Medicare Supplement Plan F

For folks who are age 65 and up, Medicare and Medicaid is common terminology. However, the rules and regulations surrounding Medicare Supplement Insurance can be daunting and extensive. There are several things to consider, particularly with the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which significantly impacted Medicare Supplement Insurance (Medigap policies), including Plan F, nationwide. The mandate stated that as of January 1, 2020, insurers are no longer able to sell Medigap policies that cover the Part B deductible to newly eligible Medicare beneficiaries. What does this mean?

Well, for individuals who turned 65 years old and/or became eligible for Medicare on or after January 1, 2020, any Medigap policy that covers the Part B deductible is completely unavailable. This enforcement specifically applies to Medicare Supplement Plan F.

If you are newly eligible and currently seeking Medigap policy options, or if you are eligible for Medigap Plan F, don't stress. Whether you're interested in Plan F or seeking alternative options, this article will cover the details of Medigap Plan F, eligibility, costs, and similar Medigap plan options for those who are not eligible.

What Is Medicare Plan F?

Medigap Plan F is the most robust of the Medigap plans and is available only to individuals who qualified for Medicare before January 1, 2020. Plan F fully covers any portion of health care charges that Medicare does not, which is why it is considered the most popular Medigap plan and may be of interest to those who have frequent out-of-pocket costs. It is also considered “first dollar” coverage, which basically means that individuals who are covered by Plan F do not have to pay for any medical costs apart from premiums.

While many Medicare beneficiaries know that Medigap Plan F is not an option for new beneficiaries, understanding what this plan covers can be extremely beneficial when looking for alternative Medigap options.

According to Medicare.gov,1 Plan F covers the following:

• Part A coinsurance and hospital costs up to 365 days after Medicare benefits are used up
• Part A deductible
• Part A hospice care coinsurance or copayment
• Part B coinsurance or copayment
• Part B deductible
• Part B excess charges
• Skilled nursing facility care coinsurance
• First three pints of a blood transfusion
• Emergency health care services for the first 60 days of travel outside the U.S.

While Medigap Plan F seems like a dream come true, there are some downfalls. In addition to being unavailable to recently eligible Medicare individuals, Plan F (along with all Medigap plans) doesn't cover costs for prescriptions drugs, long-term care, dental or vision care, or private-duty nursing. While it may differ in cost depending on what insurance company you choose, Plan F is still the most expensive plan of all the Medigap options.

High-Deductible Plan F

In addition to Medigap Plan F, there is also High-Deductible Plan F, which offers the same benefits. There are two things to consider when thinking about High-Deductible Plan F: the monthly premium and annual deductible. The main difference between Plan F and High-Deductible Plan F is that coverage does not begin until the deductible is met, which is usually relatively high. Essentially, beneficiaries will have to cover all costs until this happens. But, because beneficiaries have to pay a higher amount, the monthly premium will typically be lower than the standard Medigap Plan F, and any Medicare-related costs are covered for the rest of the year once the annual deductible has been reached.

Like Plan F, High-Deductible Plan F is available only to those whose 65th birthday occurred before January 1, 2020, or who qualified for Medicare due to a disability prior to January 1, 2020. If you are eligible and expect to have minimal health expenses throughout the year, High-Deductible Plan F may be the plan for you.

Both Medigap Plan F and High-Deductible Plan F are great options for individuals who qualify, but it's essential to keep in mind how expensive these plans are.

Medigap Plan F Costs

Medigap Plan F is standardized by the federal government, which means that the nine basic benefits of Plan F will be the same regardless of where beneficiaries live or which insurance company the plan is purchased from. However, prices are not standardized and will vary by provider. Before we delve into costs for Plan F, let's look at the determinants for Medigap pricing.

Pricing Factors for Medigap Plans

Costs for Medigap plans vary from person to person and are highly dependent on variables such as state and provider. Currently, the most expensive states for Medigap annual premiums are Louisiana, Massachusetts, and New Jersey, while Hawaii, New Mexico, and Iowa have the least expensive yearly premiums.

There are three pricing methods for Medicare Supplement plans: attained-age, community-rated, and issue-age. Some states allow insurers to choose from all three pricing models, while other states offer only one or two options.

• Attained-age rates are initially based on an individual's current age upon enrollment but will increase as that individual gets older.
• Community-rated prices have the same monthly premium that is charged to all individuals who have the policy regardless of their age.
• Issue-age pricing is based on the age of an individual when they first purchase the policy. However, the catch here is that the younger the individual, the lower the initial premium. If rates for issue-age plans increase, it would not be due to age.

Medigap plan premiums can be more expensive if you wait until after the Open Enrollment period to sign up. This could cause insurance companies to charge a higher premium based on an individual's health status.

Medigap Plan F and High-Deductible Plan F Prices

As we mentioned earlier, the annual deductibles for both Plan F and High-Deductible Plan F are pretty high compared to other Medigap plans due to the robust coverage. However, a higher deductible means a significantly cheaper monthly premium. If you are eligible and looking for a plan that has lower monthly payments and a higher deductible is feasible, Medigap Plan F and High-Deductible Plan F are great options for comprehensive coverage and benefits.

The main differences between the two plans is Plan F's slightly less expensive annual deductible. Medigap Plan F's annual deductible is $2,073, and High-Deductible Plan F's annual deductible is $2,490.2 While the out-of-pocket expenses can add up, the coverage of both plans are exceptional.

Ultimately, there are a wide array of things to consider when determining which Medigap plan is the most beneficial, but sometimes expenses can prohibit older adults from purchasing the policy they need. If you or a loved one qualifies for Medicare but is struggling to cover the cost, our article on Medicare Savings Programs can help. Looking at Medigap plans for low-income seniors is also an option.

Who Qualifies for Medigap Plan F?

The good news is, anyone who has yet to enroll but was eligible for Medicare prior to January 1, 2020, can still purchase Medigap Plan F. Additionally, for any individual who was previously covered by Plan F (or High-Deductible Plan F), the “grandfathered in” method applies. On the other hand, if you turned 65 after January 1, 2020, Medigap Plan F and High-Deductible Plan F are not viable options for you.

Essentially, if you were already covered by either of these plans before January 1, 2020, you can keep your plan and do not have to worry about seeking additional coverage.

Why Is Plan F Being Discontinued?

As of January 1, 2020, new legislation no longer allows Medigap plans to cover Medicare Part B deductibles. Because Medigap Plan F pays for this deductible, private insurance companies can no longer offer this policy to newly eligible enrollees.

You may be asking yourself how policymakers came to this decision. This significant change to Medigap plans is a direct result of MACRA,3 which has been referred to as the “doc fix” law. Legislation was passed in 2019 to ensure that doctors are compensated fairly for providing Medicare services and treatment by reforming current Medigap policies. The biggest change is that all Medicare beneficiaries are now subject to a deductible, which is where Part B comes in.

As of the January 1, 2020, date, Medigap plans are still able to cover the Part A deductible. However, plans can no longer support the Part B deductible for new beneficiaries; this directly affects Plan F.

The Best Alternatives to Plan F

Fortunately, many healthcare companies offer alternative plans that are comparable in benefits to Plan F, so there are plenty of options to suit specific needs.

Plan G

Medigap Plan G is the most comparable to Medigap Plan F, as it offers the same basic coverage benefits:

• Part A coinsurance and hospital costs
• Part B coinsurance or copayment
• First three pints of blood
• Part A hospice care coinsurance or copayment
• Skilled nursing facility care coinsurance
• Part A deductible.
• Part B excess charges.
• Up to 80 percent of medical emergency costs during foreign travel
• No out-of-pocket limit

Hospital charges, blood transfusions, ambulance transportation, and outpatient services, such as doctors visits, lab work, and medical supplies, are also covered under Plan G.

The key difference between Plan F and Plan G is that Plan G does not cover the Part B deductible, whereas Plan F does. Medigap Plan F and G both offer a high-deductible plan in some states. This means that individuals must pay for their Medicare-covered costs such as coinsurance, copayments, and deductibles up to the annual deductible amount of $2,490 before the policy takes effect. In essence, the benefits of Plan G will not take place until policyholders pay the full annual premium.

So, which plan is better? This decision solely depends on your needs and budget. And, if you are not eligible for Plan F or High-Deductible Plan F, considering other options such as Plan G is necessary.

Plan N

If Plan G doesn't sound like the right fit for you, Medigap Plan N is the next step down. It covers the same core services as Plan G, including the following:

• Part A coinsurance and hospital costs
• Part B coinsurance or copayment
• First three pints of blood
• Part A hospice care coinsurance or copayment
• Skilled nursing facility care coinsurance
• Part A deductible
• Up to 80 percent of medical emergency costs during foreign travel
• No out-of-pocket limit

Plan N pays 100 percent of the Part B coinsurance, with the exception of a copayment of up to $20 for certain office visits and up to $50 for emergency room visits that do not result in inpatient admission.4 Additionally, Plan N does not cover Part B excess charges. If you live in or receive healthcare in a state that allows excess charges, or visit a provider that does not participate in Medicare, you may have to pay additional fees.

While Plan N might not be as comprehensive as Plan F, it still covers core services and the bulk of Part B coinsurance, which is paramount. Depending on your location, healthcare provider, and medicare needs, Medigap Plan N might not be as cost-effective if excess charges are a common or potential risk.