Is Medicare Plan F going away? Yes, it is – but not for everyone, 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 gave beneficiaries until 2020 to get ready for the change.
So why in the world did Medicare Plan F have to go away? We’ve got the scoop for you here today.
When is Plan F Going Away?
As of 2020, both Plan F and Plan C are no longer available the same way they used to be. 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 feel like you missed out on a great opportunity 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 $198 per year in 2020.
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 $198 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 were on Plan F before 2020, you will not be kicked off of your plan. 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 is different because people who are grandfathered in 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.
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.
Will Medicare Plan F going away affect you personally? Do you have a question about the changes to Plan F and Plan C? We’d love to hear it. Leave it in the comments below.