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medicare changes

A Future Without Medicare Plan F

For some time now, Medicare Plan F has been widely recognized as the most comprehensive Medicare Supplemental or “Medigap” coverage available, but that is about to change.

Legislation passed on April 15th, 2015 will prohibit the sale of Medigap Plan F for those beneficiaries turning 65 on or after January 1 2015. Research provided by lawmakers like former Senator Joe Lieberman and Congressman Paul Ryan was evidence that Medicare utilization rates of those beneficiaries with “first-dollar” coverage, like that provided by Medigap Plan F, were up to 25% higher than that of other plans.

That’s because Medicare Plan F pays 100% of the Medicare Part A & B deductibles, copays and the 20%. People who do not have to pay anything to go to the doctor tend to go more often.

Those beneficiaries who are already covered by Plan F will be allowed to keep their plan because they are guaranteed renewable, but there is a catch. The existing Plan F policies will be a “closed risk pool” meaning no new members can participate. New members in good health are what help offset claims of those who are not in good health. No new members means increased premiums for the remaining members.

The thing to remember is that the new law prohibits the sale of Medigap plans like Medicare Plan F that pay the Part B Medicare deductible. It did not prohibit the sale of the other Medigap Plans like Plan G.

Plan G does not pay the Part B deductible, but the benefits are identical to the Plan F in every other way. In fact, I currently recommend Plan G to my clients as a way to save money because the premium savings are greater than the cost of the deductible they pay, which has averaged around $150 per calendar year.

Another advantage is to Plan G is premiums generally do not increase as much as Medicare Plan F because people who have lost other health insurance coverage cannot use their guaranteed issue rights to join a Plan G. This protects the pool from impaired risks and keeps premium increases to a minimum.

In conclusion, we may be losing Plan F, but there are still good alternatives like Plan G that provide Medicare beneficiaries with great coverage.