in the future. Here’s some additional scenarios:
- If you are are on Plan F already when 2020 rolls around, you won’t be kicked off your coverage. In fact, you will continue to be able to purchase Plan F policies from other carriers after 2020 as well. (Again, the MACRA act only prohibits the sale of Medigap Plans C & F to newly eligible Medicare beneficiaries.
- If you are eligible for Medicare before 2020 but have delayed it because you are still working and have employer insurance, don’t worry. When you leave that insurance and switch to Medicare, you will still have the right to enroll in Medigap Plans C or F.
- People eligible for Medicare AFTER 2020 will not have this same right, but they will have a similar right to enroll in Medigap Plans D or G going forward.
Other popular Medigap plans like Plan G and Plan N will continue to be available for everyone in their current format. A New High-Deductible Plan G will be created and made available for both newly eligible and previously eligible applicants.
Will Plan F Rates Go Up Faster After 2020?
Some people are worried about this, and it’s certainly possible. Back in 2010, when Medicare discontinued Plans H, I and J, we did see some price inflation with some carriers, but not all carriers and not in all states. Also, the discontinuation of Plan F will be different because people who are grandfathered will still be able to change to other Plan F carriers in the future.
Some states also have a birthday rule or similar rule which lets them change Medigap companies during certain times of year without any underwriting. This is the case in California, Oregon, Missouri, Connecticut and New York.
Also, at least one state has enacted legislation to be sure rate increases won’t affect Plan F policyholders specifically. The Idaho Department of Insurance also has measures in place to protect Medicare beneficiaries from inflation. They released a memorandum on October 17, 2017, which stated the following:
The Idaho Department of Insurance has received misleading information from agents encouraging them to switch plans now to avoid potential increases. The Department has reviewed all Medicare Supplement plans and is NOT anticipating abnormally large premium increases on Plan F after 2020. As part of the Medicare Supplement rule change effective July 2017, any future premium insurance requests should generally apply uniformly across all lettered plan. Idaho Rule 18.01.54 therefore protects Plan F beneficiaries from seeing higher premium increases than beneficiaries in any other letter plan.****
What Does 2020 Plan F Change Mean for You?
Here’s our advice about Medicare Plan F going away:
- Make the best coverage decision for yourself right now. If Plan F feels best to you, it’s still okay to choose that. You’ll be grandfathered if you choose to keep that plan past 2020. As long as you are aware of the potential for rate increases with Plan F, then you are an informed buyer. If you would rather choose Plan G or Plan N that isn’t slated to be discontinued, that’s fine too. In fact, Plan G offers some great potential savings and gets great reviews, which you can read about here.
- Watch our posts for future updates. Legislation about Medicare changes often and 2020 is still a few years away. We never know what other changes they may pile on between now and then. We’ll keep you posted though, so be sure to check in here at our website or like us on Facebook for future updates as we roll them out.
Click the button below to learn about plans that can give you some annual savings right now. We’ll help you see just how much you would save. Moving to Plan G now will make the Medicare Plan F 2020 changes irrelevant to you.
Will Medicare Plan F going away affect you personally? Do you have a question about the changes to Plan F and Plan C? We’ve love to hear it. Leave it in the comments below.
***Editor’s Note**** This post – Is Plan F Going Away – was originally published in March 2016. It has been updated and re-posted in May 2019.”***