That’s right, Plan F Medicare supplement will no longer be for sale as of January 1, 2020. As part of the Medicare Access and CHIP Re-authorization Act of 2016, supplemental plans that cover the Part B deductible can no longer be purchased after that time.
The legislation also phases out Plan C and it’s our understanding that it will eliminate High Deductible Plan F from the marketplace. If you have purchased one of these three plans before 2020, you will be allowed to keep your coverage.
Existing Plan F, C and HD F policies cannot be cancelled by any insurance company unless you fail to pay your premiums. And if you were enrolled in Medicare before 2020, these three plans will still be available. They are only off the market for those who enroll in Medicare after January 2020.
This is not the first time Medicare had discontinued supplemental plans. In 2010, Plans H, I and J were taken off the market. Of the three, Plan J was most popular because, like Plan F, it was most comprehensive.
In our opinion, it’s never a good thing when a supplemental insurance plan you own is taken off the market. With no new members coming in, there are fewer healthy people to offset claims from the group.
Those who are in good health will leave the plan due to perceived (or actual) above-average rate increases. This can leave a remaining pool of unhealthy members thus further increasing claims and costs. In a nutshell, discontinued plans can result in premium spikes.
When Medicare modernized supplemental plans in 2010, a very strong argument for Plan G could be made over Plans F and C. Plan G covers everything these plans do except for the small Part B deductible ($183 in 2017).
When you compare costs, the lower premiums with Plan G almost always make up for the Part B deductible – and then some. In other words, why pay an extra $25 a month for Plan F to cover a $183 yearly deductible. It does not make good financial sense.
And Plan G (as well as Plan N) is not a Guarantee Issue plan. The only time you can purchase Plan G without the need for medical underwriting is when you’re within 6 months of your Part B effective date. There are a lot of other circumstances where you can purchase Plan F well after your Part B effective date and not be turned down.
This simply means Plan F has to accept many members who might be in poor health. This fact translates to higher rate increase with Plan F when compared to Plan G. As an agent, I see rate increases cross my desk often. It’s not unusual to see insurance companies raise their Plan F rates by a couple of percentage points higher than their Plan G and N rates. Again, this makes Plan G more attractive for the long haul due to smaller premium increases.
If Plan F follows the trend of Plan J upon phaseout, there will be some policyholders who experience unpleasant, above-average rate increases. The questions is: How far ahead should we start to plan?
Certainly Plans D, G, and N are good choices. Their out-of-pocket exposure is low and their premiums are affordable. If you are in good health and able to switch coverage before 2020, it might be a good idea to consider a new policy that is not being discontinued.
There is one other issue to be aware of, however. With Plan F leaving the market, there will still need to be a Guarantee Issue plan(s) for those who are leaving group health insurance or losing other coverage through no fault of their own.
There’s no word yet as to which Medicare supplement(s) will be Guarantee Issue after 2020, but Plan G certainly will be in the running. So will it lose it’s country club status and be more available to the masses? Maybe. We’ll update this post once we know. If yes, then Plan G will also start to have higher rate increase like Plan F did before it was discontinued.
There’s a lot to think about when purchasing a supplement for the long run. We help take the mystery out of Medicare insurance shopping for our clients.
We are an independent Medicare supplement brokerage with years and years of experience. Don’t just place your coverage with anyone. Talk an agency that specialize in these policies and does this everyday. We can help you find the insurance plan that’s reliable now and in the future.
Category: Medicare Supplements