Medicare Supplement Plan F, one of the most popular Medicare Supplemental Insurance options, has been phased out for new members effective January 1, 2020. Both regular Plan F and the high-deductible version of Plan F (HDPF) are affected. While the 6 million people now in Plan F will be grandfathered in and can continue on the plan for the foreseeable future, those becoming eligible for Medicare past Jan. 1, 2020 are prohibited from choosing Plan F.
ALTERNATIVES TO CONSIDER: PLAN G AND N
Moving forward, new Medicare Supplement enrollees may want to consider Medicare Supplement Plans G or N.
Let’s start with Plan G. It is identical to Plan F, with one exception. Plan G does not cover your annual Medicare Part B outpatient deductible of $198, which is up from $185 In 2019. Otherwise, Plan G’s benefits and coverage are exactly the same as Plan F, currently by far the most popular and comprehensive Medigap plan.
For example, both F and G cover 80% of emergency room treatment for the first 60 days of overseas travel, after you pay a deductible of 20% of the Medicare-approved amount for certain necessary medical emergency services.
There is also a high-deductible version of Plan G (HDPG) that matches HDPF. Both HD plans have the same initial deductible of $2,340 that you pay before benefits begin. Still, high-deductible plan G can be a solid choice for those who want the peace of mind of Plan F’s “full coverage” level of benefits but are confident they will remain healthy and will not run up medical bills anywhere near meeting the deductible. There are no other high-deductible versions of Medigap plans available at this time.
Customers who compare Plan F and G policies, which are all standardized, may well find a Plan G with annual premium savings well below the $198 for the deductible they have to pay — as opposed to no deductible for Plan F. All told, a Plan G customer could save around $200 a year after premiums and the deductible for identical insurance coverage.
Medigap plans are standardized in 47 states — all except Connecticut, Minnesota, and Wisconsin, which have their own similar standards.
PLAN N IS ANOTHER OPTION
You might consider Plan N as a possibility. While it has fewer benefits than F and G, it offers significantly lower premiums. Like G, an N enrollee must pay the Part B $198 deductible. Plan N enrollees also pay a $20 copayment per doctor visit and $50 copayment for hospital visits that end with the patient being formally admitted as an inpatient.
Plus, N members must pay Part B excess charges. That’s an extra amount (up to 15%) that doctors can add to set Medicare charges if they are not enrolled as a Medicare provider.
For example, a doctor outside Medicare may demand 15% more than Medicare’s usual $200 fee for a service. In that case, you would owe an extra $30 in addition to your co-pay. But those excess charges may not be a big concern for two reasons.
First, you may not mind paying extra to see a particular doctor or specialist out of Medicare.
Second, and better yet, you may live in one of the seven states that prohibit excess charges: Connecticut, Ohio, Minnesota, Rhode Island, Vermont, Massachusetts, and New York.
THINKING LONG-TERM ABOUT PLAN F VS. PLAN G
If you are eligible for Part A hospital services today, you can still join Plan F or remain on it. You’ll even be able to switch between different Plan F carriers. Since Plan F is by far the most popular Medigap plan, insurance companies will continue to offer it well into the future. Indeed, there are still policyholders of other plans, such as Plan J that was discontinued a decade ago.
However, when comparing F and G, you should consider what may happen to premiums in the long term. Currently, average plan F premiums are rising at more than double the pace of G, roughly 8% a year vs. 3%. That trend may well continue for two reasons. First, people who choose “full coverage” F plans with “first dollar” benefits, meaning they have no out of pocket costs, often have costly health conditions. Those people are likely to stick with F, thereby driving up premiums.
Second, private insurance carriers offering Part G policies may ask retirees joining Medicare beyond age 65 to answer health questions and then not grant a number of them the “guaranteed issue” right to purchase a G policy. In other words, the companies will reject them. Those potential rejections mean the G pools of customers should remain healthier than F pools and therefore less costly to insure in the future. Some of those savings should trickle down to G plan members.
Policymakers have not seriously discussed introducing any new Medicare Supplement plans to replace Plan F or Plan G.